Syria’s first needs: energy and investment 

It can get mighty cold in Damascus and Aleppo. Unfortunately, it may be about to feel a lot colder for Syria’s hard-pressed population as supplies of oil and gas dwindle.

As our columnist Frank Kane wrote this week, after nearly 14 years of civil war Syrian oil production is not enough to move the dial internationally – nor sufficient to meet domestic demand. The World Bank, citing the US Energy Information Administration, estimates that production of Syria’s typically heavy, sour crude fell from 383,000 barrels a day in 2010 to a scant 90,000 bpd last year.

Instead, the country has been forced to rely on Iran. Rachel Ziemba of Ziemba Insights says the Islamic Republic has been providing 1-4 million barrels a month pretty much free to the former regime. That will now change. On cue, an Iranian tanker carrying crude apparently bound for Banias on the Mediterranean coast has turned back.

Such oil as is produced is extracted in the Kurdish-controlled north-east. Syria’s oil and gas fields – most of them elderly – run north-east across the centre of the country, east from Homs towards Kurdish-controlled Deir el-Zour to Raqqa and then into Hassakeh.

In the west, in parts controlled by the new rulers Hayat Tahrir al-Sham, the country’s battered energy infrastructure is based on two refineries: one in Homs and the other at Banias. A third, tiny refinery is reported to have been built with US assistance in Hassakeh.

In February last year two earthquakes hit Syria hard, as they did Turkey, and damaged the Banias refinery.

So, while Syrians are used to coping with adversity, without energy things may be about to get worse. True, the regime has not controlled large swathes of the country for years and those residents who have not fled have learned to improvise. But earlier this year, the World Bank, citing surveys by humanitarian organisations, put extreme poverty – those living on less than $2.15 a day – at a quarter of the population of 24 million.

Relying on night-time light data, the Bank thinks economic activity shrank by 84 percent between 2010 and 2023.

Even before the war cronyism crowded out foreign investment. During the conflict, profiteering has worsened. Rami Makhlouf, a cousin of the Assad family, infamously bestrode the country through his Cham Holding and control of Syriatel, the largest mobile telephone operator.

Other prominent businessmen – Hussam al-Qaterji, Samer Foz, owner of the Four Seasons hotel in Damascus, and Mohammed Hamsho – are likely to be displaced unless they can come to terms with the new powerbrokers. This seems unlikely given the bad blood that exists and the motivations of the new rulers.

As Matein Khalid, another of our columnists, says, ideally, Syria needs a government of technocrats – not warlords and ethnic powerbrokers – before it can hope for the removal of sanctions and significant development aid.

The incoming regime led by Hayat Tahrir al-Sham, the Organisation for the Liberation of Syria, is likely to turn to Turkey in the first instance. Shares in Turkish construction companies are spiking on prospects for work in Syria. These enterprises were quick to move into Iraq in 2003 after the US-led invasion and have an appetite for risk. But Syria is, for the moment, a different proposition.

A rare positive is agriculture. Syria is unusual in the Arab world for the size of its agricultural sector, although years of drought are thought to have been one of the drivers of the civil war in the first place. The World Bank says grain crop recovered last year to 2 million metric tonnes after a poor 2022 because of better rainfall. The Bank, however, points out that yields are significantly lower than across the border in Turkey.

Syrians are enthusiastic and resilient entrepreneurs. Reports abound of the relative success of refugees in Egypt and Turkey. But that resilience is likely to be tested over the coming months and years in their home country. Power supplies are essential and for that stability and security are needed.