Syrian President Bashar Al Assad seems to be on good terms with the new US administration, according to a report by Guardian in its internet edition.
The paper said that Colin Powell, the US secretary of state, has apparently scored an important success in his crackdown on Iraqi oil smuggling by closing the pipeline to Syria.
The 500-mile pipeline, which runs from the Kirkuk oilfields to the port of Banyas on Syria's Mediterranean coast, was built in 1953 but shut down in 1982 when Syria severed its relations with Iraq after it took the Iranian side in the first Gulf War (1980-19880. Last November, after a warming of relations between Syria and Iraq, there were reports that the pipeline had reopened and was being used to smuggle around 150,000 barrels of oil a day out of Iraq.
Under sanctions, oil exports from Iraq are illegal unless the revenue from sales is channeled through the UN's oil-for-food program. Revenue from smuggled oil, on the other hand, goes directly to the Baghdad regime - "to purchase their luxuries and not to the Iraqi people," as the British Foreign Office puts it.
According to the report, Syria and Iraq apparently thought they had found a loophole in the sanctions rules, because the plan was not to sell the Iraqi oil directly on the open market. Instead, Syria would buy the oil at half price ($10-$15 - £7-£10 - a barrel) and refine it for domestic use. This, in turn, would allow Syria to export an equivalent amount of its own oil at full price to the Mediterranean market.
As a result, Iraq could claim that its arrangements with Syria were no different from those with two other neighbors - Jordan and Turkey - which are already allowed to receive Iraqi oil outside the oil-for-food program.
But, according to the report, the Iraqi-Syrian maneuver was a different matter because, if successful, it would have doubled the volume of Iraq's illegal oil exports at a stroke. In fact, neither Syria nor Iraq confirmed that the pipeline had reopened; they maintained that it was simply being tested.
Official have said that a new pipeline was to be set up, while the worn out line was to be used temporarily.
Oil industry sources quoted by the Guardian believe that around 150,000 barrels per day (bpd) were passing through the pipeline. The giveaway was Syria's oil exports, which increased dramatically in December and continued to rise through January and February.
According to Petroleum Argus, which monitors oil shipments around the world, loadings at Banyas during February included 340,000 bpd of Syrian light crude (50,000 up on last year) and 160,000 bpd of Suweidi crude (double the customary amount).
Given that Syria produces only about 560,000 bpd of its own oil, this increase could only be accounted for by use of the Iraqi pipeline.
There are also claims that Iraq is delivering fuel oil by rail to a new 600-megawatt power station in Syria, east of Aleppo. Running the power station at full capacity would require about 30,000 tons of oil per week.
At the end of February, Colin Powell met President Bashar in Damascus and challenged him about the pipeline. After the meeting, Powell announced that the Syrians "plan to bring the pipeline and what is going through the pipeline, and revenues generated in that pipeline to be under the same kind of control as other elements of the sanctions regime."
Powell said that Assad had repeated this undertaking three times but Syria made no public comment whatsoever. The consensus among observers was that if the president had indeed made such a promise he probably had no intention of keeping it.
The word "plan" in Colin Powell's statement hinted that Syria might wriggle out of implementation. What nobody (except perhaps Powell) expected was that the pipeline would be shut down immediately. But that is what appears to have happened, according to the report.
Last Friday, Charlotte Bloom, who tracks Syrian oil for Petroleum Argus, said the provisional export figures for March show a sudden drop - back to last year's levels before the pipeline reopened.
But could Syria simply be stockpiling the Iraqi oil? Bloom thinks not. The Syrians do not have enough storage capacity, she was quoted as saying. The obvious conclusion is that someone has turned the taps off. The intriguing question is why?
From the Syrian point of view it was a win-win situation. Reopening the pipeline was worth a try because, if nobody objected strongly, Syria would gain around $1.5m a day. That is a useful sum for a poor country, though not worth going to the wall over.
If, on the other hand, there were objections, Syria could graciously agree to stop - and claim political rewards for doing so, said the Guardian.
President Bashar's handling of the affair has certainly moved Syria along the road to rehabilitation in the eyes of the west, and may help to earn it a rotating seat on the UN security council.
Reports said that the US, in return for the Syrian cooperation, has turned a blind eye to Syria’s military presence in Lebanon, which is rejected by many Lebanese.
President George W. Bush and Powell did not receive Maronite Patriarch Mar Nasrallah Sfeir during his stay in the state, which ends Tuesday.
Sfeir is vehemently opposed to Syria’s “mandate” over Lebanon. However, he was quoted by the Lebanese press on Monday as saying that opposition should not exceed peaceful means.
On the economic front, continued the Guardian, Syria can also look forward to an expansion of its legitimate trade with Iraq once the new "smart" sanctions take effect. In the long run, this will probably be more valuable than any short-term gains from illicit use of the pipeline – Albawaba.com
© 2001 Al Bawaba (www.albawaba.com)
