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17 February 2017

Why China Can’t Ignore Syria’s Rebel Factions

By George Marshall Lerner

International relations can shift depending on the scale. At the macro, geopolitical level, the ties between countries are often the result of general norms. In the case of Syria, it would make sense, as Stratfor has argued, that Russia will offer its allies in the Assad regime military supports and substantial economic aid in order to rebuild the country. Many believe China will also want follow suit and maintain its strategic interests in the region by helping Assad as well.

Yet if you zoom closer into the Syrian civil war, beyond the publicized public meetings between government officials, it looks more and more like China knows it will have to deal with factions other than the Syrian regime.

By 2016 almost all of the major operational energy infrastructure of Syria was under the almost exclusive control of the Federation of Northern Syria (a literal translation from the official Kurdish name, Federasyona Bakurê Sûriyê) and administered by its administrative arm, TEV-DEM (an abbreviated form of the Kurdish name Tevgera Civaka Demokratîk‎). China has significant investments in this region of Syria, creating an incentive to forge ties with TEV-DEM.

Before the war began in 2011, Chinese state-owned conglomerate Sinopec was a major investor in northeastern and eastern Syria. The New York Times reported Sinopec’s first major venture into country in 2008, through the acquisition of Canadian-based Tanganyika Oil.This deal gave Sinopec control of three oil fields, Sheikh Mansour, Oudeh (also called Rimelan due to its proximity to the town), and Tishrin — all located in Syria’s northeast.

According to one UBS investment report outlining the deal, Tanganyika’s Syrian assets contained an estimated 21 billion barrels of oil (bbl). The deal also provided Sinopec with Tanganyika’s access to 1 trillion cubic feet (tcf) of natural gas. This would mean these assets are on par, or larger than, many major concessions in the Middle East. According to one Reuters report, Iraqi Kurdistan’s largest oilfield, Taq Taq, contains just 356 million bbls.

Today, all three of these oil fields are in areas where the Syrian Democratic Forces maintain dozens of bases.

Every year, this newly formed autonomous region sheds more and more social and economic connections to the Syrian Regime. For example, by the end of 2016, almost all the schools in cities with a strong Syrian regime presence like Qamishli and Heseke were regulated and operated by TEV-DEM. The Syrian regime checkpoints are vastly outnumbered by checkpoints of the mostly-Kurdish police force in both cities. In 2016, the Kurdish forces overran regime positions in Qamishli; in Heseke the Syrian Air Force stepped in with airstrikes until the Syrian Democratic Forces stood down.

One of the last connections to Damascus is in the energy security sector. Since 2013, the Syrian regime has continued to pay the salaries of oil engineers and the upkeep for the plants. A typical engineer working in the Oudeh concession is paid $50 — an English school teacher based in nearby Rimelan, an area administered by TEV-DEM, will make a similar amount of money. TEV-DEM agreed to continue this pre-war status quo to help maintain the vital supply of electricity. Most of the electricity in northeast Syria comes from thermal plants that use crude oil supported by gas-fired plants — in particular, from the Oudeh oil fields.

By maintaining this status quo, TEV-DEM has found a way to give the Syrian regime a near costless stake in the northeast, an arrangement that is beneficial to both sides. According to one TEV-DEM official, in return the Syrian regime wanted them to acknowledge many legal issues, including that these oil fields were still technically owned by companies that did business with Damascus — like Sinopec.

Sinopec sent two groups in late February of 2016 to meet with TEV-DEM officials in northern Syria to survey the state of its holdings and equipment and discuss the future of the fields. On the first visit, Sinopec’s demands for the return of its assets were promptly dismissed by TEV-DEM.

Sinopec argued that these three fields were theirs before the war and should be returned to the company again. Furthermore, Sinopec believed it was the only institution legally able to export the oil, via Iraqi Kurdistan and then through Turkey. It would also be capable of rebuilding much of the vital infrastructure that had been rusting out in the open without maintenance for years. Sinopec would, through the Syrian government, share the profits of these oil exports.

TEV-DEM officials countered that while the Syrian regime still pays the employees, and the connection with the Syrian regime still existed, the prospect of the fields being returned to Sinopec was out the question.

The TEV-DEM officials explained that according to their ideology, oil has a socially corrosive effect on a society. They pointed to the cautionary example of Iraqi Kurdistan, which they argued is overly reliant on oil. Therefore, TEV-DEM could not, in good conscience, hand over control to Sinopec even if the fields were manned by Syrian workers selected by TEV-DEM and paid by Sinopec.

Instead, TEV-DEM plans to eventually transform all of these energy assets into self-sustaining economic co-operatives (co-owned by the workers and the local authorities). On the second meeting with Sinopec, TEV-DEM officials announced that the Sheikh Mansour, Oudeh, and Tishrin oil fields would be turned into economic cooperatives as soon as possible. They gave the example of the Jabisah and the Kabibah oil fields south of Heseke, and captured from the Islamic State earlier in February 2016, that were still operational and had already been transformed into economic co-operatives.

Around the same time as the visits by Sinopec, in January 2016, Chinese President Xi Jinping invited both the Syrian Foreign Minister Walid al-Moallem and the head of the opposition group, the Syrian National Coalition (SNC), to high-level meetings in Beijing. This was one of the first points of departure from Xi’s long-held policy of only supporting Bashar al-Assad, the president and current ruler of Syria.

By 2018, it’s possible that outskirts of Deir ez-Zor also be administered by TEV-DEM. If this happens, Sinopec’s remaining oil fields in Syria (which are still operational, despite American airstrikes) will also fall under the control of the Federation of Northern Syria. Currently, the Syrian Democratic Forces are 50 miles away from the city, just south of Shaddadi. In contrast, the closest Syrian regime forces are 130 miles away, near Palmyra.

This may be a bitter pill for Sinopec to swallow. Beyond its acquisition of the three fields in northeastern Syria, in 2011 it had also acquired a 20.3 percent stake in the main Syrian government oil producer, the Al-Firat Petroleum Company. The stake gave China partial ownership of all major oilfields in the east of the country.

All of these oilfields were a vital part in China’s energy security strategy. The recent efforts to reach out to groups other than the Syrian government means China is looking at other options for protecting its interests in Syria. Perhaps China has also learned from its experience in Libya where $20 billion worth of Chinese assets were damaged or lost thanks to the 2012 revolution.

Beijing’s energy interests in Syria mean the government cannot ignore the groups emerging out of the shadow of the Syrian regime. China will continue to leverage its relationship with Damascus in order to find a way to make an eventual agreement, in some form, with Assad’s opponents.

A graduate from the University of Edinburgh, George Marshall Lerner worked as a consultant for the last two and a half years focusing on trade and reconstruction in the Middle East. He recently co-founded an NGO, Hêvî (which means hope in Kurdish), supporting women, children, and healthcare initiatives in local communities.

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