The opportunities and obstacles of revived Iraq-Syria relations

On 16 July, Iraqi Prime Minister Mohammed Shia Al-Sudani made the first official visit to Syria by an Iraqi premier since 2011.

The meeting aimed to secure the two country’s shared border from infiltration by Islamic State group (IS) militants and drug bands, as well as bolster economic ties. 

Iraq and Syria, which both have close economic, military and political ties to regional heavyweight Iran, maintained relations throughout Syria's civil war even as other Arab states withdrew their ambassadors and closed their embassies in Damascus. 

Reaffirming these strong ties, Iraqi government spokesman Bassem al-Awadi told state-run media that Iraq has played a key role in returning Syria to the Arab League, and that, “Syria’s national security cannot be taken away from Iraq’s national security and the region’s stability.” 

"Sudani's visit came as other Arab countries - including Saudi Arabia, the UAE, Egypt, and Jordan - have rebuilt relations with the Syrian regime after years of tensions"

Syria’s membership was suspended in the Arab League in 2011 over Assad's brutal crackdown on protests, with several Gulf states supporting the armed opposition to his rule. 

Sudani's visit came as other Arab countries - including Saudi Arabia, the UAE, Egypt, and Jordan - have rebuilt relations with the Syrian regime after years of tensions. 

In May, Syrian President Bashar al-Assad attended an Arab League summit in Saudi Arabia shortly after Syria’s readmission into the body.

In return for ending his pariah status, Arab states want Assad to curb the Captagon drug trade - which has affected many of their countries - manage the refugee crisis, and limit Iranian influence in his country.

'Upsurge of drug addicts'

The government spokesperson also indicated that Iraq is refusing the economic sanctions that the United States has imposed on the Syrian regime, indicating that “Iraq is working so that Syria can regain its economic boost.” 

Since the popular uprisings in Syria began in March 2011, the US government has intensified its sanctions on the Syrian regime in order to deprive it from resources it needs to continue violence against civilians and its armed opponents. 

Last week a bill was introduced in the US Congress to impose new sanctions on individuals and networks associated with the production of the illicit Captagon.

“The drug issue is a key and joint dossier for both Iraq and Syria, and both countries are suffering from it. Iraq has been paying a heavy tax as a result of the upsurge of drug addicts and allocating a lot of money for their treatment,” Awadi said.

Although the Syrian regime denies involvement in the drug trade, top Syrian officials and relatives of Assad have been put on sanctions lists in recent months in the US, UK and EU over their alleged ties to the trade.

Sudani and Assad also discussed joint efforts for combating the IS insurgency in both countries, and Syria’s possible involvement in implementing Iraq’s Route of Development.

Oil exports

In his statement, Awadi also referenced Iraq’s efforts to find new gateways for exporting its crude oil, hinting that the country is open to discussing rebuilding the Kirkuk-Baniyas oil pipeline with Damascus. 

The now-defunct pipeline, which was built in 1952, links Kirkuk oil fields in northern Iraq with the northwestern Syrian port of Baniyas on the Mediterranean. It is nearly 800 kilometres long with a capacity of 300 thousand barrels per day. 

Iraq shut the pipeline between 1982 and 2000 as the Syrian regime supported Iran during the Iran–Iraq War (1980-88). During the US-led invasion of Iraq in 2003, the pipeline was badly damaged by the US air-strikes and has remained inoperational since. 

"Even with the potential for political gains, cooperation between Damascus and Baghdad may place an increased burden on Iraq’s already-fragile economy"

This move by Iraq comes at a time when the national government may feel frustrated and constrained by Turkey's unwillingness to resume the export of crude from the Kurdistan region to the Turkish port of Ceyhan.

In March, Ankara stopped handling 450,000 barrels per day of exports from Kurdistan after the Iraqi International Chamber of Commerce (ICC) ruled in a nine-year-old dispute that Baghdad should oversee all Iraqi oil exports. 

The tribunal ordered Turkey to pay Baghdad damages of $1.5 billion for allowing the Kurdistan Regional Government (KRG) to export oil between 2014 and 2018 without the Iraqi government's consent.

For Baghdad, the prospect of reviving oil exports through Syria could provide a new outlet to help to fill this gap. 

Pressuring Turkey

Bahrooz Jaafar, Director of the Mediterranean Institute for Regional Studies, has predicted that crude export to Turkey will not resume as of another year, and that Sudani’s efforts to revive the Kirkuk-Baniyas oil pipeline will likely “anger Turkey further”. 

“Iraq hopes to recuperate the Kirkuk-Baniyas oil pipeline, but there are many obstacles in front of this project, and stimulating this issue at the present time is intended to pressure Turkey, which is not ready to resume northern oil exports according to a new mechanism with Baghdad and as per Iraq’s conditions,” Yassin Taha, a Kurdish political observer, told The New Arab.

Sudani’s visit was welcomed by the Kurdish-led Autonomous Administration of North and East Syria (AANES), also known as Rojava, as both are fighting a joint enemy in IS. 

“The visit by Iraq’s PM to Syria is within the efforts made by the Arab countries to normalise relations with Syria, we welcome this initiative by the Arab countries towards Damascus, since this mean Damascus will not have an agreement with Ankara,” Fathulla Husseini, a representative of AANES in the Iraqi Kurdistan region told TNA.

“We are always suspicious of Ankara’s agenda in Syria because the agenda has negative effects on Rojava. On the other hand, Baghdad and Damascus’s coordination in fighting terrorism would reduce the threat of IS on AANES,” he continued.

Consequences for Iraq's economy

Even with the potential for political gains, cooperation between Damascus and Baghdad may place an increased burden on Iraq’s already-fragile economy.

Husseini explained that there are currently more than 70,000 displaced refugees and families of IS fighters in al-Hol camp in northeastern Syria, made up mostly of women and children.

Many of those in al-Hol are Iraqis, and Baghdad has expedited efforts to repatriate its citizens in recent months. 

“If Iraq accepts extraditing those residents from the camp, it would reduce the burden on the AANES,” Husseini said.   

The smuggling of Captagon from Syria into Iraq has also had an impact on Iraq’s economy. As part of its efforts to crackdown on Captagon production, the US has barred 14 Iraqi banks from conducting dollar transactions, The Wall Street Journal reported on 19 July.

The ban, which was imposed by the Treasury Department and the Federal Reserve Bank of New York just after Sudani’s meeting with Assad, is seen as a new set of sanctions on banks owned by the Iraqi ruling parties for the syphoning of US currency to Iran, Syria, Lebanon and some Arab Gulf countries.  

In addition to previous bans, this has left nearly a third of Iraq’s banks blacklisted. Following the ban, the value of the Iraqi dinar is struggling against the US dollar in the currency exchange markets.

The sharp drop in the dinar's value has plunged local markets into further recession, with prices of basic goods soaring daily. Iraqis have taken to the streets to protest these restrictions. 

“This has served as a reminder that breaking the sanctions either on Iran or Syria would have bad consequences and Iraq’s economy is not independent,” said Taha.

Dana Taib Menmy is The New Arab's Iraq Correspondent, writing on issues of politics, society, human rights, security, and minorities.

Follow him on Twitter: @danataibmenmy