2013-09-18 / Business News

Gas pipelines at the heart of the Syria problem

MONEY & INVESTING
jeannetteSHOWALTER, CFA

What is the real story behind Syria? The different twists to the Syrian crisis are widely known throughout Europe, thanks to the newspaper reporting of Great Britain’s The Mail and Globe and The Telegraph. It is similarly reported by Al Jazeera. It is not headlined in major U.S. newspapers.

Such side stepping has been the case — over several decades — when there has been U.S. military involvement in the Middle East. Not that our past involvement was unjustified, it’s just that the underlying reasons offered for our involvement most probably related to oil/energy issues and not exclusively humanitarian issues.

The Syrian crisis, the Syrian use of chemical weapons against its own people, the senseless death of thousands, Russia’s aggressive, center stage role and Russia’s dictation of foreign policy to the U.S. might well relate to an ongoing oil/energy dispute that involves many Middle Eastern countries and whose outcome will greatly impact the economies of Russia and Europe. As reported outside the U.S., there is a colossal abundance of Middle Eastern natural gas looking for new markets and needing a pipeline to be built for transporting the gas from the Persian Gulf into Europe. The proposed alternative pipeline routes would make some countries winners and others losers. The ancillary problem is that, in the Middle East, losers do not fade gracefully and Syria plays a pivotal role, as all of the pipelines would pass through Syria and require Syrian approval.

The gargantuan natural gas reserves in Persian waters are to be found offshore of two Middle Eastern countries, Qatar and Iran. These two physically close Muslim countries have very different agendas. What is in common is that both countries are each vying for Syria’s favor as each pipeline blueprint requires pipeline transit through Syria before reaching Europe. This natural gas pipeline debate is not a new discussion; certainly there were pipeline proposals made to Syria as early as 2009.

Mainland Europe is highly interested in getting an alternative to GAZPROM’s natural gas (the Russian national operating company) as GAZPROM delivers one third of Europe’s natural gas and virtually all of its pipeline gas. (Other gas comes to Europe by LNG tanker and requires the re-gasification of the liquid form of natural gas that was transported across oceans.) Germany, France, Austria, Switzerland, etc. would all love to have another natural gas pipeline source.

Russia has been highly interested that a competing pipeline NOT be built. Russia’s close relationship to Syria no doubt reflects Russia’s desire that Syria walk from any pipeline deal or that Syria be too internally and politically confused such that the pipeline gets further delayed. Russia will have a keen interest in supporting Syria until it can definitively cut a much better energy deal for itself.

Qatar, which is adjacent to Saudi Arabia, is very interested in reaching new markets for its superior gas finds in the North Field of the Persian Gulf. Qatar has proposed many pipeline routes but all go through Syria and most plans go from Qatar to neighboring Saudi Arabia then into Syria (Saudi Arabia’s neighbor) and then to Turkey (Syria’s neighbor). Clearly Turkey is highly interested in the pipeline being built on its soil.

Iran holds territorial rights to the Persian Gulf’s South Pars Field, which is adjacent to Qatar’s coastal reserves. Iran is highly interested in economic betterment and thwarting the effect of economic sanctions (plans effected internationally but at the initiatives of the U.S. and Israel, as Iran has been determined to develop a nuclear arsenal largely directed toward the latter.) Obviously, any economic benefit accruing to Iran is not good for the US, Israel and the other countries that have supported economic sanctions. The Iran pipeline would travel through Iraq and Syria and would obviate Turkey.

Saudi Arabia has lobbied for the Qatar’s proposed pipeline, as it would cross its country. It has also been suggested that the Saudi rulers want an unstable Bashar al-Assad out of power and a Saudi-installed puppet regime in Syria.

Iraq would want the Iran proposed pipeline.

As Syria is at the geographic crossroads for any and all proposed pipelines, Syria has been courted by all interested parties. Most recently, Syria decided against the Qatar pipeline and for the Iranian route. Saudi Arabia, Qatar, and Turkey did not like that decision. There is suggestion that some of the interested countries have offered sweetheart deals to powerful Russia to use its close connection with Syria to reverse such a pipeline course. There is suggestion that the several billions in rebel arms was financed by Qatar after Syria elected for a joint venture with Iran.

So what does that mean to the U.S.? To our citizenry, it might mean that once again our agenda in the Middle East has been disguised as humanitarian and once again we are playing international foreign policy poker with an unruly group of players with a winner take all, win at any cost, and take no hostages mentality.

With so many dogs in this fight, it might be unrealistic to think that the U.S. can play peacekeeper and that our humanitarian goals can be achieved. ¦

— Jeannette Showalter, CFA is a commodities broker with Worldwide Futures Systems. Find her on Facebook at Jeannette Showalter, CFA.

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