Partitioning Syria: Oil, Gas And Peace

It’s the 101st anniversary of the Sykes–Picot Agreement and, in light of the non-stop Syrian Civil War, it’s time to ask, “How’s that working out for you?”

The Sykes–Picot Agreement formalized the British and French spheres of influence in the Middle East and set the stage for the French Mandate for Syria and the Lebanon, which ran from 1923 to 1946. In 1936, Ali Sulayman al-Assad, grandfather of Syrian President Bashir Assad, and other Alawite notables petitioned French President Leon Blum, in an attempt to stay under French protection: “The spirit of hatred and intolerance plants its roots in the heart of Muslim Arabs toward everything that is non-Muslim, and is forever fueled by the spirit of the Islamic religion. There is no hope that the situation will change. If the Mandate is canceled, therefore, the minorities in Syria will become exposed to a risk of death and annihilation…”

Al-Assad’s thoughts are timely in light of a proposal by Jamsheed and Carol Choksy of Indiana University for an “impartial partition plan” for Syria. The proposal would complement a cease fire with partition along ethnic lines (with concomitant population transfers) and no role for Russia, Iran, and Turkey who have acted as belligerents. The majority Sunni Arabs would get the provinces in the center and the north, the Kurds would take the northeast, the Alawites and Shiites would keep the Mediterranean coastal provinces, the Christians, Druze, and Jews would share the southwest and south, and the Yezidis would get an enclave on the Syria-Iraq border.

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The proposal recognizes that Syria’s many sects were never “bonded together by secularism and tolerance” and that the pitiless fighting since 2011 has only sharpened ethno-sectarianism. Autonomous areas may ensure a measure of security for minority Christians, Jews, Druze, and Yezidis whose cooperation with the Assad regime secured protection, and who will want to escape Sunni retribution.

The international community should seriously consider a proposal for independent ethnic states or autonomous areas and take the opportunity to avoid repeating the sectarian character of Iraq’s constitution which, Iraqis point out, was not drafted by Iraqis. This goes against the grain in the West, which “celebrates diversity” but has been dealing, often unsuccessfully, with strains bought on by uncontrolled immigration from Africa and Latin America.

Four factors will bedevil the negotiators of an ethnic autonomy arrangement: the oil and natural gas in the Levant Basin Province; two competing proposals for natural gas pipelines that cross Syria; Iran’s transport corridor through Syria, which Iran needs to support the Assad regime and its Lebanese ally, Hezbollah; and the Syrian refugees and internally displaced persons.

1. The U.S. Geological Survey estimates there are potential mean recoverable resources of “1.7 billion barrels of oil and 122 trillion cubic feet of [natural] gas” in the Levant Basin Province, which is offshore Israel, the Gaza Strip, Lebanon, and Syria. Israel is developing its fields and is becoming an energy exporter. Lebanon likely has a similar bounty and has passed legislation governing oil and gas exploration, but development has stalled as Lebanon and Israel are disputing a 300 square mile area both countries claim for their Exclusive Economic Zones. The gas in Gaza’s waters won’t be safe to develop until the Israelis and Arabs conclude a peace deal and the Palestinians adopt rigorous transparency measures due to the Palestinian Authority’s corruption. Syria has limited oil reserves in eastern Deir ez Zor province which have been productive through the civil war, and both the Assad regime and ISIS have benefitted from smuggling oil to Turkey.

The ethnic states/autonomous areas will likely demand a share of the oil and gas revenue from the fields offshore the two provinces controlled by the Alawites and Shia before they agree to a cease fire and partition. A solution may be to form an operating company with transparency as the foundation of its corporate charter or endow it with a governance structure informed by the Extractive Industries Transparency Initiative.

It will be important to keep track of the money as it will be needed for reconstruction, estimated to cost at least $180 billion. Russia and Iran have enough money to disrupt Syria, but not to rebuild it. The U.S. is focusing on domestic concerns and, if America is out, Europe will never be all-in. Turkey will want a piece of the action, but no one will tether a reconstruction effort to the authoritarian Pasha. The Gulf states have cash but may lack the contract administration skills to oversee rebuilding. China may want to include Syria in the One Belt, One Road transport network, but only if it gets security and natural resource guarantees.

2. Competing natural gas pipelines that cross Syria will be vital. In 2009, Qatar approached Syria about routing its planned 1,500 mile natural gas pipeline to Europe via Syria’s Aleppo province. Qatar wanted a pipeline to Europe as its gas transport modes were limited to Liquefied Natural Gas (LNG) tanker, mostly to Asia with limited spot shipments to Europe, or the Dolphin pipeline to the United Arab Emirates and Oman. Syria refused Qatar’s offer and, in 2011, Syria, Iran, and Iraq agreed to build a pipeline to connect Iran’s South Pars gas field to Europe. The pipeline would run from Assalouyeh, Iran to Europe via Iran, Syria, and Lebanon, with Syria as the center of assembly and production.

The projects are dead, but the obituaries haven’t been published. The physical risk is “at 11” so no lender will touch them, even if a long term purchase contract could be conjured up. The political risk is almost as bad, as pipeline transits would have to be negotiated with sub-national groups and maybe a surviving Syrian government with little remaining institutional capacity. With an abundance of gas discoveries in the region, there are other ways for a natural gas company CEO to get a headache than getting involved in Syria.

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But the projects aren’t useless; they have political utility. Their sponsors – Iran and Qatar – can manipulate the fighting and keep the politicians’ and warlords’ dreams of transit fees alive by saying “when the time is right”.

3. Iran’s Syrian corridor. Iran built a corridor through Syria to support the Assad regime and its Lebanese ally, Hezbollah. The route originally skirted the Syria-Turkey border before turning south to Homs and Latakia. In response to the U.S. troop build-up in the northeast, Iran shifted the route 140 miles south, mostly though Homs and Deir ez Zor provinces, which will be Sunni-controlled in the mooted partition.

Under partition the loss of the corridor through Sunni territory would be a strategic setback for Tehran as it would have to rely on ocean shipments, many of which have been intercepted, and air shipments, which are expensive and limit the size of the cargo. In addition, increased use of Iran’s airlines to support Assad and Hezbollah will expose them to increased Western sanctions – and may cripple the deals with Boeing and Airbus - at a time when Iran is trying to integrate with the world economy. This will cause tensions between the siloviki and the economic reformers which may dilute Iran’s expansionist efforts, to the benefit of Iran’s neighbors, and the victims of Assad and Hezbollah.

4. The last issue, and one that may swamp the others, is Syrian refugees and internally displaced persons (IDPs). There are almost five million registered Syrian refugees in Turkey, Lebanon, Jordan, and Iraq. Turkey has the largest contingent of refugees, almost three million, but also has the most developed economy and capacity to host them - for now. Jordan hosts over 650,000 Syrian refugees, and Lebanon hosts over 1 million, over twenty percent of the native population of 4.5 million. Iraq hosts over 200,000 refugees, all in areas controlled by the Kurdish Regional Government. There are six million IDPs, many caused by combat operations. Increased military activity by the U.S. and alleged forced displacement of civilians by U.S. proxies may be sowing the seeds of future trouble.

Jordan and Lebanon are least financially able to indefinitely host the refugees, and they have the most precarious ethnic balancing acts and lack the money to paper over the differences, so the priority should be repatriating the Syrians in Jordan and Lebanon. But repatriate them to where? The only lure may be a share of the oil and gas revenue allocated to the independent ethnic states or autonomous areas. Given that, Lebanon and Jordan won’t be interested in delays or excuses.

The above list isn’t all inclusive. Other potential troubles are:

- The status of the Golan Heights. If Syria goes away, will Israel annex the Golan and just get it over with?

- Absorption of the ethnic states/autonomous areas by neighboring states. Turkey won’t like a semi-autonomous Syrian Kurdish province; it might like a larger Iraqi Kurdistan even less. And in Iraq, will a larger Iraqi Kurdistan cause the Kurds to demand a greater share of oil and seats in the Council of Representatives?

- Russia playing the spoiler. Russia will make things difficult, on the ground and in the UN Security Council, unless it secures naval and air bases in the “Alawite entity” and its national champions Gazprom and Rosneft participate in the development of the Levant Basin. Both firms, however, are under Crimea-related sanctions so they may be weak players.

The word “unprecedented” has been thrown around a lot in regards to Syria. It may be time to apply that thinking to Syria’s partition. The default setting for the international community will be to try to patch the old Syria back together within the internationally recognized borders, but that is make-work for bureaucrats, the aid agencies and their contractors. The impartial partition plan for Syria will give each ethnic or sectarian group territory under its own control.

Should Syria be patched back together? Maybe, but that’s a question for the Syrians and the answer won’t be rendered in this political cycle. Reconstruction after America’s Civil War took 12 years, from 1865 to 1877, and that was for a fight between people of the same ethnic group and religion that weren’t determined to exterminate each other. In Syria, the final decision on unity will be made by the grandchildren.

By James Durso for Oilprice.com

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