The American political leadership may not have been able to connect the dots on a withdrawal in Syria, but it’s really quite simple:
1) Americans step aside
2) Turks swarm across the border and attack Kurds
3) Kurds cut a deal with Assad and the Russians for protection
4) Assad gets his oil back, because it’s all in Kurdish-controlled territory in the northeast
It renders sanctions rather null and void. It empowers Assad exponentially because if there’s one thing he’s desperate for its oil. It gives the last remaining chunk of territory back to Assad, with the exception of Idlib.
Now, conflicting reports are emerging about whether the Americans are actually going to leave Syria.
It’s occurred to Trump, no doubt with some prompting, that an abrupt exit will simply give Assad all of his oil back.
On Thursday, reports citing an anonymous “military official in Damascus” began to circulate to the effect that the Americans would stick by the key oil area of Dier Ezzor (Dier al Zor), home of the Omar oilfields.
This report originated with AMN, out of the Middle East. And despite the fact that the source is both unnamed and clearly not an American military source, Western media have also picked up the story in the fashion of the day.
As of late Thursday, there has been no confirmation whatsoever that the Americans have been ordered to reverse their decision and stick by the oilfields.
From the Western perspective, the worst-case scenario should be an ISIS resurgence in Syria’s oil heartland. The second worst-case scenario is a fully revived and empowered Assad regime backed by Russia and Iran.
The US has been impotent against both.
Who Will Get Syria’s Oil?
The Assad regime is desperate for oil, so the American withdrawal means they can move into Kurd-controlled territory without a fight--even more so now that the Turks have invaded. The Kurds have no choice now but to align themselves with the regime. They are, after all, highly pragmatic. They would put up a good fight against the Turks, but they would not likely best the Turkish military.
The Kurds controlled everything north of the Euphrates:
(Click to enlarge)
But the Kurds were already dealing in oil with Assad. Again, they are pragmatic. Despite the fact that the Kurds were the key American ally in Syria, the Kurds were supplying the Assad regime with crude through a Syrian broker targeted by US and European sanctions.
No one cares now. The Trump Administration has washed its hands of Syria.
Regime forces are likely to first take over the Omar oilfield.
Russia, which has the exclusive rights to extract oil in Syria from the Assad regime, will be eyeing the American withdrawal greedily. Since they’ve already cut a deal with the regime for oil extraction, these two agendas flow together.
Russia has long been working to secure Syrian oil for itself. It needs this oil--and pipeline access--to strengthen its position in the Eastern Mediterranean. Syria is the key to maintaining Russia’s control of the Mediterranean and getting out in front of any new gas projects that threaten its EU market share. Eventually, Europe’s gas is going to come from the Mediterranean: The question now is who will control that gas.
Supported by US military advisors and NATO aircraft, the Syrian Kurd SDF forces had succeeded in driving ISIS out of the territory and taking control of the oil-rich Deir Ez-Zor area. This entire area became a major threat to Turkey because it united a large collection of Syrian tribes and clans and ended up weakening Turkey’s ties with the Al Nusra Front. Turkey is now desperate.
Russia, Iran and Turkey are now going to war for Syrian oil and infrastructure. On paper, Russia has the exclusive rights to produce oil and gas in Syria. The regime has also given the Iranians the port of Latakia, much to Moscow’s dismay; plus, Syria is in substantial debt to the Iranians for credit for fuel. The Russians get the much smaller port of Tartus, which will probably be used for Syrian offshore gas facilities in the prolific Levant basin.
A resurgent ISIS could wreck everyone’s conflicting plans.
ISIS has been a rather diversified, integrated company.
As ISIS oil business dwindled in the face of Syrian Kurd fighting forces backed by American military support and Russian operations, the radical group relied on other avenues of funding, never putting all of its eggs in a single basket. That also means they’re never destroyed. They can regroup elsewhere.
In just a few years, the Islamic State leadership managed to accrue an estimated $6 billion by various means, with operations in both Syria and Iraq, making itself the wealthiest terrorist group in history.
In 2018, the US-led coalition fighting against ISIS said that 98 percent of the territory once claimed by the jihadist group across Iraq and Syria has been recaptured.
When it did hold territory, ISIS primarily generated its wealth from three main sources: oil and gas--which it said to have totaled about $500 million in 2015--taxation, extortion and robbery, including the 2014 looting of Mosul during which the Islamic State stole about $500 million from bank vaults--and there have even been indications that ISIS has floated investments in equities.
And when times are particularly tough, there’s always drug trafficking.
The area ISIS previously controlled in Syria was also rich in other natural resources, including phosphate, cement and sulfur, from which the group is believed to have generated up to $350 million. Likewise, wheat and barley were said to have generated some $200 million in annual income for the Islamic State. Related: Is This The End Of The Lithium-Ion Battery?
In 2015 airstrikes, US-led coalition forces destroyed more than 2,500 tanker trucks operated by ISIS, along with mobile refineries and other oil-related infrastructure. By 2017, ISIS oil production in Iraq and Syria had been cut to less than $4 million a month from a peak of $50 million in 2016.
Through its extortion and kidnapping ‘subsidiaries’, ISIS threatened commercial enterprises primarily in eastern Syria and western Iraq in sophisticated protection rackets. In 2014, the UN estimated that the group had generated up to $45 million the previous year in kidnapping for ransom alone.
It also taxed citizens in territory it controlled, particularly targeting farmers. At its peak, ISIS controlled some 10 million people. Some analysts estimate that these ‘taxes’ netted ISIS around $800 million annually, or around six times the estimated returns from selling oil.
Taxes included everything from “welfare” and “salary” taxes to road taxes, customs taxes for trucks entering Iraq at Syrian checkpoints; non-Muslim protection taxes, and a long list of others.
The thing is, ISIS doesn’t rely on territory for its economic survival today. It’s raised enough to invest and stash away. After all, controlling territories is expensive in terms of overhead.
In part, that’s because its surviving leadership may have smuggled as much as $400 million in cash and gold out of Iraq and Syria. The group’s extended network will seek to launder this money through front companies in the region, especially in Turkey. Related: The End Of The Asian Oil Product Glut
Since the defeat, the group is raising money through a range of new criminal activities, including but not limited to extortion, kidnapping for ransom, robbery and theft, drug smuggling and trafficking in antiquities.
ISIS is now a full-fledged business, and oil helped it get there.
In order to keep ISIS out, chaos cannot take over--and chaos is exactly what the Americans have unleashed.
Either Assad’s forces will have to cross the Euphrates and push the Kurds forward, where they would be left to their own devices against the Turks, or Russia will have to step in provide safe passage for the Kurds to move southward away from the Turks. That would come at the price of the Kurds returning territory to the regime.
If no deal is cut and civil war breaks out, it will be an open door for ISIS, and all that oil will be fair game--again.
By Julianne Geiger for Oilprice.com
More Top Reads From Oilprice.com:
- Electric Vehicle Adoption Overshadowed By SUV Boom
- The Single Biggest Threat To U.S. Oil Jobs
- Why Did Rick Perry Resign?