Economic relations between Turkey and Syria

Prime Minister Recep Tayyip Erdoğan is headed this week to Hatay, to visit the tent »»

Prime Minister Recep Tayyip Erdoğan is headed this week to Hatay, to visit the tent cities accommodating Syrian refugees. This visit appears to mark the start of sanctions that will be placed on Syria by Ankara in the coming period.

Plans to open up these tent cities to local and foreign media are under way. Up until now, Turkey has kept the tent cities closed off to the media, in order not to “bother” Damascus and not provide a voice for the Syrian opposition in Turkey. But now in İstanbul, there is an office for the Syrian opposition being set up. It is expected that it will be through this office that the Syrian National Council will be formed.

As for the West, it has already begun implementing economic sanctions against Syria. The financial holdings of some of the top-level members of Syrian society have been frozen. The soft belly of the Syrian economy is the energy sector, and sanctions against petrol exports out of Syria have already begun. In order for the economic sanctions to prove successful, it is very important that Turkey participates. But thoughts are now focused on economic sanctions that would penalize only the leadership, and not the people of Syria. In addition to all this, it is important to keep in mind that Syria is Turkey's door to overland routes into the Middle East. Trade done by Turkey via roadways into the Middle East all done through Syria, which is why Turkey is taking hesitant steps when it comes to economic sanctions aimed at Syria.

In order to be able to analyze relations between Turkey and Syria post March 2011, we need to take a look at the recent history of economic relations between the two countries. The accords that place economic relations between Turkey and Syria on a legal foundation are the “Preventing Double Taxation” and “Reciprocal Stimulus and Protection of Investments” accords. The most important underpinning of the legal foundation that binds these two counties, however, is the “Turkey-Syria Free Trade Accord.”  What this accord presents is a 12-year period, during which industrial products exported from Turkey to Syria will be free from customs taxes in increments. As for products entering Turkey from Syria, they were made free entirely from customs taxes from the date the accord was put into implementation.

With regards to foreign trade, the volume between Turkey and Syria rose from $824.1 million in 2003 to $1.752 billion in 2009 and $1.844 billion in 2010. Both countries had aimed to see the volume of trade rise to $5 billion in 2012. Turkey's main exports to Syria include cement, electric energy, insulated wire, cables, fiber optic cable, synthetic fiber, plastic tubing, iron-steel construction accessories, iron-steel rods, pipes and hoses. As for important goods imported into Turkey from Syria, these include petrol oils, raw petrol, natural calcium, natural aluminum calcium phosphate, phosphate chalks, cotton yarns, and wheat.

The most important dual-sided plan of the Turkish-Syrian energy cooperation is exploration, production and processing in Syria's petrol and natural gas fields. At the same time, the most important multi-sided plan within the Turkish-Syrian energy cooperation is the “Arab Natural Gas Pipeline” project which aims to see the transport of energy resources from the Middle East to Europe. It is also important to note that Syria purchases around 1.5 billion kilowatts of electricity from Turkey on an annual basis.

Turkish companies active in the metal, food, cement and open sea fishing sectors of the Syrian economy have made total investments of around $223 million.

According to results from the Oct. 13, 2009 Aleppo and Gaziantep High-Level Strategic Cooperation Council, Turkish-Syrian customs were to move to a single window system. In other words, Turkish and Syrian controls at the border dividing the two countries were to be combined into one spot. In addition, the no man's zone between the two countries was to be eliminated. Currently, five out of seven border crossing points between Turkey and Syria are functional, with plans to make the other two border crossings active in the near future. From the date of Sept. 18, 2009 onwards, visa requirements between Turkey and Syria were lifted, and visa-free visits were put into implementation. Thus, citizens holding Turkish and Syrian passports were able to make reciprocal visits to one another's countries, provided that stays did not exceed 90 days. While the number of Syrian tourists coming to Turkey in 2003 was 154,000, it rose to 500,000 in 2010.

Following the events which have unfolded in Syria since March 2011, small and mid-sized amounts of capital from Syria began to enter Turkish banks. Large amounts of deposits and assets are being accepted through İstanbul. Money deposited into İstanbul from Syria, however, is generally traceable back to Hatay these days.