Given the many resolutions on Syria that have hit a brick wall at the U.N. Security Council, and the endless wrangling among Western leaders over how to end the calamitous two-year war, the April 22 decision by E.U. foreign ministers to lift the oil embargo against Syria looked almost like tangible progress. “We wish for good economic development in the areas controlled by the opposition,” Germany’s Foreign Minister Guido Westerwelle told reporters before the vote in Luxembourg. “Therefore we lift the sanctions that hinder the moderate opposition forces’ work.”
On paper, the E.U.’s idea seemed straightforward. Without an embargo, European companies can now legally begin importing barrels of oil directly from rebel groups, which have seized several oil fields in recent months, mostly around the eastern area of Deir Ezzor. That would provide the opposition with its first reliable source of income since the revolt erupted in Feb. 2011, and in theory hasten the downfall of Bashar Assad’s regime, by giving rebels the means to run skeletal local governments and consolidate their control. As part of the decision, the E.U. ministers also agreed to export technical equipment, insure the rebels’ shipments of oil and invest in the rebel oil businesses. Before the war, Syria earned about $3.6 billion a year exporting oil and gas to Europe, with its biggest customers in Germany and Italy, according to the U.S. Energy Information Administration.
(PHOTOS: Syria’s Slow-Motion Civil War)
For Syria’s opposition leaders, the E.U.’s decision last week was welcome news, especially since they have spent months trying to cobble together an interim government that can begin delivering some basic services to rebel areas, which has been hampered by a lack of money. From their perch at the margins of the conflict or overseas, the opposition’s leaders are struggling to create an iota of legitimacy among the fighting factions on the ground. “Oil will be one of the main resources for the government’s budget,” Yasser Tabbara, advisor to the Syrian National Coalition’s interim Prime Minister Ghassan Hitto, told TIME on Wednesday. Speaking by phone from Chicago, where he has lived for years, Tabarra said opposition leaders were thrashing out details of how to begin commercial oil production by using experts who have defected from the regime, including Syria’s deputy oil minister. Since the regime controls the oil pipelines, as well as the existing export terminals on the Mediterranean, rebel groups would have to truck barrels of oil across rebel territory into Turkey, where the nearest refineries are situated and where they could—if they can produce enough oil—export to the rest of Europe. “It is part of a larger plan to preserve the institutions and to keep as many public employees working as possible,” Tabarra says.
Still, analysts warn that the plan is deeply flawed—and in fact, that the E.U.’s decision could intensify the violence in Syria, by setting up a deadly competition for control of a resource that has languished amid two years of grinding civil war. Assad’s production has plummeted by half to about 150,000 barrels a day. It is barely enough to cover the regime’s needs at home, let alone to export the surplus. Oil analysts believe that if the rebels are properly equipped and organized, they could pump about 30,000 barrels a day—a tiny amount in the scale of the industry’s commercial production. If they succeed in getting it to Turkey, the oil would likely sell cheaply, perhaps between $60 and $70 a barrel—about 30% less than current world prices. “The best-case scenario is smuggling oil over the border, and getting about $30 million a month,” says David Butter, Syria analyst at London’s Chatham House think tank. “That is not much, when you are thinking of running a government.”
Nevertheless, the E.U. move has enraged Syria’s regime. The government’s Oil Minister Slaiman Abbas called the decision “illegal.” And indeed, oil traders might conclude the same, since buying rebel oil goes against their pre-war agreements with Syria’s government. “From the purely regulatory standpoint, it is the [government] Syrian Petroleum Company which sells its crude,” Leila Benali, Middle East and Africa director for IHS, an energy consultancy, told TIME. There are good reasons for that, she says: Setting up parallel exports could create Mafia-style networks, since trucking oil will require complex cross-border commerce. The war-torn country has already become fertile ground for smugglers and outfits that make money from kidnappings and extortion. “You open the door to smuggling,” she says. “If the E.U. is serious about this, it will take some time to implement it properly.”
Complicating the issue is the fact that several of the rebel-held oil fields are believed to be under the control of Jabhat al-Nusra,which has declared its allegiance to al-Qaeda. “There is no way the E.U. is going to do business with al-Qaeda,” says Ayham Kamel, a Syria analyst for the Eurasia Group in London. “So it creates the incentive for secular groups to take over these fields”—a factor that Western governments might have had in mind, he said, when they lifted the oil embargo. At the moment, the chaotic ground battle, with rival rebel groups defending disparate patches of turf, would make it all but impossible to knit together a viable oil industry. “There are hundreds of groups fighting Assad,” Kamel says. “For them to sell oil on international markets would seem very unlikely. Despite everything, Assad is still the internationally recognized government
There are signs that the oil contest among the rebels has already begun. Last week, Gen. Selim Idriss, who heads the opposition’s secular Supreme Military Council, told the Financial Times in Istanbul that he wanted Western governments to fund salaries for 30,000 men who could be deployed to secure the oil fields. “When we have a well-armed battalion and you send it to oil fields, others will see that this is a central force protecting national resources, and not a specific group taking over to sell oil,” he said. So far, that money is not forthcoming.