oct 9, 2019 - Syria awards a new contract to operate Latakia container terminal - not to iran
Description:
Event
The operating contract for Syria's main container terminal, in the port of Latakia, has been transferred to a partnership of CMA CGM-a French shipping and transportation firm-and a venture controlled by Yasser Ibrahim, a Syrian businessman with interests in real estate, cement and tourism.
Analysis
The previous franchise was awarded in October 2009 to CMA CGM and Souria Holdings, an investment group headed by Haitham Joud-a prominent Latakia-based businessman. In March 2019 the operators were told that the contract would not be renewed on expiry in October 2019 but would be awarded to Iran as part of a process of settling debts owed to the Iranian government for its economic and military support for the regime since 2013.
The Latakia container terminal has been profitable, and in early 2019, before the notification of the planned Iranian takeover, the port authority published an upbeat assessment of its prospects following a 14% year-on-year rise in throughput during 2018, to 332,532 TEUs, its highest level since 2012. In the first eight months of 2019, the terminal handled 219,401 TEUs, marginally more than in the corresponding period of the previous year.
The selection of Mr Ibrahim as the new local partner appears to indicate that the plan to hand the terminal to Iran has not been carried through. Were Iran to have secured an overt commercial role in running the terminal there would have been a risk that it would be targeted with EU sanctions, which the terminal's current operations are not subject to. Many of Syria's leading private business groups have been placed on US and EU sanctions lists, but these do not currently include either Mr Ibrahim or Souria Holdings.
Iran was keen to secure the contract, but the sanctions that would have fallen on the lucrative container terminal may have been enough discouragement. Instead, reports have been circulating that Iran has now set its sights on Syria's telecoms sector. Only two firms occupy the sector-the South African giant MTN and Rami Makhlouf's Syriatel. The Economist Intelligence Unit believes that following Mr Makhlouf's recent fall from grace, Syriatel will be restructured, in which case Iran would have an opportunity to secure a foothold in the industry's leading operator.
Impact on the forecast
Our next forecast will factor in Iran's omission from the Latakia terminal deal, and its potential entry into the telecoms sector instead-which in our view is likely.
Added to timeline:
Syrian Civil War
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