Syrian Oil: Foundation for Success or Toxic Asset?

Smuggling oil to Turkey risks compromising the partnership between the North and East Syria and the United States

The views expressed in this op-ed are solely those of the author and do not necessarily represent those of SyriacPress.

By Ahmad al-Khaled

Seeking Strength in Alliance

While the Syrian economy continues to collapse — the Syrian Pound having lost most of its value, the price on basic goods skyrocketing, and the number of people living below the poverty line reaching over 90 percent — the areas controlled by the Autonomous Administration of North and East Syria (AANES) have faired well compared to opposition and Syrian government territory, providing the most stability one can have in the country. The AANES has not only managed to avoid bread and oil shortages but also raised the pay for its officers, increasing salaries by 150 percent to compensate for the dive of the Syrian Pound.

This was made possible thanks to large-scale international support. Since 2014, the Syrian Kurds, who became the foundation of the Syrian Democratic Forces (SDF) and the AANES, have been the key ally of the U.S. and the International Coalition in the fight against the Islamic State (IS) and as such have been receiving help from abroad within the framework of postwar reconstruction. International humanitarian agencies and foreign states financed the reconstruction of Raqqa and Kobani, nearly destroyed in the fierce clashes with IS terrorists, as well as various projects in agriculture, health care, and education. The close relations with Western partners helped to secure multimillion dollar contracts despite the sanctions imposed against Syria that have forced a number of humanitarian organizations to suspend their activities in government and opposition areas alike.

Despite the current western support, the leadership of the AANES and the SDF seem fully aware of the fluid nature of international alliances and have taken special pains to leave room for maneuver. Kurdish officials have never cut ties with their “difficult” partners the Syrian government and Russia who proved somewhat useful in countering aggressive Turkish advances in the wake of the unsteady and often contradictory U.S. stance on keeping boots on the ground in Syria. In 2019, when U.S. President Donald Trump abruptly announced his intention to withdraw U.S. forces from all of Syria, giving Ankara a green light for the military operation ironically dubbed Peace Spring, it was the contact with Damascus and Moscow that allowed Syrian Kurdish officials to suspend, if not prevent, the Turkish offensive and mitigate the consequences.

Moreover, the leaders of the AANES and the SDF have consistently declared their readiness to start dialogue with the Turkish authorities. In his latest interview with the Crisis Group, SDF General Commander Mazloum Abdi confirmed the necessity of a mutually tolerant arrangement between the SDF and Turkey and consider it a top priorities.

Oil Runs Deeper

There is no doubt that the political and diplomatic prowess of Syrian Kurdish officials has had a considerable role in the tangible improvement of the situation in the northeast. However, the foundation for this success was largely laid by the control over the oil fields located in eastern Deir ez-Zor province.

The crude oil produced at these fields is bought by both the Syrian government and opposition, although the two continue to seek to diversify their sources of fuel. Syrian authorities receive sporadic supplies from Russia and Iran, while the opposition is provided with oil by Ankara. Watad, a shady Turkey-backed company, transports oil to opposition areas in Aleppo and Idlib run by the Turkey-backed Interim Government and the National Salvation Government affiliated to the powerful Hayat Tahrir al-Sham terror group.

Despite the scale of the Turkish efforts to hinder oil trade between AANES and opposition controlled areas (some reports indicate that the oil supplied to Idlib and Aleppo is acquired by Turkish companies in Ukraine), Turkey itself is unexpectedly among the largest importers of oil smuggled from North and East Syria. All the parties involved in the smuggling operation have serious reasons to avoid publicity, but both Kurdish and Turkish sources with first-hand knowledge of the situation have unofficially confirmed that Syrian oil from the northeast ends up in Turkey.

The powers involved in the smuggling have been able to keep the inner workings of the operation concealed for a prolonged period of time, which, given its scale, had to require considerable effort. The first noteworthy publications on the oil trade between parties in North and East Syria and Turkey appeared about a year ago and revealed that the fuel from the Deir ez-Zor fields was being transported to the Kurdistan Region of Iraq (KRI) and then exported to Turkey relabeled as originating from Iraq.

The exact details about the role of the KRI’s leadership leaked this August, shortly after the AANES inked an agreement on oil extraction, refinement, and exportation with a little known American company Delta Crescent Energy. The plan of the Americans was nearly identical to the already existing scheme and envisaged the use of shell firms controlled by the Barzani family to hide the origin of the smuggled oil.

A New Reality

The U.S.’s ill-timed urge to step on the often treacherous ground of managing Syrian natural resources may put the AANES in an uncomfortable position. The controversial policy of Donald Trump, who announced the withdrawal of the U.S. troops from Syria after a phone conversation with Turkish President Recep Erdogan, effectively allowing the Turkish offensive to be conducted with no obstacles, undoubtedly has its seedy side. However, it was the personal relationship between the American and Turkish leaders that most likely contributed to the White House turning a blind eye to the smuggling of the Syrian oil.

Unlike Trump, U.S. President-elect Joseph Biden does not seem intent on rebuilding relations with Ankara on the basis of personal agreements with Erdogan. More than that, he openly called the Turkish president an “autocrat” and voiced his intention to support opposition forces who could replace the Turkish leader and his inner circle. With this in mind, it can be assumed that Washington is likely to reconsider all aspects of cooperation with Turkey and look for leverage. The Syrian oil trade may come handy alongside sanction pressure regarding the S-400 deal and the continued use of Incirlik Air Base.

At the same time, although the Biden Administration is widely speculated to be “pro-Kurdish,” this does not imply that the new president’s team will ignore the undertakings of its partners it might find dubious. On the contrary, Washington’s special attention to the Kurdish issue may forge a new shape to its relations with the Autonomous Administration in which fuel smuggling to Turkey will no longer be allowed, especially if Ankara falls into disfavor.

Thus, the export of Syrian oil, which for a long time has been mutually beneficial to all of the participants, becomes a “toxic asset”. Perhaps, in anticipation of the imminent transition between U.S. administrations, some priorities should be reconsidered before this sensitive issue provokes a full-blown crisis impacting all the parties involved.

Ahmad al-Khaled is a Syrian journalist with first-hand knowledge of the Syrian conflict gained from a vast network of personal acquaintances and sources on the ground. He has published in the Jerusalem Post and Global Security Review. Ahmad al-Khaled currently resides in the United Kingdom.