Ten Challenges that Will Determine Syria’s Fate in 2023

30 December 2022, Syria, Idlib city: Syrians take part in a demonstration against potential rapprochement between Türkiye and the Syrian government, after the Russian, Syrian, and Turkish defense ministers met in Moscow on Wednesday for talks for the first time since the war broke out in Syria in 2011. (dpa)
30 December 2022, Syria, Idlib city: Syrians take part in a demonstration against potential rapprochement between Türkiye and the Syrian government, after the Russian, Syrian, and Turkish defense ministers met in Moscow on Wednesday for talks for the first time since the war broke out in Syria in 2011. (dpa)
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Ten Challenges that Will Determine Syria’s Fate in 2023

30 December 2022, Syria, Idlib city: Syrians take part in a demonstration against potential rapprochement between Türkiye and the Syrian government, after the Russian, Syrian, and Turkish defense ministers met in Moscow on Wednesday for talks for the first time since the war broke out in Syria in 2011. (dpa)
30 December 2022, Syria, Idlib city: Syrians take part in a demonstration against potential rapprochement between Türkiye and the Syrian government, after the Russian, Syrian, and Turkish defense ministers met in Moscow on Wednesday for talks for the first time since the war broke out in Syria in 2011. (dpa)

Ten developments and files, both local and foreign, will determine the fate of Syria in 2023. The resolution of these files will have implications for years and perhaps even decades to come. They will determine the fate of the three “statelets” in Syria after they remained largely unchanged in the past three years.

1 – Turkish normalization: The Syrian and Turkish foreign ministers are expected to hold a meeting in mid-January to follow up on the military and security talks that were held in recent weeks. The aim is to reach Russian-sponsored joint arrangements in northern Syria, starting from the US zone of influence east of the Euphrates River.

Here, one must monitor the roadmap drafted by Moscow for Damascus and Ankara that should culminate in a meeting between Turkish President Recep Tayyip Erdogan and Syrian President Bashar al-Assad before Turkish presidential and parliamentary elections are held in June.

There is no doubt that the results of the roadmap will have massive political and economic repercussions on Syria and its surrounding. Will deals be struck? Will concessions over geography be made in exchange for political and economic gain?

2 – Kurdish concerns: One of the main common points of agreement between Moscow, Ankara and Damascus is weakening the Kurdish entity and their autonomous administration in northeastern Syria. They believe that these Kurdish institutions are an “existential threat to Syria and Türkiye.”

Joint Syrian-Turkish military operations and Russian pressure are being exerted to dismantle these Kurdish institutions and keep them at a 30-kilometer distance from the Turkish border.

One must monitor the positions of the Kurdish Syrian Democratic Forces (SDF) and Syrian Democratic Council (SDC) over these developments. The SDF has said that it has withdrawn its heavy weapons and Kurdish People Protection Units (YPG) from the border region in line with the 2019 Sochi agreement reached between Russia and Türkiye. It has, however, refused to pull out its Asayish security forces and local councils.

The SDF is banking on Erdogan’s loss in the elections and continued American support and military presence. Ankara is insisting on the dismantling of all Kurdish institutions and is not opposed to the deployment of Syrian border guards, forces and institutions on its border.

3 – US cover: The SDF has been allied with the US-led international anti-ISIS coalition for seven years. They succeeded in defeating the group geographically in Syria. The US, meanwhile, set up military bases in Syria that have given it clout in negotiations against Russia, in curbing Iran’s entrenchment in the war-torn country and in offering logistic support to Israel.

Contrary to the former administration of US President Donald Trump that had made a surprise call for the pullout of American troops in Syria, current President Joe Biden has maintained the troop presence. There are signs that the US, which is involved in the war on Ukraine, needs Türkiye and NATO and will not wage a war against Ankara because of the Kurds.

The American position must be monitored in wake of efforts to normalize relations between Türkiye and Syria.

Arab fold

4 - Arab normalization: The bilateral steps of normalization that had taken place between Arab capitals and Damascus, and the collective steps between the Arab League and Damascus, were somewhat put on hold in 2022. Syria did not attend the Arab summit in Algeria due to objections by influential Arab countries.

Some countries, such as Jordan, the United Arab Emirates and others, that had kicked off normalization also put these efforts on hold last year for various reasons, such as the bitter experience with Damascus in controlling its border and halting the smuggling of Captagon narcotic pills. They also yielded to American and western pressure to freeze the normalization. The US Congress had issued new resolutions against Damascus, limiting economic support towards it.

The Arab position must be monitored in 2023 in the leadup to the next Arab summit set for spring and in wake of the changes taking place in relations between Arab countries, the US, China and Russia. The position will likely be impacted by the normalization between Ankara and Damascus and Damascus’ behavior in regional files and its ties with Iran.

5 – Ukraine war: Russia’s involvement in the war has had a major impact on Syria. The conflict bolstered the cooperation between Ankara and Moscow and Presidents Erdogan and Vladimir Putin. Putin now needs Erdogan, whose country is now Russia’s economic and political gateway.

The Russian leader has also been pushing for a meeting between Erdogan and Assad so that they could resolve their differences and open a new chapter in relations. He has also been keen on Erdogan winning the upcoming presidential elections.

On the economic level, the Syrian conflict has largely been forgotten with the world focused on Ukraine. Donor funds are now being pumped in Ukraine instead of Syria, deepening its economic crisis.

6 – Israeli strikes: Israeli Prime Minister Benjamin Netanyahu’s hard-right government kicked off the new year by carrying out strikes against “Iranian targets” in Damascus International Airport, leaving the facility out of service for several hours.

Israel has carried out hundreds of similar raids against Iranian positions in Syria over the years. Last year, it expanded the scope of its attacks throughout the country. The Syrian Observatory for Human Rights documented 32 Israeli raids in 2022 that destroyed and struck 91 targets, including buildings, weapons caches and vehicles. Eighty-eight military personnel were killed and 121 wounded in the attacks.

One must monitor the impact of Netanyahu’s return to power on Syria in 2023. How will his hardline government tackle the Iranian nuclear file? What will happen to understandings reached between Israel and Putin and the hotline for military coordination between Tel Aviv and Russia’s Hmeimim base in Syria? How will Israel’s position on the war on Ukraine and the military cooperation there between Moscow and Tehran impact its stance on Syria?

Syrian-Iranian ‘divorce’

7 – Iranian alliance: Tehran believes that it helped “save” the Damascus regime when it intervened in the Syrian war in late 2012. It offered massive military, security, economic and financial support to Syria and wants a price for it. It has been stalling in “saving” the regime from its economic crises without extracting a price: “sovereign concessions” that include the establishment of permanent military bases in Syria and securing economic agreements related to oil, gas and phosphates.

Tehran is taking advantage of the economic crisis in Damascus, Moscow’s preoccupation in Ukraine, the possible normalization of relations between Türkiye and the Arabs with Syria, and the Israeli raids to reap major privileges in Syria.

One must observe the developments between Damascus and Tehran, most notably since Iranian President Ebrahim Raisi was set to visit Syria last week and amid claims of a Syrian-Iranian “divorce” or a “redefinition” of the relationship.

8 – Economic crisis: Syria has been destroyed by 12 years of war. The United Nations says half the Syrian population have been displaced from their homes and a third of them have sought refuge abroad. Ninety percent of the population is living in poverty, 80 percent suffers from lack of food security and 14.6 million people rely on aid. The cost of the food basket rose 85 percent in 2022 and the Syrian pound has lost over 80 percent of its value.

The catastrophe is massive. One must monitor the developments related to the extension of the international resolution on the delivery of cross-border humanitarian aid later in January. One must note Russia’s position on the resolution that is the lifeline for nearly four million people in northern Syria. The extension of the resolution would ease a financial burden on Damascus.

9 – Syrian collapse: Syrians living in government-held regions have said the situation there was worse in 2022 than what it was in 2011, the start of the conflict. They noted how the government has sought to shed economic costs by extending holidays and occasionally suspending work at institutions and hospitals.

There are deep concerns over a major collapse in Syria that will impact the government, army and security forces. The normalization of relations between Türkiye and Syria will have an impact on the economic crisis. Will the crisis force Damascus to take painful political decisions and implement UN Security Council resolution 2254 or will it lead it to loosen its relations with Iran?

10 - “Step for step”: UN envoy to Syria Geir Pedersen had focused his efforts in recent years on holding meetings of the Constitutional Committee, believing it to be the foundation for the implementation of resolution 2254. Russia, Türkiye and Iran had banked on this path through the Astana process.

In wake of the Ukraine war, Russia has made logistic conditions related to the Constitutional Committee that has led to the suspension of its work for months.

Pedersen therefore, revived an old suggestion – the “step for step” approach – that calls for Damascus to carry out measures in return for western countries to offer incentives and waivers. Syria had never showed interest in this approach, but this stance has now shifted. This was evident during the latest meeting held between Pedersen and Syrian Foreign Minister Faisal al-Mikdad in Damascus, which wants to know what is on offer and what countries are offering them.

Discussions are ongoing over simple issues, such as western countries taking steps to resolve the electricity problem or granting visas to Syrian diplomats, in return for Damascus taking steps towards prisoners and amnesty.

This path must be monitored, as well as the next meeting between Pedersen and Mikdad and the extent it may impact the normalization between Ankara and Damascus and just how committed it is to the envoy’s mission.



Iran's Revolutionary Guards Extend Control over Tehran's Oil Exports

Iranians drive as smog obscures the skyline in Tehran, Iran, 18 December 2024. EPA/ABEDIN TAHERKENAREH
Iranians drive as smog obscures the skyline in Tehran, Iran, 18 December 2024. EPA/ABEDIN TAHERKENAREH
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Iran's Revolutionary Guards Extend Control over Tehran's Oil Exports

Iranians drive as smog obscures the skyline in Tehran, Iran, 18 December 2024. EPA/ABEDIN TAHERKENAREH
Iranians drive as smog obscures the skyline in Tehran, Iran, 18 December 2024. EPA/ABEDIN TAHERKENAREH

Iran's Revolutionary Guards have tightened their grip on the country's oil industry and control up to half the exports that generate most of Tehran's revenue and fund its proxies across the Middle East, according to Western officials, security sources and Iranian insiders.

All aspects of the oil business have come under the growing influence of the Guards, from the shadow fleet of tankers that secretively ship sanctioned crude, to logistics and the front companies selling the oil, mostly to China, according to more than a dozen people interviewed by Reuters.
The extent of the Iranian Revolutionary Guard Corps' (IRGC) control over oil exports has not previously been reported.

Despite tough Western sanctions designed to choke Iran's energy industry, reimposed by former US President Donald Trump in 2018, Iran generates more than $50 billion a year in oil revenue, by far its largest source of foreign currency and its principal connection to the global economy.

Six specialists - Western officials and security experts as well as Iranian and trading sources - said the Guards control up to 50% of Iran's oil exports, a sharp increase from about 20% three years ago. The sources declined to be identified due to the sensitivity of the matter.

Three of the estimates were based on intelligence documents about Iranian shipping while others derived their figures from monitoring shipping activity by tankers and companies linked to the IRGC. Reuters was unable to determine the exact extent of the IRGC's control.

The IRGC's growing domination of the oil industry adds to its influence in all areas of Iran's economy and also makes it harder for Western sanctions to hit home - given the Guards are already designated as a terrorist organization by Washington.

Trump's return to the White House in January, however, could mean tougher enforcement of sanctions on Iran's oil industry. The country's oil minister said Tehran is putting measures in place to deal with any restrictions, without giving details.

As part of their expansion in the industry, the Guards have muscled in on the territory of state institutions such as the National Iranian Oil Company (NIOC) and its NICO oil trading subsidiary, according to four of the sources.

When sanctions hit Iran's oil exports years ago, the people running NIOC and the wider industry were specialized in oil rather than how to evade sanctions, added Richard Nephew, a former deputy special envoy for Iran at the US State Department.

"The IRGC guys were much, much better at smuggling, just terrible at oil field management, so they began to get a larger control of oil exports," said Nephew, who is now a researcher at Columbia University.
The IRGC, NIOC, NICO and Iran's foreign ministry did not respond to requests for comment.
RISK APPETITE
The IRGC is a powerful political, military and economic force with close ties to Supreme Leader Ali Khamenei.
The Guards exert influence in the Middle East through their overseas operations arm, the Quds Force, by providing money, weapons, technology and training to allies Hezbollah in Lebanon, Hamas in Gaza, Yemen's Houthis and militias in Iraq.
While Israel has killed a number of senior IRGC commanders over the past year, the oil specialists in its ranks have been able to continue their operations, two Western and two Iranian sources said.
The Iranian government began allotting oil, instead of cash, to the IRGC and Quds Force around 2013, according to Nephew.
The government was under budgetary pressure then because it was struggling to export oil due to Western sanctions imposed over Iran's nuclear program.
The IRGC proved adept at finding ways to sell oil even under sanctions pressure, said Nephew, who was actively involved in tracking Iranian oil activities then.
Iranian oil revenues hit $53 billion in 2023 compared with $54 billion in 2022, $37 billion in 2021 and $16 billion in 2020, according to estimates from the US government's Energy Information Administration.
This year, Tehran's oil output has topped 3.3 million barrels per day, the highest since 2018, according to OPEC figures, despite the Western sanctions.
China is Iran's biggest buyer of oil, with most going to independent refineries, and the IRGC has created front companies to facilitate trade with buyers there, all the sources said.
Oil export revenues are split roughly evenly between the IRGC and NICO, said one source involved in Iranian oil sales to China. The IRGC sells oil at a $1-$2 barrel discount to prices offered by NICO because buyers take a bigger risk buying from the Guards, the person said.
"It depends on a buyer's risk appetite, the higher ones will go for the IRGC, which the US designates as a terrorist group."
Two Western sources estimated that the IRGC offered an even bigger discount, saying it was $5 per barrel on average but could be as much as $8.
The oil is allocated directly by the government to the IRGC and Quds Force. It's then up to them to market and ship the oil - and work out a mechanism for disbursing the revenue, according to the sources and intelligence documents seen by Reuters.
NIOC gets a separate allocation.
CHINESE FRONT
One of the front companies used is China-based Haokun. Operated by former Chinese military officials, it remains an active conduit for IRGC oil sales into China, despite Washington hitting it with sanctions in 2022, two of the sources said.
The US Treasury said China Haokun Energy had bought millions of barrels of oil from the IRGC-Quds Force and was sanctioned for having "materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, the IRGC-QF".
In one oil transaction dated March 16, 2021 involving Haokun and parties including Turkish company Baslam Nakliyat - which is under US sanctions for its trading links to the IRGC - a payment was processed via US bank JP Morgan and Turkish lender Vakif Katilim, according to the intelligence documents.
The transaction took place before the companies were sanctioned. Reuters has no indication JP Morgan or Vakif Katilim were aware of the Iranian connection - highlighting the risks of companies getting inadvertently caught up in the shadow trade.
JP Morgan declined to comment. Vakif Katilim said in a statement: "Our bank performs its activities within the framework of national and international banking rules."
Haokun declined to comment. Baslam did not respond to a request for comment.
'GHOST FLEET'
Quds Force commander Qassem Soleimani, who was killed in a US strike in Baghdad in 2020, had set up a clandestine headquarters and inaugurated that year for the unit's oil smuggling activities, initially staffed by former oil minister Rostam Ghasemi, according to the intelligence documents.
Reuters could not determine where all the oil money funneled through the IRGC goes. The IRGC headquarters and day-to-day operations has an annual budget of around $1 billion, according to assessments from two security sources tracking IRGC activities.
They estimated that the IRGC budget for Hezbollah was another $700 million a year.
"Exact figures remain undisclosed, as Hezbollah conceals the funds it receives. However, estimates are that its annual budget is approximately $700 million to $1 billion. Around 70%-80% of this funding comes directly from Iran," Shlomit Wagman, former director general of Israel’s Money Laundering and Terrorism Financing Prohibition Authority, said separately.
Hezbollah did not respond to a request for comment.
The former Secretary General of Hezbollah, Hassan Nasrallah, who was killed in an Israeli airstrike, said Iran provided the group's budget, including for salaries and weapons.
Iran's main tanker operator NITC, which previously played a key role in exports, also now provides services to the IRGC.
It executes ship-to-ship transfers of Iranian oil onto vessels operated by the IRGC to ship crude into China, according to sources and ship-tracking data. Such transfers are common practice to help disguise the origin of the oil tankers carry.
NITC did not respond to a request for comment.
In August, Israel's National Bureau for Counter Terror Financing, part of the country's defense ministry, imposed sanctions on 18 tankers it said were involved in transporting oil belonging to the Quds Force.
In October, the US Treasury slapped sanctions on 17 separate tankers it said formed part of Iran's "ghost fleet", outside of NITC vessels. It followed up with sanctions on a further 18 tankers on Dec. 3.