Syrian authorities and Iran signed a deal this week to activate a $3.6 billion credit facility to buy oil products with long term payment terms, officials and bankers said on Wednesday.
The deal, which was agreed last May between the two allies and will allow Iran to acquire equity stakes in investments in Syria, was part of a package to extend Iranian aid to President Bashar al Assad’s government, its main political ally.
Another $1 billion credit line to Damascus has already been extended to buy Iranian power generating products and other goods in a barter arrangement that has helped Syria export textiles and some agricultural produce such as olive oil and citrus, trade officials say.
Syria is short of diesel for its army and fuel to keep the economy running because of U.S. and European Union sanctions imposed after a crackdown on pro-democracy protesters. Its main supplier of petroleum products by sea has been Iran.
Despite political support from China and Russia, which have blocked U.N. draft resolutions which could have led to further sanctions on Syria and opposed military intervention to end the conflict, Assad’s fuel and cash lifelines have all but dried up
Iran has steadily expanded economic ties with Syria to help it withstand Western economic sanctions and sealed a free trade deal that granted Syrian exports a low 4 percent customs tariff.
Last January, Tehran agreed during a visit by Prime Minister Wael al-Halki to deposit $500 million in Syria’s central bank vaults, banking sources say.
Iran grants Syria $3.6 billion credit facility to buy oil products