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Robert Berke

Robert Berke

Robert Berke is an energy financial analyst with experience as a government consultant to the State of Alaska.  

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The Rationale Behind Russia’s Withdrawal From Syria

As reported around the world, Russia’s decision to greatly reduce its military presence in Syria, coming as it did with little warning, has left the world struggling for explanations.

After having rescued the Syrian Government’s position in Syria from certain defeat and securing a partial truce along with the onset of an imminent peace conference, the partial withdrawal is seen by many as a message to the Assad government to not take Russia’s military aid for granted, and to be more flexible in the upcoming peace negotiations.

If we assume that all wars are essentially trade wars grown large, and in the Middle East, they almost always involve energy, then the Russian gambit in Syria can be viewed from a different perspective. Russia’s economy is currently in recession, partly as a result of western sanctions, but much more seriously hurt by the crashing of energy prices. Related: Is The Latest Rally Yet Another False Start?

Russia’s warming relations with Saudi Arabia has helped to bring about an OPEC-Russian sponsored freeze in oil production, with only Iran refusing to comply. With the Syrian withdrawal, Russia has tempered a major political feud with the Saudis over Russia’s support for Assad, a move that at once increases the prospects for a Russian-Saudi agreement on oil production cutbacks.

There are also many who think that Russia is also increasing pressure on its allies to be more flexible, not only in peace talks but also oil production cuts. With the withdrawal of the Russian protective air shield, Iran and Hezbollah’s ground forces in Syria are suddenly exposed to the threat of Saudi and Turkish air attacks. Will the threat of a looming military catastrophe in Syria force Iran to comply with production cuts?

Many oil insiders believe that after decades of punishing western sanctions, Iran’s oil industry is in no condition to meet its avowed quota for production, so that an agreement on cuts might cause little sacrifice.

Russia’s actions may well have staved off other threats to its business. Recall that Robert Kennedy Jr., the nephew of the slain U.S. President, recently published an article in Sputnik, claiming that the major reason for the west’s attempt to overthrow the Assad government was to build a natural gas pipeline from Qatar that traversed Syria, capturing its newly discovered offshore reserves, and continued on through Turkey to the EU, as a major competitor to Russia’s Gazprom. Related: OPEC Production Declines Despite Iran’s Efforts

By re-establishing the Assad government in Syria, and permanently placing its forces at Syrian bases, the Russian’s have placed an impenetrable obstacle to the development of the Qatar gas pipeline. Russia has also placed itself at the nexus point of other new offshore gas discoveries in the Eastern Mediterranean, including Israel, Cyprus, and Greece.

It’s not hard to imagine a new Russian pipeline to Europe serving these new partners. Could easing of sanctions also lead to the implementation of the long-stalled plans of Gazprom for a second pipeline under the Baltic Sea to Germany for Russia and its partners, Royal Dutch Shell, Germany's E.ON, and Austria's OMV?

If so, we can be assured that the U.S. will be in fierce opposition to any such plans. As George Friedman, founder of Stratfor has stated, the American’s worst European nightmare is an alliance between Germany and Russia. Related: Oil Won’t Stage A Serious Rebound Until This Happens

The timing of the Russian withdrawal could not be more fortuitous, as it occurs at the very pinnacle of the European refugee crisis, a crisis that was caused by Europe’s backing of the Saudi-Turkish attempt to overthrow Assad. For the first time in four years, the truce in Syria offers respite for Syrian refugees, fleeing from constant bombardment and attacks, and raises prospects for increasing security within their homeland.

Is this part of the Russian Syrian gambit? Is Russia gambling on receiving some modicum of European gratitude for helping to stem the flight of refugees to its borders, with the pay-off in terms of easing sanction and enabling its long stalled pipeline projects to be completed.

No, Putin could not possibly be so calculating, could he?

By Robert Berke for Oilprice.com

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