Former foes Turkey and Syria signed a free-trade accord and said they had agreed to put their differences behind them during a visit Wednesday by Turkish Prime Minister Recep Tayyip Erdogan.
Erdogan, at the start of a two-day mission, and his Syrian counterpart Mohammed Naji Otri signed the deal, which had been under negotiation for several years.
"Our links will develop in all fields in the future, especially in trade," Otri said at a joint news conference, while Erdogan said it "shows how far relations have come between the two countries".
"We are in agreement. We want a comprehensive cooperation in the region," said the Syrian premier, adding that Erdogan had also agreed to increase the flow of water into Syria.
Asked about disputes over sharing of scarce water resources in the arid region, Otri said those problems "are now forgotten", according to a Turkish interpreter.
Syria has in the past accused Turkey of taking more than its fair share of the waters of the Euphrates River, a charge which Turkey has denied, saying that Syria has not built enough dams to retain the water.
Asked about proposals to jointly build a dam over the Oronte River, which flows the other way, rising in Syria and entering the Mediterranean from Turkish territory, Otri said:
"If the dam project serves the interests of Syrian and Turkish citizens, then let's build it. That would demonstrate the exemplary relations that link the two countries.
A Turkish diplomatic source said Damascus lifted its reservations to signing the trade deal "after a certain accord" was reached on Turkey's sovereignty in the southern province of Hatay, formerly Alexandretta, on which Syria had claims.
The region was ceded to Turkey in 1939 when Syria was under French mandate, and Ankara has maintained that the issue of sovereignty is non-negotiable.
The free-trade accord is the cornerstone of efforts to boost the newly found friendship between the two former foes, which came to the brink of war only six years ago.
Trade between the two countries amounted to one billion dollars in 2003.
The "new era" in relations began when Syria's President Bashar al-Assad visited Turkey in January on the first such visit by a Syrian head of state, Erdogan earlier told reporters at Ankara airport.
Erdogan, whose delegation includes three ministers, among them Foreign Trade Minister Kursad Tuzmen, also met Assad and is to visit the northern city of Aleppo today before flying back home.
Turkey, a close ally of the United States and Israel, has pushed for closer relations with Syria since the US-led invasion of Iraq, despite warnings from Washington to limit its cooperation with Damascus.
Ankara and Damascus share concerns over the Iraqi Kurds' aspirations for self-rule in a future federated Iraq as they both have sizeable Kurdish communities of their own.
In 1998, the two countries nearly went to war over Ankara's accusations that Damascus was sheltering separatist Kurdish militants fighting the Turkish government.
Tensions eased when Damascus expelled Kurdish rebel leader Abdullah Ocalan from his safe haven in Syria and signed a security deal with Ankara, pledging to stop supporting Ocalan's Kurdistan Workers' Party (PKK).
As a result, Turkish intelligence operatives arrested Ocalan in Kenya, where he had fled. He was brought back to Turkey for trial and is serving a life sentence for treason.
The Israeli-Palestinian conflict, war-torn Iraq and the Kurdish question also figured in the Otri-Erdogan talks, officials said.
Turkey and Syria have since the March 2003 invasion of neighbouring Iraq signed a series of economic and security agreements, including one to jointly combat crime and terrorism.
Last year, Syria detained and extradited to Turkey 20 people wanted in connection with suicide-bombings that targeted synagogues and British interests in Istanbul.