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Middle East Situation – World at the Crossroads (Part II)

Click here to read Part I of this article

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[continued from Part I (dated: 5th October 2013)…] Both the US and Russia have significant vested interests in this region. Continuance of a favourable regime in Syria is of utmost importance to Russia. Russia maintains an extremely important military base in Syria at its port city of Tartus, in form of a naval installation which is their sole existing military facility outside the former Soviet Union. This is the very reason for Russia to steadfastly support the Assad regime.

At the same time, other nations in the Middle East, particularly the Sunni nations, which are allies of the US, are extremely keen to overthrow the Assad regime. Qatar has a keen interest in supplying its natural gas to Europe. Qatar had planned to install a pipeline for supply of natural gas to Europe that would run across Syria. However, the plan had received strong opposition from the Syrian President Bashar al-Assad. The Assad regime, while rejecting the Qatari pipeline proposal to Europe, on the one hand, inked a similar deal worth almost $10 billion, in cooperation with Iran and Iraq during July last year. It may be of interest to note that the clashes between the Syrian forces and rebels actually coincided with the inking of the deal by Syria. It is believed that Saudi Arabia too had done hectic lobbying with Russia to get it on board during the period in which Qatar had proposed its gas pipeline. Saudi Arabia too is very keen to have a friendly regime in geo-politically sensitive Syria, in order to foster and maintain its dominance in the fuel trade.

Middle East SituationTraditionally, Russia has been a leading fuel supplier to Europe. The European nations have been alleging the use of this fuel by Russia as a weapon against them. Hence, Russia would be the last nation that would want fuel from the Middle East to reach Europe. This is another important reason for Russia’s continued support of the Assad regime in Syria. As a result of this complicated mesh of vested interests of all the parties involved, a long-lasting resolution to the Syrian crisis seems a distant reality and the current peace efforts seem to be just a temporary arrangement.

Along with the Middle Eastern countries, the US and Russia, other countries are now gradually getting drawn into this issue. European allies of the US, namely the United Kingdom, Germany, France, Italy, Denmark, Luxembourg, Spain and the Netherlands have pledged financial aid worth $430 million for Syrian refugees. The United Kingdom has also declared an additional package of $3 million which would be dedicated for destruction of Syrian chemical weapons and facilities. China, along with Russia, has traditionally sided with Syria and blocked several US-sponsored anti-Syria resolutions in the UN. China has been unsupportive of any military action against Syria and has recently claimed ‘dialogue’ to be the only and the best available option to resolve the Syrian issue.

Middle East SituationThe threat of increased violence not only poses a serious challenge to the stakeholders involved, but at the same time it also poses serious challenges before a country like India, that imports 80% of its fuel requirement and depends heavily on the Middle East for its supply. The US has already put sanctions on Iran, which was one of the leading fuel suppliers to India. Iran gives 90 days credit to Indian oil companies and its crude is cheaper than that from Saudi Arabia and Iraq. It also accepts part of the payments in Indian currency. Hence, India saves precious foreign exchange if it buys fuel from Iran. However, the US sanctions on Iran have forced India to reduce its imports from Iran. Similarly, Syria has offered India stakes in its oil and gas fields. There are 14 onshore oil blocks and 6 offshore oil blocks in Syria. However, due to the current situation in Syria, Indian companies have temporarily suspended their operations over there. Projects of Oil and Natural Gas Corporation Ltd. and Bharat Heavy Electricals Ltd. are also a part of it. India is also involved in a steel plant in Syria.

Political imbalance in fuel-rich Middle East has always led to a surge in fuel prices. The Indian rupee is already in a free fall, making imported fuel costlier. A rise in fuel prices could spell further trouble for an already troubled Indian economy. Oil accounts for about a third of India’s import bill. According to most analysts, an attack on Syria could push oil prices to $150 levels, from the present level of about $115. If fuel prices were to go higher, it will be very difficult for the Indian government to contain inflation.

Middle East Situation

Middle East Situation

Published at Mumbai, Maharashtra – India

2 comments

  1. Hari Om Dada,

    Really an eye opening article with complete information and in simple language. The situation mentioned in the article shows that India should be very careful while in international affairs. The coming time going to be very challenging.

  2. Sanjaysinh Nesarikar

    Both parts most informative. USA has been in a dilemma whether to strike Syria or not as it has more than burned its fingers in Iraq when they dislodged Saddam but no weapons of mass destruction were found. Also hitting Syria will indirectly help the rebels, which are infiltrated by Al Quida. Hence it was a lose-lose situation for Obama. On the other hand Russia has a stronghold in Syria and the Russians do not want to encourage rebels(Al-Quida) since it may have affect in Chechnya and other areas of Russia where terrorism may flourish.Hence a dicey situation.

    Ambadnya

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