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--On 02 November 2000, 20:57 -0600 email@example.com wrote: > Stratfor.com's Global Intelligence Update - 03 November 2000 > _________________________________________________ > > _________________________________________________ > > Summary > > Oil may once again flow in the pipeline connecting Iraq and Syria. > The pipeline could produce up to $1 billion in revenue for the > Syrian government. This would help stabilize the economy and > President Bashar al-Assad's political base but dampen his > government's appetite for economic reform. > > Analysis > > Syria and Iraq have agreed to re-open the petroleum pipeline > between the two countries in November 2000. The Middle East > Economic Survey reported the pipeline, closed since 1992, would > open in the middle of the month and export about 200,000 barrels of > Iraqi crude per day. The opening would be a boon to Syrian > President Bashar al-Assad. Pipeline profits will help keep the > Syrian economy afloat and Assad in power. > > The line reaches from Kirkuk, the heart of Iraq's northern > oilfields, to the Syrian port of Banias. The pipeline had a > capacity of over one million barrels per day (bpd), but Syria shut > it down in 1982 at the start of the Iran-Iraq war and it fell into > disrepair. Politically estranged for nearly two decades, Syria and > Iraq have fixed the pipeline and their bilateral relations over the > last few years. The biggest step was opening an Iraqi interests > section in Syria in February of this year the first diplomatic ties > between the two countries in 19 years. > > Syria won't actually export Iraqi oil. Rather, Damascus will > receive about 200,000 bpd of Basra Light crude, to process in local > refineries. Syria will then export an equivalent amount of Syrian > Light crude. The kicker is that Syria will buy the Iraqi oil at > reduced prices, but will export Syrian oil at market prices. > > _______________________________________________________________ > > For more on the Middle East, see: > http://www.stratfor.com/MEAF/default.htm > _____________________________________________________________ > > Iraq won't maximize its profits on the deal, but simply finding > another export route for its oil is well worth it. U.N. sanctions > forbid opening the pipeline, but the Security Council is unlikely > to punish Syria. > > How much Syria will pay for Iraqi oil is unclear, but Baghdad has a > similar arrangement with Jordan. Amman has no oil resources, and > imports 94,000 bpd from Iraq at sweetheart prices averaging about > $9.50 per barrel, according to the U.S. Department of Energy. Quite > a discount, when current oil prices hover around $30 per barrel. > > A conservative estimate might put Syria's purchase price at $15 a > barrel. That leaves about $15 of profit for the Syrian government > per barrel of oil at current prices. This comes to nearly $1.1 > billion in annual revenues, which will undoubtedly go straight into > Syrian government coiffeurs. This amount is about 5 percent of > Syria's gross domestic product (GDP), according to World Bank > figures. > > President Assad is most likely to use the windfall to finance his > new job creation plan, announced in early October. The five-year, > billion-dollar plan is to create 440,000 jobs for unemployed youth > between the ages of 18 and 24. The plan seemed ludicrous when first > announced; Syria simply didn't have the money to fund it. But > Damascus may have the cash when the pipeline opens. This is good > news for Syria's youth and for Assad's somewhat tenuous hold on > power. > > Syria's economy definitely needs help. GDP has plunged by more than > 20 percent since 1995. The country had two years of recession > caused by low oil prices and a severe drought. Growth should resume > in 2000, but only at a rate of about 2.2 percent. But the > population is growing fast about 4 percent a year and economists > estimate Syria needs an annual growth rate of about 5 percent to > make progress. > > __________________________________________________________________ > > For more on Syria, see: > http://www.stratfor.com/MEAF/countries/Syria/default.htm > _____________________________________________________________ > > Low investment, an overvalued currency, government subsidies, and a > hard currency shortage have crippled the economy. Large, state- > owned corporations continue to control 40 percent of the national > wealth and strategic sectors of the economy, including oil, > electricity and banking. The Syrian government claims the > unemployment rate is 5 percent; some Western observers say the rate > is four times that high. > > The existing economy relies primarily on oil exports, which account > for 55-60 percent of export earnings and one-third of GDP, > according to the U.S. Energy Information Agency. But production has > declined over the last 5 years; many of the fields have reached > maturity and further exploration is slow. Some predict Syria will > need to import oil within a decade. > > The other major source of income for the Syrian government and the > one that keeps it in power is the profit from drug smuggling > through Syria and Syrian-controlled Lebanon. Syria cut back its > drug production in the mid-1990s under heavy U.S. pressure, but > Damascus still acts as a transit station for narcotics flowing to > Europe from Central Asia, as well as into Egypt and North Africa, > Israeli intelligence sources estimate the Syrian government rakes > in about $1 billion a year, according to the Jerusalem Post. Hafez > al-Assad used the money to enrich allies and buy off opponents; the > younger Assad is likely to follow his lead. > > With oil money to keep the masses quiet and drug money to appease > his potential rivals, Assad may have bought his regime a measure of > stability. But that may be bad news for the Syrian economy in the > long term, as the money may allow Assad to postpone difficult but > desperately needed economic reforms. > > _______________________________________________ > > (c) 2000 Stratfor, Inc. > _____________________________________________ > > > SUBSCRIBE to the free, daily Global Intelligence Update. Click on > http://www.stratfor.com/services/giu/subscribe.asp > UNSUBSCRIBE by clicking on > http://www.stratfor.com/services/giu/subscribe.asp > _______________________________________________ > Stratfor.com > 504 Lavaca, Suite 1100 Austin, TX 78701 > Phone: 512-583-5000 Fax: 512-583-5025 > Internet: http://www.stratfor.com/ > Email: firstname.lastname@example.org > > > > > > > > > > > > > > > > > > > > > > > > > > > > > -- > ----------------------------------------------------------------------- > This is a discussion list run by the Campaign Against Sanctions on Iraq > For removal from list, email email@example.com > Full details of CASI's various lists can be found on the CASI website: > http://www.casi.org.uk ======================================================= 'I like getting into hot water - it keeps me clean.' Chesterton ------------------------------------------- 'The truth which sets men free is often the truth they would rather not hear.' ------------------------------------------- Fiorella Sultana De Maria, New Hall College. Telephone: (01223) 524 588 Mobile: 07939 135760 -- ----------------------------------------------------------------------- This is a discussion list run by the Campaign Against Sanctions on Iraq For removal from list, email firstname.lastname@example.org Full details of CASI's various lists can be found on the CASI website: http://www.casi.org.uk