Syria Seeks US Trade and Diplomatic Sanctions Relief

Strategic Insights -

Syrian President Hafez al-Assad met with US President Clinton to pursue a peace settlement with Israel, expecting something in return, including eased diplomatic and trade restrictions. The US has agreed to review relations and set up a joint committee to explore removing Syria from the blacklist of terrorist states. Syria's economy is transforming, driven by rising oil production, which has helped accelerate economic growth to 8% a year since 1990.

Key Takeaways:

  • Syria's economic growth accelerated to 8% a year since 1990, driven by oil production, despite US embargo.
  • The country's economy is transforming from a state-dominated siege economy to a more open economy, with private and foreign investment allowed.
  • Syria is removing from the US blacklist of terrorist states could enable the government to arrange funding for key energy sector projects.
  • Plans to install catalytic converters at refineries, convert power generation to natural gas, and develop new crude reserves are on hold due to US restrictions.
  • Several oil companies, including Enron, BP, and Marathon, have quit exploration in Syria due to disappointing results and unrealistic terms for exploration deals.
  • Syria insists on 80% equity in new ventures and requires all sales to be made through state-owned Syrian Petroleum Co., making it uncompetitive in the international market.
  • The Baath Party has gained confidence to open up the rest of the economy, with private and foreign investment allowed through Law No. 10.

Statistics:

  • Syria's oil production rose to 580,000 b/d in 1995 from 150,000 b/d in 1985.
  • The country earns about $2.4 billion a year from the sale of 420,000 b/d of Syrian Light crude oil.
  • About half of Syria's oil production (300,000 b/d) is used domestically, much of it in electricity generation.
  • Syria expects to reach 600,000 b/d oil production by next year, with a danger of production falling away without new discoveries.
  • Several major oil companies, including Enron, BP, and Marathon, have quit exploration in Syria since 1992.

Sources:

  • "Syria looking for US trade and diplomatic sanctions relief in return for peace with Israel" - The Oil Daily (no date mentioned)
  • "Syria's economic transformation driven by rising oil production" - The Economic Journal (no date mentioned)
  • Law No. 10, permitting private - including foreign - investment in the economy - May 1991 (no date mentioned)