Vested Interests in Syria

Vested interests make Syria oil unlikely EU target

By David Brunnstrom

BRUSSELS | Wed Aug 10, 2011 4:36pm BST

BRUSSELS (Reuters) - Despite worsening bloodshed in Syria, there appears little prospect that Western countries will put teeth in their sanctions on Syrian President Bashar al-Assad any time soon by targeting his vital oil industry.

While states like Turkey and Saudi Arabia have recently increased political pressure on Syria, dissidents and analysts say divisions among European states and a reluctance to sacrifice commercial interests have emboldened Assad in a crackdown that activists say has killed more than 1,600 people.

Syria produces about 400,000 barrels of oil a day, exporting most of about 150,000 barrels per day to European countries including the Netherlands, Italy, France and Spain.

While small on a global scale, analysts and activists say the exports bring in millions of dollars a day to Assad's government, accounting for perhaps 30 percent of its income.

Despite daily increases in the protester death toll and the use of tanks against anti-government demonstrators, the European Union has continued to take an incremental approach to sanctions.

In four rounds since March, it has subjected 35 individuals including Assad to asset freezes and visa bans and targeted military-linked firms linked to the suppression of dissent.

But it has not touched the oil sector, where big European corporations Anglo-Dutch Royal Dutch Shell and France's Total are significant investors.

Last week, after the EU expressed shock at the "massacre" of civilians in the town of Hama, EU ambassadors agreed to expand the sanctions list in coming weeks and said consideration should be given to expanding the "scope" of restrictions.

However, EU officials say that any more robust steps against Syrian economic interests that might include the oil sector are unlikely even to be discussed before the end of the EU's August summer break.

At last week's ambassadors' meeting Germany called on EU states to "explore options on economic sanctions" while adding that it was "not sure" itself if this was the best approach.

Britain said the bloc should "start the process of considering" economic sanctions and France raised the possibility of sanctions against the Commercial Bank of Syria.

The meeting concluded by inviting the EU executive to draw up an "options paper," with the suggestion that this would "be good to have" before an informal meeting of EU foreign ministers in Poland on September 2-3, an EU official said.

VESTED INTERESTS

Such a lack of urgency not only betrays vested EU interests, but has played directly into Assad's hands, analysts say.

"Sanctions on the energy sector would be an obvious next step," said Clara O'Donnell of the Centre for European Reform.

"But if there were a real interest to do that it would probably have gone further already -- the level of violence the Syrian authorities have been inflicting has been quite prolonged now and it's striking to see how slow the exploration of widening sanctions has been," she said.

"Clearly the desire of European policy makers not to damage the economic interests of some firm may be a playing a role."

Rime Allaf, a Syrian Middle East expert at Chatham House, said the EU approach had likely worsened the bloodshed.

"Making a noise about sanctions and not actually acting has given the regime a lot more self-confidence that it can literally get away with murder," she said.

Among arguments advanced by EU states reluctant to pursue economic sanctions is that they could increase the suffering of civilians, even though dissidents say more and more Syrians would stomach short-term pain for long-term gain.

EU states have also been unable to agree to declare that Assad has lost legitimacy and should step down, or to follow Italy's lead in pulling out its ambassador to Damascus.

"The main concern for us is to stop the killing," said a diplomat from one EU state. "But there are some strong arguments that economic sanctions will not really help. And there are some strong counter-arguments saying the opposite.

"So there is no unanimity for the time being."

A Swedish official said differing views on extending sanctions to the oil industry and financial institutions meant for now "the likelihood of a strong response appears small."

And while the United States might have wanted to go further, "they don't want to push the question if there aren't EU countries that also support it," he said.

Ausama Monajed, a spokesman for the Syrian opposition in Europe, called for sanctions to be extended to the Syrian oil sales and marketing companies Sytrol and MAHRUKAT, as well as to the Syrian Real Estate Bank and the Syrian Commercial Bank.

"By sanctioning the oil companies you would dry up the major sources of funding being used to buy bullets to kill people," he said, while warning of a campaign of increasing public pressure on EU governments and companies.

"If they want their logos associated with the images of 11, 12 and 13-year-old kids being shot in the head, then let it be."

Even so, it remains unclear how effective such a campaign might be, given limited European public interest in what is seen by many as just the latest Middle East unrest, and preoccupation with internal problems such as the euro zone debt crisis.

"It's unlucky for Syria that it's just the latest in country to go through this," said O'Donnell. "And the Libya episode has definitely made governments more cautious in their responses."

The lack of quick results from the Western intervention in Libya and of any guarantee that any Syrian transition would be smooth, or even friendly to Western interests, has killed even theoretical talk of a military option in Syria.

Again this has played into Assad's hands.

"It is very possible that Assad will remain in control," O'Donnell said. "The fact that he knows military action is completely off the cards means the Americans and Europeans have lost their bluff cards and can't even keep up the pressure by implying they might intervene," she said.

"Also Assad knows that particularly when it comes to the Europeans, they don't even have the military means to take forceful action because they are over-stretched elsewhere."

http://uk.reuters.com/article/2011/08/10/uk-eu-syria-sanctions-idUKTRE7794HZ20110810