June 4, 2010 / 3:29 PM / in 7 years

Trade flourishes as Syria befriends old foe Turkey

ALEPPO, Syria (Reuters) - Turkish delicacies are unashamedly on display in Syria’s culinary capital. Aleppo merchants are switching to imports from Turkey, and buses ferry shoppers to an upscale mall across the border.

<p>Palestinians refugees living in Syria take part in a rally against Israel as they hold a poster of Syria's President Bashar al-Assad (R) and Turkey's Prime Minister Tayyip Erdogan, at al-Yarmouk camp near Damascus, June 4, 2010. REUTERS/Khaled al-Hariri</p>

A warming of once-chilly Turkish-Syrian ties has unleashed a one-way trade boom. A trade deal activated two years ago has cut tariffs and reduced smuggling. Visa requirements were abolished.

Turkey’s popularity in Syria soared after an Israeli raid on Gaza-bound aid ships in which nine Turks were killed on May 31.

“Turkey now has a stake in the Palestinian cause, and Syria stands to gain,” a diplomat said. “It will be more difficult for Israel to launch any military action against Syria.”

The furor over the flotilla interception has also deflected attention from Israeli and U.S. pressure on Damascus over its alleged arms supplies to the Lebanese Shi‘ite Hezbollah group.

Syrians have traditionally looked askance at their powerful northern neighbor, which ruled them during the Ottoman Empire, but many are now seeing secular Muslim Turkey, a NATO member with an Islamist-leaning government, in a new light.

“It’s time to shed the stigma we have had about Turkey. They’re no longer Ottoman, but a development model for the Arab East,” said Abdelqader al-Deiri, a Syrian businessman who now buys restaurant equipment from Turkey instead of Europe.

“Transport costs are lower, but Turkish goods do not compete on price alone. They make high quality,” added Deiri, who often vacations in Turkey. His eight-year-old son is learning Turkish.

“We have to admit that the Turks make better sweets than us. The pistachios and butter are better, so is the workmanship,” he said, munching on a baklava slice from Gaziantep.

Viewing Syria as a gateway to the Middle East, Turkey has moved in recent years to solve old disputes with Arab governments while becoming more critical toward Israel.

Ankara mediated indirect Syria-Israel peace talks that were broken off when Israel attacked the Gaza Strip in 2008.

“Syria is an important country as a growing market, a promising economic partner, plus it has an important place in regional issues,” Turkish ambassador Omer Onhon told Reuters. “So it’s only natural that our relations have improved.”

Yet the two countries, on opposing sides in the Cold War, came to the brink of conflict in 1998 over Syrian support for the PKK, a separatist Turkish Kurd guerrilla group. Work on demining the 800 km (500 mile) border began only two years ago.

Syria previously complained that Turkish upstream dams had worsened its water shortage. It long upheld a territorial claim against Turkey, which was awarded the province of Alexandretta (Iskenderun) by France in 1939 when Syria was under French rule.

Syrian maps still show the border province as part of Syria, but the government has indicated that a solution is possible.

Under Western pressure, Turkey has expanded the rights of its Kurdish minority in recent years, although clashes with the PKK continue. Syria has kept its own one million Kurds on a tight rein, denying citizenship to a substantial number of them.

The easing of Syrian-Turkish trade restrictions, however, is helping revive Aleppo, which has a big Kurdish population.

The once-cosmopolitan entrepot had been a prime casualty of the decades of border tensions that cut the city off from its natural hinterland in what is modern-day Turkey.

Turkish businessmen fill Aleppo hotels, eager to sell consumer goods to Syrians starved of them under the country’s previous socialist-style economic policies.

Joint ventures, mostly in jeans and textiles, with Turkish companies make up half of the $650 million investments at the nearby Sheikh Najar industrial zone, according to official data, but overall Turkish investment in Syria remains miniscule.

“Syria is a truly virgin market for us,” said Bilge Pakis, an engineer at Turkish waterpark specialist Polin, which operates in 70 countries.

ECONOMIC DISPARITY

Syrian presidential aide Hassan Turkmani said ties with Turkey had helped Damascus overcome Western attempts to isolate it, but acknowledged the challenges in befriending a powerhouse with an economy 10 times as big as Syria‘s.

Turkish exports to Syria, ranging from construction material to white goods and electronics, rose to $1.4 billion in 2009 from $1.1 billion the previous year. Syrian exports in return, mostly of oil, almost halved to $328 million in the same period.

“Syria has the potential and if we can learn from the Turkish experience and adopt the technology we can become competitive,” Turkmani said.

The burgeoning relationship with Turkey may also have encouraged Syria to snub an economic deal with the European Union that could have forced the government, controlled by the Baath Party since 1963, to discuss its treatment of political prisoners and reforms to the legal system.

Syria cited interference in internal affairs and potential economic damage as reasons for refusing to sign the deal last year. But not everyone sees this as a good thing.

“What we would have lost to the European Union we are now losing to Turkey,” one Syrian businessman said.

Last year the two countries signed 50 protocols ranging from energy to transport, which will consolidate Turkey’s push. Turkish officials, keen to see Syria ease container truck congestion at the border, say progress has been slow.

“Trade has been to our advantage. But more Turkish investments will come and Syrian labor is starting to go to Turkey,” one of the officials said.

Syrian businessman Fahed Tfenkji said Syrian companies could not rely only on lower labor costs to attract Turkish partners.

“A Turkish company comes and is pleased with the operation for the first six months,” he said. “But unfortunately the Syrian partner often cannot sustain the quality.”

Additional reporting and editing by Alistair Lyon

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