Economy |

Iran, Syria attempt to circumvent sanctions via joint bank

By Waleed Abu al-Khair in Cairo


Central Bank of Iran Governor Abdolnasser Hemmati (right) and Central Bank of Syria Governor Hazem Qarfoul met September 2nd in Tehran, where they agreed to expand banking relations between the two coutries. [IRNA]

Increasing co-operation between the central banks of Syria and Iran and the establishment of a joint bank is an obvious plot to circumvent sanctions imposed on both countries by the US and a number of European countries, analysts warn.

Such co-operation could enable dubious banking transactions and the transfer of funds generated by illegal trade activities carried out by Iran's Islamic Revolutionary Guard Corps (IRGC), whose profits fund armed militias throughout the region, they say.

"Many of the bilateral agreements that were the subject of discussions and meetings between Iranian and Syrian officials in the past period have now been put on the front burner to move forward with their implementation, including the establishment of a joint Syrian-Iranian bank," Syrian journalist Mohammed al-Abdullah told Al-Mashareq.


The wing of an Iranian company in the Damascus International Fair, held between August 28th and September 6th, which was dominated by Iranian companies. [Photo courtesy of SANA]

The joint bank was announced during a meeting between Syria's Central Bank Governor Hazem Qarfoul and Iran's Central Bank Governor Abdolnasser Hemmati in Tehran on September 2nd.

"In addition to the joint bank, the talks also addressed the activation of co-operation between Iranian and Syrian banks, the exchange of expertise, and the transfer of Iranian technical banking expertise to Syria to facilitate trade exchange between the two countries," he said.

By inking these agreements, Iran aims to open the door wide "to enter Syrian markets with force and compete with a number of countries looking to get a share of the investment projects and secure [fast] export channels to Syria to evade the sanctions and acquire a chunk of the foreign currency that the markets of both countries sorely need", al-Abdullah said.

Attempting to evade sanctions

The plan to establish the joint bank is a "new ploy by the IRGC to evade the effects of the international sanctions imposed on it", said Shaher Abdullah, an economist and professor at Ain Shams University in Cairo.

"Through this bank and the new credit lines that will be opened, Tehran will use Syrian ports for import and export with credit lines from non-Iranian banks that are not being monitored or at are least not under international sanctions," he told Al-Mashareq.

A number of Arab and international banks, including some Lebanese banks, continue to conduct business in Syria, he said.

These bilateral agreements "will provide the IRGC with a new door to acquire funds from the illegal trade activities it carries out around the world", he said.

Such funds enable the IRGC "to finance terrorist groups affiliated with it in more than one country in the Middle East through both indirect money transfers, or money laundering, and dubious fake deals", he said.

Iranian economy 'near collapse'

"The Iranian economy, which is near collapse, is compelling Iran and the IRGC to find any available outlet to recoup some of the losses resulting from the sanctions imposed on them," said Fathi al-Sayed, a researcher who specialises in Iranian affairs at al-Sharq Centre for Regional and Strategic Studies in Giza.

Syria "provides the ideal setting to do this through controlling the banking markets", he told Al-Mashareq.

"The planned provision of banking facilities and use of national currencies -- as outlined in the meeting between the governors of the central banks of Syria and Iran -- will allow Iran to circumvent the foreign currency hardship and enable it to conduct transactions with the Iranian riyal instead," al-Sayed said.

"This will open the door for mutual investment to businessmen in both countries in sectors that of course include the infrastructure, electricity and transport of smuggled petroleum products to Syria," he said.

The proposal to establish the joint bank dates back to 2009, when the plan called for the establishment of a bank called Al-Aman Bank, he said.

However, the requisite steps to make the bank operational have not been realised.

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