Perspective: The $30 billion Debt Syria Owes Iran That Will Remain Unsettled

Iran's $30 billion investment in Syria and its unresolved $1 trillion claim against Iraq underscore the escalating expense of its foreign aspirations amid increasing home unrest.

The estimated debt of Syria to Iran amounts to USD 30 billion. This statistic, sourced from the Office of the Iranian Presidency, was disclosed in August 2023. It signifies the cost incurred by Iran since 2011 to sustain Assad's regime. The likelihood of repaying this substantial debt is further diminished by the current Syrian leadership's profound and lasting animosity towards the Islamic Republic due to its nearly unwavering backing of the former ruler.

It is important to acknowledge that Iran has yet to reclaim the USD 1 trillion due by Iraq for reparations stemming from the protracted conflict initiated by Saddam Hussein in 1980, which endured for eight years. Currently, the two nations maintain favorable relations, with bilateral commerce consistently rising over the previous decade. However, Iran has not received any of its funds, but Kuwait has successfully reclaimed the USD 50 billion that Iraq owes it for the 1990 invasion. Iran evidently suffers due to its absence of international assistance and networks, advantages that Kuwait significantly enjoys.

The trade and economic relations between Iran and Syria were varied, including — prior to Assad's downfall — sectors such as energy, industrial products, vehicles, armaments, petrochemicals, construction materials, financial investments, and substantial cash inflows from Iranian pilgrims visiting sacred Shiite sites near Damascus. Over a span of 14 years, Iran exported an average of 60,000 barrels of oil daily to Syria. At a price of USD 50 per barrel, Syria incurs an annual debt of USD 1 billion, totaling USD 14 billion in this industry since 2011. For instance, an Iranian supertanker transporting 750,000 barrels was compelled to retreat in the Gulf of Suez on December 8 due to assaults by entities still classified as “rebels” at that time.

Currently in control, these insurgents are improbable to be disposed to acknowledge the nation's debt. Nevertheless, Iranian authorities were already apprehensive and doubtful over the recovery of their assets, even under Assad. This is why they diversified agreements and contracts with him across other sectors to ensure a return on their investments. In September 2022, a significant contract encompassing eight projects was executed between the two nations, whereby Damascus will remit USD 18 billion to Tehran. Iran was expected to invest USD 1 billion and recoup USD 18 billion over a span of 50 years. A separate agreement conferred to Iran control of the Syrian port of Tartus for a duration of 49 years, with an automatic renewal for an additional 49 years, continuing until 2093. On November 13, 2024 — barely one month prior to Assad's departure — the Iranian Parliament enacted legislation facilitating the complete liberalization of trade with Syria, seeking to secure the predominant portion of the nation's reconstruction efforts.

Consequently, Iran dispatched military advisors to Syria and placed proficient professionals similar to missi dominici, thereby promoting commerce transactions and overseeing these bilateral agreements. Certain reports suggest that approximately 10,000 Iranian officials are presently in Syria, their fate being become uncertain. The uncertain position is exacerbated by the reality that these significant expenditures—primarily associated with civilian projects in Syria—are financed from Iran’s military budget pursuant to “advanced security” agreements between the two nations.

Widespread dissatisfaction, long disregarded by Iranian authorities, was apparent prior to Assad's removal, as numerous media sources consistently voiced indignation at the diversion of funds from the nation's struggling economy. Currently, a growing contingent of national and local political leaders are publicly scrutinizing this approach, given that Syria's USD 30 billion debt constitutes at least 10 percent of Iran's GDP.