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Lebanon and Syria: Stuck between a rock and a hard place on natural gas

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The East Mediterranean’s gas resources can promote cooperation, resolve conflicts and turn the region into an energy hub presenting new prospects for Lebanon and Syria.

Lebanon is currently in need to diversify its energy mix away from oil in order to strengthen its security of supply but lags behind neighboring Israel and Cyprus in developing its gas reserves in the East Mediterranean. 3D seismic surveys carried out by the Norwegian Spectrum company have estimated recoverable Lebanese offshore gas reserves at 25.4 trillion cubic feet. The development of Lebanon’s hydrocarbon resources nevertheless faces significant challenges at political and economic levels, namely the skyrocketing public debt, an unstable regulatory framework, and a weak administration attributable to the sectarian nature of the country’s political system.

The January 4th 2017 approval by the Lebanese cabinet of two decrees is considered critical to ignite the engines of gas exploration and production given that they provide the delineation of the offshore area into 10 blocks; the establishment of production-sharing contracts; the specification of tender protocols; and, the model exploration and production agreement (EPA) so that the first licensing round for offshore gas exploration becomes feasible and Lebanon catches up energy synergies in the East Mediterranean.

The commercial attractiveness of Lebanon’s gas resources is evidenced in the registration of interest by twelve operators and major oil companies such as Chevron, ExxonMobil, Shell, and Total in the prequalification round of 2013. But two main prerequisites are critical for the transformation of the Arab country into a gas producer. First, the Lebanese government needs to be held accountable and push for effective public consultation in that the bidding process is transparent and that contracts are sufficiently completed. Second, anti-corruption safeguards for the gas industry in Lebanon are necessary to be created to standardize binding rules for licenses and contracts with: (a) penalties on companies which provenly secure contracts through bribery; and, (b) the ability of companies to exercise supervision over one another for competitive reasons. Anti-corruption mechanisms can also include the creation of sovereign funds that take part of the gas profits and allocate them to the development of infrastructure projects and to the decrease of national public debt thus favoring economic growth.

On a broader regional setting, existing overlapping maritime claims between Lebanon and Israel over an 854 square kilometers area are hampering trans-boundary gas sharing initiatives on exploration and production. American mediation efforts thus far have failed to resolve the maritime dispute but reduced the risk of escalation by succeeding in dispiriting Lebanon and Israel from exploring gas fields and awarding contracts. The delineation of the maritime border is notably crucial for gas exploration given that oil and gas companies assess security and political risks before investing.

Also interestingly, delays in the Lebanese decision making process can close market-transformative opportunities, hinder joint monetization with Egypt and possibly Cyprus, and accelerate competition with new entrants in the regional gas market, such as Iran and Australia. For the conclusion of long-term gas supply contracts, the discovery of sufficient gas quantities in the ten blocks of the Lebanese maritime area is important. This is especially crucial when taking into account that by the time Lebanon comes on stream, a major gas market share will be locked up, thus limiting the Arab country’s ability to create gas price competition. No doubt that in the existence of a compact regulatory framework and a strong political leadership, regional energy arrangements will not likely bypass Lebanon.

Coming to neighboring war-torn Syria, the country can prove to be a significant regional energy player. Damascus overall undiscovered gas potential looks promising in accordance with French CGGVeritas’ acquisition of 2D seismic data on offshore Syrian resources in 2005 and subsequent 2011 evaluation that three offshore blocks in the Mediterranean Sea by the Syrian coast are expected to hold multi trillion cubic feet of gas.

Among various interests, geopolitics of energy seem to dominate the crisis in Syria. Foreign powers battle control of natural gas resources and the trade routes that bring energy to consumers. Conflicting energy interests in Syria are demonstrated by Russia, Qatar and Iran. Russia seeks to maintain investments in the energy sector in so-called “Safe Syria,” which is a promising zone of natural gas reserves in the territorial waters off Syria’s Mediterranean coast. The significance that Russia attributes to joining the East Mediterranean energy game is underlined by the fact that energy giant Gazprom has reportedly taken over the gas exploration and drilling rights off the Syrian coast from Russian state-controlled Soyuzneftegaz, which in 2014 signed a 25-year agreement with the Syrian government that concedes exclusive exploration rights in Syria’s EEZ.

Qatar’s energy agenda in Syria contradicts Russian and Iranian interests as it includes a pipeline that would connect Qatar and Turkey through Syria, in order to join the Nabucco pipeline and ultimately reach Europe. For its part, Iran’s energy strategy centers on the Iran-Iraq-Syria Islamic pipeline project, originally signed in 2011. The project is intended to transport Iranian gas through the Gulf to Iraq, then to Syrian and Lebanese ports, with Europe as the final destination.

Noteworthy, Syria contains a number of gas fields that have been periodically seized by the Islamic State, principally in Palmyra, a city that serves as transit for pipelines carrying gas from fields in Hasakah and Deir Ezzor provinces in northeastern and eastern Syria respectively. The regime’s control of Shaer field, the largest field northwest of Palmyra that feeds the national grid, is considered significant because it impedes the Islamic State from amassing further disproportionate rewards compared to its limited investment of combat manpower.

The “pipelization” of Syria is a reported reality. Thus all efforts should direct to the resolution of the Syrian conflict as a prerequisite not only for the development of the country’s untapped offshore gas resources but most significant for attracting foreign investment.

No doubt that as the cases of Lebanon and Syria show, potent decision making, cooperation and conflict resolution are critical for the region’s gas potential to be unlocked in a way that promotes economic growth and sustainable development for the benefit of current and future generations.

Antonia Dimou is Head of the Middle East Unit at the Institute for Security and Defense Analyses, Greece; and, an Associate at the Center for Middle East Development, University of California, Los Angeles

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Kavala Case as a Cause for Dıplomatıc Crısıs

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Turkey’s President Recep Tayyip Erdoğan’s recent statement about the Osman Kavala declaration of the envoys of 10 countries has been dominating both domestic and foreign policy agenda. Erdoğan  on October  25 slammed the envoys of 10 countries over their statement on the ongoing case of businessman Osman Kavala.

Osman Kavala was arrested on  November 1, 2017. Businessman Osman Kavala who was arrested as part of the investigation of the Gezi Park events, the 17-25 December plots of the Fetullah Terrorist Organization (FETÖ) and the July 15 coup attempt is accused of being the manager and organizer of the Gezi Park events. Kavala is still in prison. Besides his businessman identity, Kavala is also known as a critical human rights activist.

 It is known that, the European Court of Human Rights requested that Kavala be released. This request has been ignored by Turkey, and can be seen as one of the reasons leading to recent diplomatic crisis. Previously, Kavala has been tied to billionaire George Soros after he helped to found the Turkish branch of Soros’ Open Society Foundations. That branch ceased operations in 2018 after Erdogan accused Soros of attempting to undermine the Turkish government.

The Council of Europe’s Committee of Ministers and the Strasbourg Court found that Osman Kavala’s extended detention had an “ulterior purpose, namely to reduce him to silence as an NGO activist and human rights defender, to dissuade other persons from engaging in such activities and to paralyse civil society in the country” .

Not only European Court of Human Rights, but also American officials addressed Kavala imprisonment as well.  The United States State Department spokesman Ned Price in February 2021 stated that “The specious charges against Kavala, his ongoing detention, and the continuing delays in the conclusion of his trial, including through the merger of cases against him, undermine respect for the rule of law and democracy.”

According to Kavala’s attorneys, the courts’ actions during the process of merging have been intended to keep Kavala in prison.  Kavala was kept in prison despite the European Court of Human Rights (ECHR) earlier decision stating that he should be released immediately. In such an environment, the ambassadors of 10 countries — US, Canada, Finland, Sweden, Denmark, Norway, New Zealand, the Netherlands, Germany, and France – issued a statement about Kavala’s imprisonment. After the statement, President Erdoğan noted that Turkey must declare the ambassadors, as “persona non grata” According to Erdoğan no nation can interfere in Turkey’s internal affairs. Erdoğan said: “I gave the necessary order to our foreign minister and said what must be done. These 10 ambassadors must be declared persona non grata at once. You will sort it out immediately.” After Erdoğan’s remarks, explanations were made by these countries. While the US, Canada, New Zealand and Netherlands embassies made a statement on their Twitter accounts that they would comply with the 41st article of the Vienna Convention, which includes the principle of “non-interference in internal affairs”, Germany, France, Norway, Sweden, Denmark and Finland retweeted the US Embassy’s statement.

Kavala Case has been an issue of human rights debate in Turkey. Most of the information about Kavala focuses on his alleged involvement in the Gezi Park protests and his involvement in the 2016 military coup attempt.  The European Court required Turkey to release Kavala and noted that any continuation of his detention would prolong the violations of the Convention. Despite these developments, the statement of the ten ambassadors cannot be accepted because this move is a direct action of the interference in internal affairs. Erdoğan’s decisive stance about this issue has made the countries retreat, however Kavala issue still stands as one of the critical issues that has the potential to shape Turkey’s position in international relations.

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Saudi Arabia and Iran want to be friends again

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Eventually the ice-cold relationship between Iran and Saudi Arabia began to melt. The two countries sat at the negotiating table shortly after Biden came to power. The results of that discussion are finally being seen. Trade relations between Iran and Saudi Arabia have already begun to move. Although there has been no diplomatic relationship between the two countries since 2016, trade relations have been tense. But trade between Iran and the two countries was zero from last fiscal year until March 20 this year. Iran recently released a report on trade with neighboring countries over the past six months. The report also mentions the name of Saudi Arabia. This means that the rivalry between the two countries is slowly normalizing.

Historically, Shia-dominated Iran was opposed to the Ottoman Empire. The Safavids of Persia have been at war with the Ottomans for a long time, However, after the fall of the Ottomans, when the Middle East was divided like monkey bread, the newly created Saudi Arabia did not have much of a problem with Iran. Business trade between the two countries was normal. This is because the rulers of Saudi Arabia and Iran at the time were Western-backed. That is why there was not much of a problem between them. But when a revolution was organized in Iran in 1979 and the Islamic Republic of Iran was established by overthrowing the Shah, Iran’s relations with the West as well as with Saudi Arabia deteriorated. During the revolution, Ayatollah Khomeini called for the ouster of Western-backed rulers from the Middle East. After this announcement, naturally the Arab rulers went against Iran.

Saddam Hussein later invaded Iran with US support and Saudi financial support. After that, as long as Khomeini was alive, Saudi Arabia’s relations with Iran were bad. After Khomeini’s death, Akbar Hashemi Rafsanjani and Mohammad Khatemi tried to mend fences again. But they didn’t get much of an advantage.

When the Bush administration launched its invasion of Iraq in 2003, Iran’s influence in Shiite-majority Iraq continued to grow. Since the start of the Arab Spring in 2011, Iran’s influence in the region has grown. Saudi Arabia has been embroiled in a series of shadow wars to reduce its influence. It can be said that Iran and Saudi Arabia are involved in the Cold War just like the United States and the Soviet Union. Behind that war was a conflict of religious ideology and political interests. Diplomatic relations between Saudi Arabia and Iran came to a complete standstill in 2016. Iranians attack the Saudi embassy in Tehran after executing Saudi Shiite cleric Sheikh Nimar al-Nimar.  Since then, the two countries have not had diplomatic relations.

Finally, in April this year, representatives of the two countries met behind closed doors in Baghdad. And through this, the two countries started the process of normalizing diplomatic relations again. The last direct meeting between the two countries was held on September 21.

Now why are these two countries interested in normalizing relations? At one point, Mohammed bin Salman said they had no chance of negotiating with Iran. And Khomeini, the current Supreme Leader of Iran, called Mohammed bin Salman the new Hitler. But there is no such thing as a permanent enemy ally in politics or foreign policy. That is why it has brought Saudi Arabia and Iran back to the negotiating table. Prince Salman once refused to negotiate with Iran, but now he says Iran is our neighbor, we all want good and special relations with Iran.

Saudi Arabia has realized that its Western allies are short-lived. But Iran is their permanent neighbor. They have to live with Iran. The United States will not return to fight against Iran on behalf of Saudi Arabia. That is why it is logical for Iran and Saudi Arabia to have their ideological differences and different interests at the negotiating table. Saudi Arabia has been at the negotiating table with Iran for a number of reasons. The first reason is that Saudi Arabia wants to reduce its oil dependence. Prince Salman has announced Vision 2030. In order to implement Vision 2030 and get out of the oil dependent economy, we need to have good relations with our neighbors. It is not possible to achieve such goals without regional stability, He said.

Saudi Arabia also wants to emerge from the ongoing shadow war with Iran in Iraq, Syria, Yemen and Lebanon to achieve regional stability. The war in Yemen in particular is now a thorn in the side of Saudi Arabia. The Saudis are unable to get out of this war, nor are they able to achieve the desired goal. Saudi Arabia must normalize relations with Iran if it is to emerge from the war in Yemen. Without a mutual understanding with Iran, Yemen will not be able to end the war. That is why Saudi Arabia wants to end the war through a peace deal with the Houthis by improving relations with Iran.

Drone strikes could also have an impact on the Saudi Aramco oil field to bring Saudi Arabia to the negotiating table. Because after the drone attack, the oil supply was cut in half. The Saudis do not want Aramco to be attacked again. Also, since the Biden administration has no eye on the Middle East, it would be wise to improve relations with Iran in its own interests.

Iran will benefit the most if relations with Saudi Arabia improve. Their economy has been shaken by long-standing US sanctions on Iran. As Saudi Arabia is the largest and most powerful country in the Middle East, Iran has the potential to benefit politically as well as economically if relations with them are normal.

While Saudi Arabia will normalize relations with Iran, its allies will also improve relations with Iran. As a result, Iran’s political and trade relations with all the countries of the Saudi alliance will be better. This will give them a chance to turn their economy around again. The development of Iran’s relations with Saudi Arabia will also send a positive message to the Biden administration. It could lead to a renewed nuclear deal and lift sanctions on Iran.

Another reason is that when Saudi Arabia normalizes relations with Iran, it will receive formal recognition of Iran’s power in the Middle East. The message will be conveyed that it is not possible to turn the stick in the Middle East by bypassing Iran. Relations between Saudi Arabia and Iran need to be normalized for peace and stability in the Middle East.

But in this case, the United Arab Emirates and Israel may be an obstacle. The closeness that Saudi Arabia had with the UAE will no longer exist. The UAE now relies much more on Israel. There will also be some conflict of interest between Saudi Arabia and the UAE. Prince Salman wants to turn Saudi into a full-fledged tourism and business hub that could pose a major threat to the UAE’s economy and make the two countries compete.

Furthermore, in order to sell arms to the Middle East, Iran must show something special. Why would Middle Eastern countries buy weapons if the Iranian offensive was stopped? During the Cold War, arms dealers forced NATO allies to buy large quantities of weapons out of fear of the Soviet Union. So it is in the Middle East. But if the relationship between Iran and Saudi Arabia is normal, it will be positive for the Muslim world, but it will lead to a recession in the arms market.

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Turkey and Iran find soft power more difficult than hard power

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The times they are a changin’. Iranian leaders may not be Bob Dylan fans, but his words are likely to resonate as they contemplate their next steps in Iraq, Iraqi Kurdistan, Lebanon, and Azerbaijan.

The same is true for Turkish President Recep Tayyip Erdogan. The president’s shine as a fierce defender of Muslim causes, except for when there is an economic price tag attached as is the case of China’s brutal crackdown on Turkic Muslims, has been dented by allegations of lax defences against money laundering and economic mismanagement.

The setbacks come at a time that Mr. Erdogan’s popularity is diving in opinion polls.

Turkey this weekend expelled the ambassadors of the US, Canada, France, Finland, Denmark, Germany, Netherlands, New Zealand, Norway, and Sweden for calling for the release of philanthropist and civil rights activist Osman Kavala in line with a European Court of Human Rights decision.

Neither Turkey nor Iran can afford the setbacks that often are the result of hubris. Both have bigger geopolitical, diplomatic, and economic fish to fry and are competing with Saudi Arabia and the UAE as well as Indonesia’s Nahdlatul Ulama for religious soft power, if not leadership of the Muslim world.

That competition takes on added significance in a world in which Middle Eastern rivals seek to manage rather than resolve their differences by focusing on economics and trade and soft, rather than hard power and proxy battles.

In one recent incident Hidayat Nur Wahid, deputy speaker of the Indonesian parliament, opposed naming a street in Jakarta after Mustafa Kemal Ataturk, the general-turned-statemen who carved modern Turkey out of the ruins of the Ottoman empire. Mr. Wahid suggested that it would be more appropriate to commemorate Ottoman sultans Mehmet the Conqueror or Suleiman the Magnificent or 14th-century Islamic scholar, Sufi mystic, and poet Jalaludin Rumi.

Mr. Wahid is a leader of the Muslim Brotherhood-linked Prosperous Justice Party (PKS) and a board member of the Saudi-run Muslim World League, one of the kingdom’s main promoters of religious soft power.

More importantly, Turkey’s integrity as a country that forcefully combats funding of political violence and money laundering has been called into question by the Financial Action Task Force (FATF), an international watchdog, and a potential court case in the United States that could further tarnish Mr. Erdogan’s image.

A US appeals court ruled on Friday that state-owned Turkish lender Halkbank can be prosecuted over accusations it helped Iran evade American sanctions.

Prosecutors have accused Halkbank of converting oil revenue into gold and then cash to benefit Iranian interests and documenting fake food shipments to justify transfers of oil proceeds. They also said Halkbank helped Iran secretly transfer US$20 billion of restricted funds, with at least $1 billion laundered through the US financial system.

Halkbank has pleaded not guilty and argued that it is immune from prosecution under the federal Foreign Sovereign Immunities Act because it was “synonymous” with Turkey, which has immunity under that law. The case has complicated US-Turkish relations, with Mr.  Erdogan backing Halkbank’s innocence in a 2018 memo to then US President Donald Trump.

FATF placed Turkey on its grey list last week. It joins countries like Pakistan, Syria, South Sudan, and Yemen that have failed to comply with the group’s standards. The International Monetary Fund (IMF) warned earlier this year that greylisting would affect a country’s ability to borrow on international markets,  and cost it an equivalent of up to 3 per cent of gross domestic product as well as a drop in foreign direct investment.

Mr. Erdogan’s management of the economy has been troubled by the recent firing of three central bank policymakers, a bigger-than-expected interest rate cut that sent the Turkish lira tumbling, soaring prices, and an annual inflation rate that last month ran just shy of 20 per cent. Mr. Erdogan has regularly blamed high-interest rates for inflation.

A public opinion survey concluded in May that 56.9% of respondents would not vote for Mr. Erdogan and that the president would lose in a run-off against two of his rivals, Ankara Mayor Mansur Yavas and his Istanbul counterpart Ekrem Imamoglu.

In further bad news for the president, polling company Metropoll said its September survey showed that 69 per cent of respondents saw secularism as a necessity while 85.1 per cent objected to religion being used in election campaigning.

In Iran’s case, a combination of factors is changing the dynamics of Iran’s relations with some of its allied Arab militias, calling into question the domestic positioning of some of those militias, fueling concern in Tehran that its detractors are encircling it, and putting a dent in the way Iran would like to project itself.

A just-published report by the Combatting Terrorism Center at the US Military Academy West Point concluded that Iran’s Islamic Revolutionary Guards Corps (IRGC) faced “growing difficulties in controlling local militant cells. Hardline anti-US militias struggle with the contending needs to de-escalate US-Iran tensions, meet the demands of their base for anti-US operations, and simultaneously evolve non-kinetic political and social wings.”

Iranian de-escalation of tensions with the United States is a function of efforts to revive the defunct 2015 international agreement to curb Iran’s nuclear program and talks aimed at improving relations with Saudi Arabia even if they have yet to produce concrete results.

In addition, like in Lebanon, Iranian soft power in Iraq has been challenged by growing Iraqi public opposition to sectarianism and Iranian-backed Shiite militias that are at best only nominally controlled by the state.

Even worse, militias, including Hezbollah, the Arab world’s foremost Iranian-supported armed group, have been identified with corrupt elites in Lebanon and Iraq. Many in Lebanon oppose Hezbollah as part of an elite that has allowed the Lebanese state to collapse to protect its vested interests.

Hezbollah did little to counter those perceptions when the group’s leader, Hassan Nasrallah, threatened Lebanese Christians after fighting erupted this month between the militia and the Lebanese Forces, a Maronite party, along the Green Line that separated Christian East and Muslim West Beirut during the 1975-1990 civil war.

The two groups battled each other for hours as Hezbollah staged a demonstration to pressure the government to stymie an investigation into last year’s devastating explosion in the port of Beirut. Hezbollah fears that the inquiry could lay bare pursuit of the group’s interests at the expense of public safety.

“The biggest threat for the Christian presence in Lebanon is the Lebanese Forces party and its head,” Mr. Nasrallah warned, fuelling fears of a return to sectarian violence.

It’s a warning that puts a blot on Iran’s assertion that its Islam respects minority rights, witness the reserved seats in the country’s parliament for religious minorities. These include Jews, Armenians, Assyrians and Zoroastrians.

Similarly, an alliance of Iranian-backed Shiite militias emerged as the biggest loser in this month’s Iraqi elections. The Fateh (Conquest) Alliance, previously the second-largest bloc in parliament, saw its number of seats drop from 48 to 17.

Prime Minister Mustafa al-Kadhimi brought forward the vote from 2022 to appease a youth-led protest movement that erupted two years ago against corruption, unemployment, crumbling public services, sectarianism, and Iranian influence in politics.

One bright light from Iran’s perspective is the fact that an attempt in September by activists in the United States to engineer support for Iraqi recognition of Israel backfired.

Iran last month targeted facilities in northern Iraq operated by Iranian opposition Kurdish groups. Teheran believes they are part of a tightening US-Israeli noose around the Islamic republic that involves proxies and covert operations on its Iraqi and Azerbaijani borders.

Efforts to reduce tension with Azerbaijan have failed. An end to a war of words that duelling military manoeuvres on both sides of the border proved short-lived. Azerbaijani President Ilham Aliyev, emboldened by Israeli and Turkish support in last year’s war against Armenia, appeared unwilling to dial down the rhetoric.

With a revival of the nuclear program in doubt, Iran fears that Azerbaijan could become a staging pad for US and Israeli covert operations. Those doubts were reinforced by calls for US backing of Azerbaijan by scholars in conservative Washington think tanks, including the Hudson Institute and the Heritage Foundation.

Eldar Mamedov, a political adviser for the social-democrats in the Foreign Affairs Committee of the European Parliament, warned that “the US government should resist calls from hawks to get embroiled in a conflict where it has no vital interest at stake, and much less on behalf of a regime that is so antithetical to US values and interests.”

He noted that Mr. Aliyev has forced major US NGOs to leave Azerbaijan, has trampled on human and political rights, and been anything but tolerant of the country’s Armenian heritage.

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