Syria, Iran and Qatar push ahead with dedollarisation
Earlier this month, Iran announced the successful creation of a joint insurance company and a bank with Syria. The new entities aim to facilitate non-dollar trade and investment between Iran and Syria. In 2019, the joint bank was originally conceived but due to political, legal and financial difficulties, it never amounted to much. Following the Iranian President to Syria in May, it was agreed that financial entities will be established to facilitate trade and investment between Syria and Iranian businesses.
Three months following the trip, a joint insurance company was established by a consortium of Iranian and Syrian insurance companies. Furthermore, a joint bank was created of which 60% will be owned by Iran and 40% by Syria. Additionally, two private Iranian banks opened branches in Syria. The ultimate goal of both institutions is to offer financial and insurance services and guarantees to de-risk trade and investment and overcome currency hyper fluctuation.
If sustained, the new financial set-up is a milestone for the Syrian Iranian relations and will help overcome western sanctions using national currencies. Gulf countries are also competing with Iran for access to the Syrian market. Particularly, Saudi and the UAE have been lobbying the EU to ease financial sanctions on Syria. The UAE embassy in Damascus also recently inaugurated its first coordination office for foreign aid in Syria. However, with the persistence of western financial sanctions on Syria, it will be difficult for gulf countries to trade and invest meaningfully with Syria without de-dollarising the process.
Elsewhere in the region, an unusual actor is also pursuing capitalising on the regional de-dollarisation trend. CQUR, a Qatari international bank, previously owned by Russia’s VTB and recently acquired by Lebanese and Indian shareholders, is now offering bank accounts to Russian clients. Accounts may be established in Dubai, China, Hong Kong and Singapore and can only be operated in roubles, yuan or dirhams. CQUR is a small bank that was created in 2019 with less than 20 employees based in Doha. A visit to its LinkedIn page suggests it is run by Russian and Asian agents. It is unclear whether the Qatari state is facilitating such transactions although the bank is regulated by Qatar authorities. Experience from the UAE suggests CQUR license might ultimately get revoked. Earlier this year, the UAE cancelled the licence it granted last year to Russia's MTS bank, which was placed under British and US sanctions.
Overall, de-dollarisation in the region just started and many actors are seeking to turn the region into the financial hub for the newly emerging global financial multilateral architecture.