Located at the eastern end of the Mediterranean Sea, Syria shares borders with Turkey, Iraq, Jordan, Lebanon and Israel. Syria and Lebanon are known as the Levant states and share much common history and many modern day problems. After invading Iraq the U.S. has focused its political rhetoric on Syria, claiming that the country has developed chemical weapons and is pursuing a nuclear program. America has since 1979 designated Syria as a state sponsor of terrorism. Syria admits supporting resistance groups involved in legitimate struggles for independence, or to reclaim occupied territories. Meanwhile, Syrian culpability for a number of terrorist incidents has been disproved, or called into question by evidence.

Since the invasion of Iraq, the US has criticized Syria for failing to close its borders to insurgents entering or fleeing Iraq. Some US officials claim that Iraq's alleged WMDs were transported to Syria, leaving some to wonder whether Syria is the next target for the Bush Administration’s policy of unilateral liberation.

Historical Background

In ancient times the Levant was home to the Phoenicians who established the foundations for western civilization, inventing the alphabet, building sea-going ships and creating the first large-scale manufacturing of textiles and ceramics as early as 1250 B.C. In 332 B.C. the region was conquered by Alexander the Great and in 63 A.D. fell to Rome’s Byzantine conquest and remained under at least marginal Roman control for nearly 600 years. Christianity took firm root in the region until 636 when the Ummaia Caliphs rose to power and Damascus became home of the Caliphate, the ruling base of the fast-growing Islamic world prior to its move to Bahgdad. In the 11th century the Levant came under control of the Seljuk Turks, European Crusaders, Saladin’s Kurds, the Egyptian Mamluks and finally the Ottoman Turks in 1516. Syria remained part of the Ottoman Empire for nearly 400 years, except for a brief period of occupation by Napoleon.

Centuries of competing Christian and Muslim influence created powerful communal differences between Maronite Christians and Druze Muslims, as well as Sunni, Shia Muslims. Disagreements over land ownership led to a Maronite rebellion and the Druze massacred thousands of Maronites, prompting intervention by French forces to protect the Christians in 1860. France forced the Turks to establish a separate province of “Little Lebanon,” over which European states would have substantial influence. With European backing the Maronites assumed superiority over their Muslim neighbors.

Seeking to exploit Europe’s distraction with World War I and rid themselves of European influence, Arab nationalists revolted and established a short-lived government. After World War I, the League of Nations awarded France control over Syria and Lebanon, a measure to protect French interests in the Iraq Petroleum pipeline from Iraq to Tripoli, while England took control over Iraq, Palestine, Jordan and Egypt. France divided the region into territories, roughly based on communal differences. In 1926 Lebanon became independent. Even today some Syrians continue to argue for reunification of Syria and Lebanon.

In 1940, British and Free French forces occupied Syria after the local French administration declared its loyalty to the pro-Nazi Vichy government. Syria became independent in 1944 although French forces didn’t withdraw until 1946 at U.N. direction.

An Era of Turmoil and Conflict

Syria helped found the Arab League and fought against establishment of Israel in the war of 1947-48. During the war many Palestinians fled to neighboring Jordan, Lebanon and Syria, adding complexity to the diverse national, political and religious mosaic. After a series of coups, the Ba’ath Party took power in 1963 with Hafez al-Assad becoming president in 1971. Assad imposed harsh totalitarian rule until his death in June 2001. The government is mainly controlled by members of the Alawite Muslim minority, representing just 12% of the Syrian population. His son, Bashar a-Assad, succeeded him. Syria again joined the Arab coalition forces attacking Israel in the 1967 Six-day War during which Israel occupied the Golan Heights in southwestern Syria
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In 1970 Syria supported Palestinians fighting against Jordanian forces and subsequently suspended relations with Jordan. In 1973 Syria massed its armies near the Israel border, prompting Israel to attack, launching the Yom Kippur War. In 1976 Syria sent troops into Lebanon as part of the Arab Deterrent Force to forestall partitioning of the country and in hopes of mediating the civil war. Syrian forces became embroiled in fighting against Lebanese Christian militias in 1981 as Lebanon slid into all-out civil war. Amidst Lebanon’s internal conflict, Israel invaded in support the Christian militias, destroying Syrian planes and Soviet-supplied surface-to-air missile batteries. Syria then backed Palestinian factions seeking expulsion of Yassir Arafat’s PLO from its base in Tripoli.

In the late 1970’s, members of the Sunni majority associated with the fundamentalist Muslim Brotherhood and rose in armed opposition to the secular Assad regime. As the resistance gained strength Assad sent government troops into the town of Hamas in 1982 to crush the rebellion, slaughtering over 20,000 Syrian citizens, leveled Hamas and put an end to internal dissent. The insurgents reportedly received support from Iraq and Jordan. Syria closed its border with Iraq, which responded by closing the Kirkuk-Banius oil pipeline.

Subsequently, Syria’s relations with Iraq, Jordan and Saudi Arabia deteriorated. Syria charged Jordan with continuing support of the Muslim Brotherhood and threatened military action against Jordan. As the Iraq-Iran war erupted, Syria backed Iran against Iraq and henceforth, strengthening relations with Iran, but aggravating relations with Iraq. In the 1991 Gulf War, Syria joined the coalition forces to expel the Iraqi invaders from Kuwait.

Alleged Syrian Support International Terrorism

Syria has remained steadfast in demanding return of the Golan Heights, occupied by Israel in1967 and in demanding Israeli withdrawal from other occupied territories. Syria’s fertile Bekaa Valley, a prime agricultural area, is better known as a training base for insurgent groups operating in Lebanon, Palestine and Turkey. Since 1979 Syria has been designated as a state sponsor of terrorism by the U.S. State Department. Syria acknowledges its support and/or tolerance of certain organizations and argues that its support is limited to legitimate resistance movements.

Since 1984, Syria provided a safe haven for Kurdistan Worker’s Party (PKK) resistance fighters seeking independence from Turkey as had been directed under the Treaty of Sevres after World War I, but never achieved. In 1998, Syria agreed to expel the PKK from its territory and has done so.

Likewise, Syria has permitted Palestinian resistance groups to train and operate from bases in its Bekaa (Biqa’) Valley and permits the re-supply of Hizballah, a Shia Muslim militia operating in southern Lebanon. Syria argues that these activities are legitimate resistance to Israeli occupation in Palestine, Lebanon and Syria’s Golan Heights.

The U.S. has also claimed Syrian links to specific terrorist events, but in each case information has been developed to refute such allegations or to raise questions as to the accuracy of such charges. For instance, Syria was initially implicated in the Pan Am airliner bombing over Lockerbie, Scotland, but ultimately responsibility fell to Libya; in other cases evidence points to Iran not Syria. Nonetheless, Syria remains a target of U.S. political animosity and economic sanctions.

Syria and Weapons of Mass Destruction (WMD)

In 1998, the Clinton Administration charged that Syria had developed and armed missiles with Sarin nerve gas. The U.S. also claimed that Syria and Russia have cooperative agreements to upgrade Syrian military equipment, namely anti-tank weapons, and possibly programs to develop nuclear power facilities in Syria. Meanwhile, Israel charges that Syria has developed long-range Scud missiles, capable of hitting targets throughout Israel.

Before the smoke had cleared over defeated Iraq, the U.S. re-focused attention on Syria, reiterating concerns over Syrian weapons and intentions. Meanwhile, Syria has called for establishing a WMD-Free zone in the Middle East, reminding that Israel already has nuclear weapons and possibly Bio-Chem weapons as well.

Syria currently produces small amounts of oil, but its reserves are expected to run out in 10-12 years and the recent Iraqi oil embargos put pressure on Syria to sustain its energy sources. As a result, Syria, not surprisingly, imported Iraqi oil in violation of U.N. sanctions for which it has been criticized. Given its diminishing reserves, U.N. and U.S. sanctions and erratic relations with Arab neighbors, it’s also not surprising that Syria finds itself compelled to pursue nuclear energy sources, regardless of any future weapons potential.

As the U.S. turns up the rhetoric and political heat on Syria, the potential for renewed conflict involving Syria, Lebanon, Israel and the numerous resistance groups can be expected to increase. Syria’s relations with Russia and Europe add uncertain complexity to an already difficult situation and put considerable pressure on President Bashar al-Assad to manage the many conflicting interests that could lead to further violence in this troubled region.

For related information, refer to the Country Briefings on Lebanon, Israel-Palestine and Turkey-Kurdistan.

RECENT DEVELOPMENTS

On June 10, 2000, President Hafiz al-Asad died, and was replaced by his son, Bashar al-Asad, who promised to undertake a variety of economic, administrative, and political reforms. Progress in implementing economic reforms has been slow, however, due in part to the influence of holdovers from the regime of the elder Asad. Growth in real gross domestic product (GDP) was 1.8% percent in 2003, which is lower than the rate of population growth. Real GDP growth for 2004 is projected at 2.4%. According to the Syrian government, the country’s unemployment rate is under 10%, although according to foreign diplomats, the rate is more likely over 20%.
The ultimate goals of economic reform in Syria are to move the country away from a state-run economy and towards a more market-based, modernized one, to reduce the country’s high rate of unemployment (particularly given the country’s rapid population growth), and to diversify the country’s economic base for the day when oil reserves run out. In recent years, Syria has moved extremely slowly and cautiously in these directions. For the most part, as of early 2004, large state corporations continue to control all strategic sectors, including oil, electricity, banking, and chemicals. The Syrian government announced in early 2002 that it had put on hold any immediate moves to privatize large state-owned enterprises, concentrating instead on increasing their efficiency.
Syria lost a major source of revenue in late March 2003, when a pipeline bringing in crude oil from Iraq was shut down due to the war. In the short-term, relatively high oil prices have made up for some of the lost revenue. In November 2003, the United States Congress passed the “Syria Accountability Act,” which was signed into law by President Bush in December. The Act provides for economic sanctions against Syria in response to its continuing support for terrorism, offering a menu of options from which the president can choose. At present, a decision on implementing the Act is still pending, and no new sanctions have yet taken effect. The volume of merchandise trade between the United States and Syria is modest—around $400 million per year—but there are U.S. companies involved in a developing Syria’s oil and gas sectors.

OIL

Syria’s oil industry faces many challenges in the years to come. Oil output and production continues to decline due to technological problems and depletion of oil reserves. Since peaking at 590,000 barrels per day (bbl/d) in 1996, Syria’s oil output has fallen, to an estimated 535,000 bbl/d in 2003, as older fields, especially the large Jebisseh field discovered in 1968, have reached maturity. Syrian oil production is expected to continue its decline over the next several years, while consumption rises, leading to a reduction in Syrian net oil exports. If this trend continues, it is feared that Syria could become a net oil importer within a decade. Export levels, which had been temporarily buoyed by illegal imports from Iraq, fell sharply after the invasion of Iraq in March 2003.

Syria hopes to reverse the trend toward declining oil exports through intensified oil exploration and production efforts, plus a switch from oil-fired to natural-gas fired electric power plants. Syria also has opened up new blocks for oil and natural gas exploration, with the Oil and Mineral Resources Ministry receiving bids from several international companies in December 2001 on five exploration areas. Awards for these blocks were made in January 2003, with Shell receiving exploration rights in the Damascus-Palmyra area and India’s ONGC Videsh receiving another onshore block. Independents Ocean Energy and Stratic Energy also received awards. In 2003, three new exploration deals were announced, with companies receiving awards including Canada’s Tanganyika and PetroCanada, China’s CNPC, and Devon Energy and Gulfsands Petroleum of the United States. Another round of awards took place in January 2004, with companies involved including U.S. independent IPR Transoil, India’s ONGC, and Croatia’s INA Naftaplin. Another 14 onshore blocks are being offered in the current 2004 bid round.

Syria’s main oil producer (by far) is al-Furat Petroleum Co. (AFPC) a joint venture established in 1985 and owned by the Syrian Petroleum Company (SPC), Shell, and PetroCanada. AFPC’s fields are located in the northeastern Syria—particularly the Deir ez-Zour region, where commercial quantities of oil were discovered in the late 1980s—and are producing about 400,000 bbl/d of high quality light crude.

AFPC’s main oil field is al-Thayyem, although production there has been declining since 1991. Another important field—Omar/Omar North—began production in February 1989 at 55,000 bbl/d. Shortly thereafter, operator Shell was pressed by the cash-strapped Syrian government to step up production (against Shell’s advice) to 100,000 bbl/d. The result was serious reservoir damage, and in April 1989, output plummeted to 30,000 bbl/d. Currently, Omar produces about 15,000 bbl/d from natural pressure and 30,000 bbl/d from water injection. Other AFPC fields include al-Izba (light oil), Maleh (34o API gravity oil), Sijan, and Tanak. Production from fields run by SPC peaked in the late 1970s at more than 165,000 bbl/d.

SPC’s fields include: 1) Karatchuk—Syria’s first discovery, located near the border with Iraq and Turkey; 2) Suwaidiyah—a giant heavy oil field located south of Karatchuk in the Hassakeh region (and extending into northwestern Iraq) which currently produces around 85,000 bbl/d; 3) Jibsah—a major field producing both oil and gas; 4) Rumailan—a small field near Suwaidiyah which produces heavy oil; and 5) Alian, Tishreen, and Gbebeh—three small, depleting fields producing heavy oil. China’s CNPC signed a contract with SPC in March 2003 to undertake an enhanced oil recovery project for Gbebeh, which is to increase production from the current 4,500 bbl/d to 10,000 bbl/d.

Other Syrian oil fields include Maleh, Qahar, Sijan, Azraq, and Tanak. Jafra, discovered in late 1991 and located near Deir ez-Zour, is operated by TotalFinaElf and has current production of around 60,000 bbl/d. Besides conventional oil reserves, Syria also has major shale oil deposits in several locations, mainly the Yarmouk Valley stretching into Jordan.

Oil exploration activity in Syria has been slow in recent years due to unattractive contract terms by SPC, and poor exploration results. For these reasons, only a few companies out of more than a dozen operating in the country in 1991 remain in Syria at present. The recent bid rounds are an attempt to reverse this trend, but it is unclear how successful this will be. Officials of TotalFinaElf publicly expressed their intention to scale down their Syrian operations in May 2002, and ConocoPhillips announced in February 2004 that it was ending its operations in Syria.

Refining/Downstream

Syria’s two refineries are located at Banias and Homs. Total current production from these refineries is 239,865 bbl/d (132,725 bbl/d and 107,140 bbl/d, respectively). Syria is planning to construct a third refinery, with an initial capacity of 60,000 bbl/d (possibly increasing to 120,000 bbl/d), at Deir ez-Zour to supply products to the eastern part of the country. A feasibility study on this project reportedly was completed in January 1998, but it has not been implemented. In addition, Syria plans to upgrade its two current refineries, both of which are in urgent need of overhauling, to replace output of fuel oil with lighter products.

Syria markets all of its crude oil, including that produced by foreign companies, solely through state marketing company Sytrol. Prices for Syrian Light, a blend of light and sweet crudes produced primarily from the Deir ez-Zour and Ash Sham fields, and heavy Suwaidiyah crude, produced from the Suwaidiyah and Jebisseh fields, are tied to the price of dated Brent and are adjusted monthly. Since January 1994, Sytrol has had a clause in its term contracts prohibiting customers from re-selling Syrian crudes without written permission from Sytrol. This is intended to curb spot trading in Syrian crudes and especially sales to Israel. Besides crude oil, Syria also exports fuel oil and other products. Syria is a member of OAPEC (the Organization of Arab Petroleum Exporting Countries), although not of OPEC.

Syria’s major oil export terminals are at Banias and Tartous on the Mediterranean, with a small tanker terminal at Latakia. Banias can accommodate tankers up to 120,000 dead weight tons (dwt), and has a storage capacity of 437,000 tons of oil in 19 tanks. Tartous can take tankers up to 210,000 dwt, and is connected via a pipeline to the Banias terminal. Latakia can handle oil tankers up to 50,000 dwt. All three terminals are operated by the Syrian Company for Oil Transport (SCOT), a sister company of SPC.

SCOT also is in charge of Syria’s pipelines, including: 1) a 250,000-bbl/d export line from SPC’s northeastern fields to the Tartous terminal, with a connection to the Homs refinery; 2) a 500,000-tons/year refined products pipeline system linking Homs refinery to Damascus, Aleppo, and Latakia; 3) a 100,000-bbl/d spur line from al-Thayyem and other fields to the T-2 pumping station on the old Iraqi Petroleum Company (IPC) pipeline; 4) a spur line from the al-Ashara and al-Ward fields to the T-2 pumping station.

Flows through the IPC pipeline ended in March 2003 during the invasion of Iraq. According to press reports, there has been some border trade in crude oil, which is being bartered for electricity supplied to Iraq, but the volumes involved are minimal.

NATURAL GAS

Syria’s proven natural gas reserves are estimated at 8.5 trillion cubic feet (Tcf). Most (around three-quarters) of these reserves are owned by SPC, including about 3.6 Tcf in the Palmyra area, 1.6 Tcf at the al-Furat fields, 1.2 Tcf at Suwaidiyah, 0.8 Tcf at Jibsah, 0.7 Tcf at Deir ez-Zour, and the remainder at al-Hol, al-Ghona, and Marqada. About half of Syria’s gas is non-associated, with the rest either associated (with oil) or “cap” gas. In June 1999, a new natural gas field, called North al-Faydh, reportedly was discovered by SPC. The field reportedly has production potential of 35 million cubic feet per day (Mmcf/d).

In 2002, Syria produced about 205 billion cubic feet (Bcf) of natural gas, a slight decline from the 215 Bcf produced in 2000 after a steady increase over the preceding decade. Syria plans to increase this production in coming years as part of a strategy to substitute natural gas for oil in power generation in order to free up as much oil as possible for export. A number of new gas-fired power projects are currently under construction or being planned. Another possible source of natural gas is imports. Syria signed agreements with Egypt, Jordan, and Lebanon in early 2001 for an onshore pipeline network (the “Arab Gas Pipeline”) which would link the four countries and make Syrian imports of natural gas from Egypt a possibility. The section of the pipeline running from Egypt to northern Jordan currently is in the final stages of construction. An agreement was signed in January 2004 between Egypt, Jordan, Syria, and Lebanon for the extension of the pipeline into Syria and Lebanon, but construction had not begun as of March 2004.

Meanwhile, Syria has begun exporting a small quantity of natural gas to Lebanon. In May 2001, Syria signed a deal with Lebanon to build a 26-mile pipeline that would supply power stations in Lebanon with natural gas from Syria. While implentation of the deal was delayed until late 2003, construction is now underway on a short pipeline linking Syria’s Homs-Baniyas natural gas pipeline with the Zahrani power plant in Lebanon, which is being converted to burn natural gas.

A key challenge for the Syrian natural gas industry is logistical, with reserves located mainly in northeastern Syria, while population is centered in western and southern Syria. SPC currently is working to increase Syria’s natural gas production through several projects. The Palmyra area in central Syria is the site of much of this activity, including development of the Al Arak gas field, which came onstream at the end of 1995. Other gas fields in the Palmyra area include Al Hail and Al Dubayat—both of which are “sweet gas” and two “sour gas” fields—and Najib and Sokhne, which came onstream in 2000. Syria is attempting to expand output at Najib through its central area gas project. Foreign energy companies have been invited to submit proposals on gas projects in the Palmyra region. Several have reportedly held discussions with the Syrian government on the project, but no contracts have been awarded.

In October 1997, Syria announced discovery of a large new natural gas field in the Abi Rabah area of the Palmyra region. In addition to supplying a new (completed in 1997), 375-megawatt, power plant at Zaisoun in central Syria, the Palmyra fields have been linked with a new pipeline to Aleppo, as well as to the Tishreen power plant in Damascus and the Mhardeh power plant in Homs. Najib, the fourth and final field to be developed in the Palmyra region, started production in 2000 at a capacity of 100 mmcf/d. A modest-sized new discovery was reported in the Palmyra area in August 2002 by the Croatian company INA Naftaplin, which tested at about 9 Mmcf/d.

Syria’s Jibsah natural gas treatment plant, which came online in 1988, accounts for more than one-quarter of the country’s total natural gas processing capacity. Jibsah’s capacity was increased 88% in a project completed during the first half of 1997, and now is being increased again (to 105 mmcf/d from 60 mmcf/d currently). Other Syrian gas processing plants include: the Deir ez-Zour Gas Treatment Plant (since 1991); the Jafra Gas Separation Plant (late 1996); and the Palmyra Gas Processing Plant (late 1996).

In September 2001, several months ahead of schedule, an important new, integrated natural gas project (called “Desgas”) was completed in the Deir ez-Zour region, three years since a $430 million service agreement was signed between SPC on the one hand, and ConocoPhillips and TotalFinaElf on the other. The new complex utilizes approximately 175 Mmcf/d of previously-flared, “associated” (found together with oil) natural gas, in the Deir ez-Zour oil fields. TotalFinaElf and ConocoPhillips each hold 50% interest in the project, with ConocoPhillips as lead operator. ConocoPhillips announced in February 2004 that it intended to end its operations at Deir ez-Zour in the future, likely by letting the current contract lapse in 2005. The Deir ez-Zour complex now includes a natural gas gathering system and processing plant, plus a 155-mile pipeline to carry 150 Mmcf/d of natural gas to the grid serving western Syria. Natural gas also is being transported to the Tabiyeh oil field for processing and reinjection/enhanced oil recovery.

As increased volumes of natural gas feedstock become available, and given abundant phosphate reserves, Syria is adding capacity to produce fertilizer. At present, Syria has two nitrogenous fertilizer plants and one phosphate-based unit, both located at Homs.

ELECTRIC POWER

As of January 2002, total installed Syrian electric generating capacity was around 7.6 gigawatts (GW), with fuel oil and natural gas the primary fuels, and 1.5 GW of hydroelectric capacity. With Syrian electric power demand growing, adding electricity supply capacity is an important national priority. Also, Syria is aiming to replace its oil-fired power plants with natural-gas-fired plants, in order to free up oil for export and to avoid becoming a net oil importer in a few years. Since then, existing power stations have undergone maintenance and four new generating plants have been built (including the 600-MW al-Zara gas/oil plant near Hama, completed by Mitsubishi in November 2000). Also planned are the 300-MW Zeizoun plant and the 630-MW Tishreen hydro station. Overall, Syria hopes to add 3,000 MW of power generating capacity by 2010, at a probable cost of around $2 billion, but progress toward implementing these projects has been slowed by a lack of investment capital. Foreign-owned power projects are still not under consideration.

While power generation capacity in Syria now appears adequate, the country’s power distribution network remains a problem. Transmission losses are estimated as high as 25% of total generated capacity due to a variety of factors including poor quality wires and transformer stations. In December 2000, the European Investment Bank (EIB) agreed to lend Syria 75 million Euro for expansion and upgrading of the country’s power transmission network (in February 2001, the EIB agreed to lend another 115 million Euro). The project, scheduled for completion by 2005, will involve construction, upgrading, and expansion of sub-stations, overhead power lines, and underground cables. In addition to the EIB, funds for this project is coming from Arab Gulf states and the Syrian government. Also, in March 2001, Kuwait agreed to loan Syria $65 million to help double the size of a natural-gas-fired power plant at Nasriyeh, northeast of Damascus. Nasriyeh currently has capacity of 300 MW.

In March 2001, a project to link the electric power grids of Syria, Egypt, and Jordan was completed, with an inauguration ceremony attended by Egyptian President Husni Mubarak and Jordan’s King Abdullah. Linking the three countries’ grids together creates a network of approximately 45 GW. The link between Jordan and Syria is via 400-kilovolt cable, while the Jordanian-Egyptian link is via underwater cable in the Red Sea.

As part of its strategy to save oil for hard currency exports, Syria has plans to build several natural gas, combined-cycle power plants, and to convert the country’s major oil-fired plants to natural gas. Two of Syria’s largest power stations—the Mahrada and Banias plants—have been converted from fuel oil to natural gas in recent years. Natural gas for these two plants comes from the Palmyra fields. Syria also plans to increase natural gas usage at the dual-capacity (fuel oil or natural gas) Tishreen power plant. Gas for Tishreen is to come from the Omar treatment plant. In addition to these plants, Suwaidiyah Station II had five new natural gas turbines installed in 1989, while Suwaidiyah I operates mainly on associated gas from nearby fields.

On May 19, 1999, the director-general of Syria’s Atomic Energy Commission signed an agreement with Russia on cooperation in peaceful uses of nuclear power, including construction of two nuclear reactors in Syria. On February 23, 1998, Syria and Russia had signed an agreement on the peaceful use of nuclear energy, and in July, 1998 the two countries had agreed on a timetable for a 25-MW light-water nuclear research center project in Syria with the participation of Russia’s Atomstroyeksport and Nikiet. The project appears to have been abandoned, however, due to lack of financing. Russia’s Minister of Atomic Energy stated in January 2003 that the project is no longer under discussion.