The adage that “my enemy’s enemy is my friend” was a very simple concept (even if often misplaced) until Turkey put its own twist on that circular old saw.  Nowadays, Ankara has no problem in regarding my friend’s enemy as my friend. Turkey’s economic ties with Iran have strengthened considerably recently while Turkish companies also manage to turn a tidy profit in Kurdish Northern Iraq.  Trade with Iran was worth an estimated $8 billion in 2007, up nearly a fifth on the previous year. In the first month of this year, the rise was even more spectacular. Bilateral trade hit $700 million, an increase of 32.35% on the same month last year. So the visit to Ankara in March of Iranian Deputy Foreign Minister Alireza Sheikh Attar was a significant step in cementing ties.

Turkey’s mildly Islamist Justice and Development Party (AKP) government certainly looks more favorably towards the Islamic Republic than the staunchly secular, Atlanticist governments of the past. In return, Iran has backed Turkey’s incursion into Iraq, comparing the PKK to its own Kurdish separatist movement, the PJAK (a somewhat spurious but politically useful conflation). More controversially, according to some reports, Iran used Turkey’s military operations as an excuse to conduct its own, shelling villages in Northern Iraq that it believes shelter PJAK militants. This will not play well with Turkey’s American allies. The US apparently supplied the Turkish military with strategic assistance in targeting PKK camps but its patience will be finite if Turkey’s attacks continue.

Turkey also has a difficult circle to square in its relations with both Iran, and its arch enemy, Israel – long a Turkish ally. Prime Minister Erdogan has strongly criticized Israeli assaults on the Gaza Strip, but may be embarrassed by the belligerent stance of Sheikh Attar, who brought up the Gaza issue while in Ankara, and whose government issues regular condemnations of Zionism. Israel’s government, in turn, has accused the Turks of double standards, comparing their incursion into Gaza to Turkey’s in Iraq. But then Iran too knows something about double standards. Israel supplied Iran with spare parts for its ageing F-4 fighters during the eight-year war with Iraq, partly in exchange for allowing Jews out of Iran.

The middleman for all sides

Despite a current diplomatic situation that is – on the surface – uncomfortable at times, Turkey sees trade with Iran continuing to grow.  Barring an unforeseen crisis and an unlikely end to Turkey’s ability to see profitable opportunity in every direction, this is a reasonable forecast.  Nor does Iran seem to view Turkey’s relations with the Jewish state as an impediment to commerce.

In turn, Turkey is showing willingness to help Iran boost its trade with the wider world, currently limited by sanctions. In March, Saltuk Duzyol, head of Turkish energy firm Botafl, floated the idea that the proposed Nabucco pipeline, which will carry natural gas across Turkey to Eastern and Central Europe, could transport Iranian gas. This raised eyebrows in Washington — the US has long supported the Nabucco project, seeing it as a key to diversifying Europe’s energy supply away from an increasingly belligerent Russia but is publicly opposed to

using Iranian gas, due to its equally public bitter disagreements with Tehran. Admittedly, Duzyol also raised the possibility of transporting Russian gas, which would seem to defeat the whole object of Nabucco.  That puts into question whether Turkey’s European partners in the pipeline project are receptive to his suggestions – or indeed take them seriously. The Iran gambit may also alarm Turkey’s ethnic cousins in Central Asia, who were originally intended to be Nabucco’s suppliers (though it seems that Kazakhstan has been bought off by Russian President Vladimir Putin). Turkmenistan’s President Kurbanguly Berdymukhamedov passed through Ankara in March, and the pipeline and his country’s role in it were on the agenda. But Duzyol’s statement can be seen as notice that Turkey still considers Iran a useful trading partner, as it has for decades.

The friend-enemy-friend syndrome appears politically even less logical in Northern Iraq but nevertheless its economic pragmatism has solid roots in history. Turkish-owned trucks made a very profitable (and wholly unofficial) living running a supply chain in and out of Northern Iraq throughout the days of Saddam’s rule in the era of sanctions. On the Kurdish question, the simplistic “Turkey is very wary of all things Kurdish” becomes muddied when muddled with money. Iraq’s response to the eight-day Turkish incursion into the Kurdish region in the north of the country at the end of February, and air strikes that were resumed in mid-March, has been muted. Days after ground troops pulled out, Iraqi President Jalal Talabani, himself a Kurd, visited Ankara, his first trip since assuming the role of head of state. Murat Ozcelik, Turkey’s special representative for Iraq said that, after the visit, “relations between Turkey and Iraq will gain a new momentum and we will enter a period in which a new page will be turned.” While the visit was described as a “working” trip rather than “official”, which was seen as a minor but deliberate snub to Talabani, the meeting was indicative of Ankara’s eagerness not to leave bad blood between the two countries.

Fortunes lost and gained in Iraq

Turkey’s interest in Iraq certainly extends beyond the problems of Kurdish insurgents. The Turkish-Iraqi Business Council estimated before the US-led invasion in 2003 that the cost of the two Iraq wars to Turkey is around $150 billion.  However, trade has recently received an “immense” fillip, according to Council president Ercüment Aksoy, who thinks that “the future may be brighter than we had foreseen in 2002,” if the unitary Iraqi state can be held together. Ironically, Turkey may actually have benefited from the occupation of Iraq, as its firms have had access to public tenders and more freedom to operate in the market than had previously been the case. Indeed, reports in the Turkish press in March suggested that Turkey had actually made a net financial gain from the US invasion.  However, Aksoy has warned that a break-up of Iraq could lead to the balance tipping drastically into loss again. Furthermore, analysts say that the increase in the price of Iraqi oil exports to Turkey (from $4.1 billion to $12 billion for Turkey’s annual 175 million barrel purchase), means that Turkey has, in fact, still lost out.

Nonetheless, the lifting of the sanctions imposed between 1991 and 2003 has allowed Turkish firms to sell their goods – particularly basic staples and household goods – across the border once more. Interestingly, the opening of the Kurdish region in the north, and its relative stability, has paid off; Turkish exports to it are lively. Last year Turkish-Iraqi business volume, which includes construction and other services, was estimated at around $7 billion, which Turkey is looking to increase to $10 billion; bilateral trade overall is worth around $4 billion.  The bulk of the business volume is Turkish activity in the three northern provinces of Iraq. While the saber-rattlers in the military and the nationalist opposition in Turkey have urged that the army press further into Iraq, the government assuredly sees the need to keep relations with the autonomous northern region at least cordial, and economic disruption to an absolute minimum. The feeling both sides of the border seems to be that, once the necessary damage is adjudged to have been done to the PKK’s infrastructure in Northern Iraq, business as normal can resume. In short, where business is concerned concepts of friends and enemies take on an altogether different hue.

Peter Grimsditch is editorial director at the Oxford Business Group.

Once one of the cradles of humanity — Jericho, one of the oldest human settlements sits near its northern shore — today the Dead Sea has become a prime tourist attraction and a source of revenue for Jordanian industry.

The Dead Sea is a liquid enclave caught between the mountains of Israel and Jordan. At about 400m below sea level it is the lowest point on earth. “A million years ago, a major earthquake causing the Syrian-African Rift created the Dead Sea, which was deprived of its natural outflow to the sea,” said Dr. Ussama Qutaishat from Jordan’s Universal Labs. It is fed by freshwater from the Jordan River as well as by small springs and streams. As the Dead Sea water evaporates, salts accumulate in the lake and in its sediments, a natural process resulting in high salt concentration estimated at 33%, over 10 times higher than the Mediterranean.

From this wonder of nature many industries have sprung to life, with hotels and spas rising around the salty lake, and tourists flocking to the area all year round, seeking the many benefits offered by the Dead Sea. On the Jordanian side, industrial conversion of sediments into products is done by one company. Qutaishat pointed out, “On the industry level, the Arab Potash Company is responsible for the production and marketing of a variety of chemical products extracted from the minerals of the Dead Sea as well as raw materials for the cosmetic industry.”

An expanding industry

The Dead Sea cosmetics industry revolves around the mineral-rich salts and mud harvested from the lake. Components are mainly magnesium, calcium, bromides and potassium. These ingredients are known for treating a variety of ailments and skin conditions such as arthritis, rheumatism, psoriasis, eczema, stress and other disorders. “Minerals also disinfect, purify and nourish, deep cleanse and firm as well as tighten the skin,” Qutaishat added.

The Dead Sea industry in Jordan began in the late 1980s. According to the Dead Sea Cosmetics Cluster by the Jordan Ministry of Planning, by 2003 there were around 48 registered companies, 36 of which are export-oriented small and medium companies engaged in manufacturing Dead Sea products, with a total investment capital of $10 million, and giving jobs to around 750 workers.

“Jordan and Israel are the only two producers of Dead Sea cosmetics in the world but Israel has been engaged in this particular activity long before us,” explained Munir Haddad, international marketing manager at Rivage (Al-Mawared Natural Beauty Products Corporation). According to the Dead Sea Cluster, in 2003 Jordan sold 2.7 million tons of Dead Sea cosmetics, while Israel supplied the world with 29.6 million tons.

The Jordanian Dead Sea cosmetic industry caters mainly to foreign markets. Haddad estimates that around 60% of the company’s production is exported to more than 35 countries in North America, Europe, the Arab World and the Far East. The manager also explained that, whereas Israel’s Dead Sea cosmetic exports are worth about $200 million, Jordan generates less than 10% of that amount.

Both cosmetic companies agreed that local consumption of Dead Sea products is hindered by the reluctance of Jordanians to use local products and their unfamiliarity with the many benefits offered by Dead Sea product lines, a factor which may account for the industry’s focus on export. “The Dead Sea cosmetic sector is still relatively new in Jordan and remains a very challenging one due to the Israeli competition. It has also taken some time to develop as it has been slowed by red tape and bureaucracy. Nonetheless, perceptions are slowly changing as people start realizing the importance of Dead Sea cosmetics,” said Qutaishat.

According to Haddad, Dead Sea products are mainly marketed through hotels and spas, and can also be found in department stores, pharmacies and airport duty free sections. Qutaishat pointed out that as of this year, his lines will be available in five Arab airports.

However, cosmetics are not the only products derived from the Dead Sea. Other items include potash for the agricultural and chemical industries, while some international companies also use Dead Sea salt in saline solutions.

These industries are closely linked to the fate of the Dead Sea. In recent years, the surface of the sea has shrunk significantly with water levels having fallen by about 26 meters, or an average 90 centimeters every year, according to Dr. Sufyan Tell, former director of the Jordanian Department. Too much of the Jordan River’s water, the Dead Sea’s lifeline, is used for agriculture purposes and in towns.

“The Dead Sea originally consisted of two basins, a larger, deep northern basin and a shallow southern one, which are separated by a peninsula called Al-Lisan — meaning ‘the tongue’ in Arabic,” Tell said. Today, the southern basin is essentially dry and includes evaporation ponds used by Israeli and Jordanian potash plants. Ecological damage to the Dead Sea lies in the loss of fresh water springs, river bed erosion, and the further decline of sea levels, which are likely to cause more severe environmental, cultural, and economic damage.

Reviving the Dead Sea

In 2005 Jordan, Israel and the Palestinian Authority publicly committed themselves to studying the feasibility of transferring water from the Red Sea to the Dead Sea, via a canal — dubbed “Red-to-Dead” — as a solution to stop the rapid decline of water levels in the Dead Sea. The project envisions desalinating water and generating energy for Jordan, Israel, and the Palestinian Authority by putting to use the 400 meter difference in elevation between the Dead Sea and the Red Sea to produce electricity.

“However, the project holds critical environmental and technical challenges and much of it will expand on Jordanian land. In addition, the Red Sea and Dead Sea waters will not mix properly, which will certainly alter water quality and structure in the Dead Sea,” Tell explained. The scientist expects the connection of the two seas to contribute to a layered effect in the Dead Sea rather than a deep mixing of the two solutions as a layer of seawater will come to rest atop the dense hyper-saline solution, leading to a change in water color. “The project will also negatively affect the industries derived from the Dead Sea, such as the Arab Potash company, which will be flooded while Israeli structures, built on higher grounds remain unscathed. The cosmetics industry will most probably be affected as well,” he believes.

Once the right level is reached, the rate of inflow would have to be adjusted to preserve the water balance between the fresh and salty water. Tell doubts that Jordan will truly benefit from the project, which is estimated to cost $4-6 billion and whose main positive effects will be on the Israeli side.

However, with the Dead Sea’s water level continuing to fall and a decline of water consumption from the Jordan River out of the question, the Red-to-Dead Canal may be the only way to ensure that in a few more decades the Dead Sea will be nothing more than a dry, salt-crusted hole in the ground.

Look at any map of maritime shipping routes and there are two geographically ideal ports for Iraq-bound goods: Umm Qasr for ships from Asia, and Lattakia/Tartus in Syria for cargo from Europe, the Americas and Africa.

Maps, however, do not convey the realities on the ground, with the obvious points of entry to Iraq fraught with complications. Umm Qasr’s ports are in a state of infrastructural disarray, shippers report corruption and theft, and some $13 billion is needed for the first stage of a the new ‘Larger Port’. Further billions are needed for the new Al-Faw port, and the other four harbors in the Shatt al-Arab all require serious upgrades.

Kuwait, a potential contender for major trade hub status with Iraq, is currently hampered by customs, high taxation and foreign ownership issues in addition to inadequate port facilities, although the development of the $1.2 billion Bubiyan island port facility will change this in coming years.

All of this has left Iran, Turkey, Jordan and Syria to take up the slack as the main maritime and land-based trade routes into beleaguered Iraq. The Islamic Republic, however, is benefiting in terms of exporting Iranian goods and machinery, Turkey likewise, leaving much of the maritime trade for Iraq to come through Jordan’s Aqaba port — logistically far from Iraq, particularly the urban zones of the Jazira — and better geographically positioned Syria.

Up and down trade

Syria, despite its proximity to Iraq, has not exactly pushed the boat out to capitalize on the geographic attributes that make it a natural trading partner with its easterly neighbor and a major transit route from the West and Africa. Official trade figures from 2004-2006 are only indicative of one particular trend, declining imports from Iraq, from $88.7 million in 2004 to $18.7 million in 2006.

The trend for Syria’s exports to Iraq can be best described as a reverse bell curve, from $469.1 million in 2004, down to $254.6 million in 2005, and then surging to $626.8 million in 2006. With the figures for last year yet to be released, it is not known whether Syria’s exports spiked or declined in 2007, and it is also unapparent what caused 2005’s plunge in exports — conversations with public and private sectors having not made the picture any clear.

On a recent Executive visit to the Syrian-Iraqi border at Abu Kamal/Al-Qaim in the north-east, there was no traffic to speak of and locals reported minimum activity. This was not overly surprising given the state and size of roads from Deir al-Zor to the border. Major highway infrastructure is also absent on the Iraqi side of the border despite Abu Kamal’s strategic position 648 km from Lattakia and 403 km to Baghdad, making it one of the shortest routes to the Iraqi capital and immediate north of the country.

The state of Syria’s infrastructure does beg the question of why Damascus is not doing more to improve connections to Iraq, although the Logistics Performance Index released by the World Bank last year offers an idea. Out of 150 countries reviewed, Syria ranked 135th, and 15th out of 16 countries in the MENA region, ranking highest for domestic logistics costs and worst for ‘logistics competence’.

Considering Abu Kamal’s logistical difficulties, the south-eastern border at Al-Tanf is the more favored crossing, connecting to a major highway in Iraq’s Anbar province that also merges with Jordanian traffic to Ramadi and Baghdad, clocking in at around 955 km from Lattakia to Baghdad.

“For security reasons a lot of people take cargo to Aleppo and then to Northern Iraq to the Kurds, as they have established some form of security,” said Samir Hamod, manager of Maersk’s trade coordination office in Lattakia.

Goods are also transported from Aleppo by train on a rather circuitous route via Qamishle in the far north to Mosul. “It’s the best way, safe and lower costs,” said an official with a Lattakia-based logistics company who preferred to

remain anonymous.

Syria is to improve this route however, currently laying a railway via Deir al-Zor that will run to Mosul and on to Iran, although when the Iraqi side will be operational is far from clear (the first stage of a 284 km railway around Baghdad, slated to cost $8 billion, is expected to take six years to complete).

Syrian port activity (2006)

Syrian trade with Iraq

Border closures and inferior products

One reason for such unpredictable trade, aside from security on the Iraqi side, is the accessibility of the border crossings. “It’s hard to know about the borders, they are sometimes open, and at other times closed, so trade is good at times, bad at others,” said the logistics company official.

Indeed, according to a Voices of Iraq (VOI) report in February 2008 that quoted the head of Al-Qaim’s city council, the border with Abu Kamal was only re-opened in November 2007 after being closing for an undisclosed time while security improved on the Iraqi side.

Although trade has increased since then, local traders complained to VOI of second-level quality or expired goods entering from Syria. “Despite the Al-Qaim border now being open, I am still importing foodstuff items from Turkey because Turkish products are of a much higher quality and competitively priced when compared to similar Syrian products. Locally consumed products in Syria are high quality, and Syrians export low quality products to Iraq,” a trader is quoted as saying.

According to Jihad Yazigi, editor of the economic and business newsletter The Syria Report, Syria’s manufacturing sector has benefited from bolstered trade with Iraq, as following the 2005 Greater Arab Free Trade Area (GAFTA) pact local production began developing higher quality products and packaging.

“Usually the Syrian manufacturing sector has difficulties exporting, and Iraq is an easy market. It has given breathing space to a lot of manufacturers, with Iraqis coming and paying cash,” said Yazigi. He added that goods exported to Iraq are primarily foodstuffs and manufactured products.

Port development

Syria still has a lot to do in developing infrastructure for trade with Iraq, but its major ports are getting much needed investment. In February 2008, a cooperation agreement was inked between Syria and the Japan International Cooperation Agency to modernize and improve goods shipping and infrastructure at Lattakia’s port. A Chinese firm is also to install a gantry crane in the next three months.

Meanwhile, the Tartus International Container Terminal is being upgraded by a Filipino firm, ICTSI, which is also to manage the port as part of a 10-year concession.

According to Yazigi, “For Syrian decision makers the country’s position as an infrastructure route is so strategic that at the Tartus port they contracted a private company to manage it. This is new for the government, to encourage BOTs (Build Operate Transfer), and this is a significant contract.”

Although Tartus is geographically better suited for trade with Iraq, the port currently handles considerably fewer containers than Lattakia, with 38,649 containers in 2006 compared to Lattakia’s 471,970. Cargo weight at Tartus, however, is significantly higher, at 12.76 million tons as opposed to Lattakia’s 8.09 million tons.

But just as customs issues need to be ironed out at the Iraqi border, Maersk’s Homod said Lattakia’s port authorities need also need to streamline their inspections.

“Lattakia can handle a lot of containers but one problem we are suffering from is customs. A lot of commodities have to be inspected, strip searched inside the port so that causes congestion. The normal procedure at a terminal is to go to a warehouse and empty it there,” he explained.

Influx of Iraqis

Legislation and regulations are certainly not lacking for trade with Iraq to flourish, with bilateral agreements in place, gas and electricity networks in operation, and relations between Damascus and Baghdad warmer than they have been for 30 years. Turkey, Iraq and Syria have even agreed, just last month, to set up a joint water institute to share their water resources. Syria’s first private airline, Sham Wings, is also now flying to Baghdad, competing directly with Iraqi Airways.

“It’s not so much legislation [that needs to be amended] as attitude,” said Dr Nabil Sukkar, Managing Director of the Syrian Consulting Bureau for Development and Investment. “We are liberalizing trade, but it’s difficult to know what is happening on the ground. That has to be talked about rather than through legislation.”

As economists and businessmen point out, aside from official trade statistics there is minimal information about the scale of trade, what is traded, and where it is bound.

“We know the origin of containers but it’s difficult to determine where the cargo will go,” said Homod. “A lot of cargo is declared in transit, or to the free zone, and can then go to Jordan, Turkey, Iraq or Lebanon.”

Informal trade with Iraq is extremely high, as are inflows and outflows of cash to the 1.36 million Iraqi refugees in Syria. The number of refugees increased 19% last year, triggering inflation, higher rents and costing the treasury some $1 billion a year, but also strengthening ties.

“There has never been as strong a relationship between the two countries as due to the refugees — intermarriage, contracts and investment in factories, and a private university,” Said Yazigi. “A lot will also stay on when there is stability in Iraq.”

Syria’s trading heritage spans empires. But while the famed souks of Damascus and Aleppo still bustle with activity, a new shopping experience is being demanded: the air-conditioned souk, commonly known as the shopping mall. Unlike its neighbors, Syria has long been barren ground for shopping malls. The country has, however, undergone something of a retail revolution in recent years and the appearance of foreign goods and international retail chains is one of the most obvious signs of the country’s economic liberalization. Four shopping malls have opened in as many years and the same number are presently under construction. Upwards of six more are on the drawing board. All expect to find a warm welcome from a public which, until 2003, was banned from importing many foreign goods.

Syria’s new-found retail spirit has not, however, been without the odd hiccup. The Hejaz Souks project was to transform the central business district of Damascus, giving one of the world’s oldest trading hubs a shinny new commercial heartland. Yet three and a half years after the contract to build the 60,000 square meter commercial and retail development was signed, and two years after the multi-million project was expected to be finished, it remains a large hole in the ground.

Urban management problems

Work started on the five-story shopping mall, which will include a rail link joining the city center to the airport on a Build-Operate-Transfer (BOT) basis, in 2004. But little progress has been made since the foundations were dug three years ago. Urban management problems such as where to park cars and how to solve ever increased conjunction in front of the station, along with opposition from heritage groups concerned about the project’s impact on the character of the near 100-year-old Hejaz Station, has reportedly bogged down progress on the development which is being backed by the country’s largest holding company, Cham Holding.

“There has been a lot of opposition to the project from various NGOs, including the Friends of Damascus Society, to preserve the Hejaz building,” said Nabil Sukkar, managing director of the Syrian Consulting Bureau for Development and Investment.

But while the country’s flagship retail development has been tangled in delays, others are happy to take the title. Four shopping malls are now up and running in the country’s capital including the 35,000 square meter Town Center located on the southern outskirts of Damascus, the 8,000 sqm Cham Center situated in the recently developed up-market Kafer Souseh area, the 10,000 sqm Skiland shopping and entertainment venue incorporating Syria’s first ski-rink and the 2,500 sqm Damascus Boulevard, the country’s premier high end shopping address adjoining the Four Seasons Hotel. All are doing a brisk trade and have whetted the nation’s appetite — the core demographic of which is young — for the shopping mall experience. As Mohamed Awa, manager of Damascus Boulevard which opened last September, pointed out, “Syrians are no longer strangers to the shopping mall model, there is a big demand for this kind of shopping service and experience.”

The 55,000 square meters of dedicated shopping mall space in Damascus is still, however, far below that of other regional capitals. Amman boasts 200,000 sqm, Cairo 600,000 sqm, while Beirut’s City Mall and ABC mall by themselves provide more than four times the dedicated shopping mall space than what is on offer in Syria. And then there are those 1.3 million sqm in Dubai. “Syria is still quite underdeveloped in Western retail terms when compared with the leading Gulf states or even Jordan and Lebanon, despite the current economic downturn in the latter,” said Simon Thompson, head of Retail International.

That, however, is about to change. The next few years is set to see Syria come up to shopping mall par, with upwards of 10 malls being planned for the country’s two major cities of Damascus and Aleppo, several of which are vying to be the largest in the Levant. The next to open will be the Damasquino Mall, a 20,000 sqm enclosed mall centered on a hypermarket and adjoining the Cham Center in Kafr Sousah. Work has also begun on the high profile Eighth Gate development by Dubai-based Emaar Properties and Investment Group Overseas (IGO), an offshore company owned in majority by Syrian expatriate businessman Mouaffaq Al-Gaddah. The project — what is essentially a private city — will include a 55,000 sqm mall, along with a five-star, 15-story hotel, a similar tourist apartment building and a 30-story office tower, all spread over 300,000 sqm. The $550 million project is located in Yafour on the Damascus-Beirut highway.

More projects a coming

The company is also finalizing the details of its second major Syrian project, Damascus Hills, another multi-use development spread over 5 million sqm containing considerable retail space. Located on the northern outskirts of Damascus near the highway leading to Homs, early estimates have put the project’s total cost at more than $3 billion.

Construction has also begun on Yafour Gardens, a mixed-use development being backed by the Syrian-based Urban Development Group. The $120 million project has a built up area of 100,000 sqm and will include a hotel, furnished apartments, sporting facilities, shopping mall and supermarket.

Another Gulf heavyweight, the Majid Al-Futtaim Group, is backing a $1 billion integrated tourism city in Sabboura on the outskirts of Damascus. The project will have a built up area of 1.5 million sqm and contain a 200,000 sqm shopping mall boasting some 350 retail shops. When completed the mall is set to be the largest in the Levant.

Souria Holding, one of the country’s new holding companies, is also backing a number of high level developments. The company is behind plans to develop the Baramkeh area in central Damascus, turning the former transport hub into a mixed-use development including a five-star hotel, serviced apartments, office tower and considerable retail space containing a hypermarket and cinema. The $280 million development will be located on 3,700 sqm of land, with a built up area of 260,000 sqm.

The company is also backing a $70 million, 49,000 sqm mixed-use development on the Mezzeh Highway in Damascus which is expected to include around 17,400 sqm of retail space. In addition, it recently signed a BOT contract with the City Council of Aleppo to build and develop Aleppo’s Gate, a 300,000 sqm development that will include a shopping mall and new transport hub for the city. The project is expected to cost $60 million. The company has also finalized a deal with the Middle East hypermarket retailer Spinneys to establish outlets in each of its retail developments.

Finally, Mövenpick Hotels and Resorts will manage a five-star hotel in a 49,000 sqm complex, again in the Kafr Sousah area, of which 6,300 sqm will be dedicated to retail space. A further 75,000 sqm tourism development to be constructed next the Sheraton Hotel in Damascus and, also, contain a shopping mall.

Adding to the retail boom

Numerous factors are driving the country’s retail boom. The 2003 decision allowing the import of foreign goods has seen an ever growing array of international brands appear on Syrian shelves. The successful move by Syria’s garment industry to begin producing international clothing brands under license has also seen a number of high profile clothing lines appear throughout the country and Syria’s new malls are heavy in clothing outlets. “Greater consumer confidence in Syrian manufactured garments, gained from the production of clothing under the license of international brands since the early-1990s, has preempted the shift from the souk to the high street,” a recent report by Colliers International on Syria’s retail sector found.

Syria’s withdrawal from Lebanon — and the subsequent political tension between the two countries — has also aided the country’s retail conversion, with more affluent Syrians choosing to spend their pounds in Damascus rather than Beirut, generating a viable retail market. “Before, the closest market was Lebanon,” Muhannad al-Mallah, general manager of the Damasquino Mall, said. “These days, not a lot of people are going there. They are excited to find the kinds of brands they found in Lebanon right here.”

The country’s young demographic is also starved of leisure amenities and shopping — or window browsing at the very least — is fast becoming a national past time. “The popularity of shopping and dining as a key leisure activity in Syria for both the middle and high classes and increases in consumer purchasing power have also stimulated demand for retail malls with strong brand representation,” Colliers International concluded.

Syria’s retail sector is becoming an increasingly important driver in the national economy. The sector is estimated to employ 27% of the country’s workforce and stands as the third largest contributor to GDP at 17%. It is also one of the main reasons 4.8 million day visitors from neighboring Arab countries, including 1.8 million from Lebanon, crossed into Syria in 2006, the last year hard figures are available.

Yet obstacles remain. The most common complaint being the high tariffs levied on many imports, which can reach as high as 50% on some items, hampering the development of high end shopping. “That’s why we are trying to choose middle range brands,” al-Mallah said. “The high-end would be too high with tax.” A lack of diversification among outlets, particularly clothing brands, has also been singled out as a weakness. The rising cost of raw materials is also seeing the costs of projects throughout Syria balloon.

For now, however, its full steam ahead — the simple guide being, if you build (and air-condition) it, they will come.