The Energy Crisis is unsolvable; Securing the Quarter at Best.
Ashtar Mahmood Ashtar Mahmood

The Energy Crisis is unsolvable; Securing the Quarter at Best.

The Energy crisis is the epitome of all current crises, as it practically reflects the crisis of the Syrian pound and the inability of the funds available in the national currency to secure the needs of importing the mainstay of production, which is represented in oil. It also reflects the crisis of the decline in the economic and social role of the state apparatus and its inability to secure the basics, in addition to the state of production paralysis affecting the country. The worst, is that all the current indications show that the energy crisis cannot be seriously solved with such resources and such performance.

The Need for 200 Thousand Barrels of Oil and Securing Less than 50!

Lately, the government kept mentioning numbers about our daily needs for crude oil to generate energy, noting the need for 200 thousand barrels of oil per day. We practically produce 20 thousand barrels of oil, and need to import 180 thousand barrels from abroad in foreign exchange nonetheless. Securing those oil needs, according to the currently increasing oil prices, requires an amount close to $4.2 billion annually. This amount has become beyond the capabilities of the Syrian government, as neither its total general budget covers it, nor receiving all those flows of foreign remittances (in case it has remained at the limit of $3 billion) can cover the amount of energy needs. Not even if the allocated annual international aid fund in international conferences such as the Brussels Conference has reached the Syrian government will this amount be covered (which will never happen nonetheless). The general budget of 8500 billion Syrian pounds for 2021 now has become equivalent to nearly $ 2.8 billion (according to an average of the total government exchange rates issued last week). If all budget capabilities were allocated to crude oil importers, only two-thirds of energy needs can be secured!

Lack of Government Funding is the Cause of the Crisis.

The government recognizes this reality, and the prime minister has said in his last statement that the government is securing crude oil from Iran at a cost of $50 million per month, without mentioning quantities. $50 million per month can only secure about 26 thousand barrels per day, which means that what the government can secure by importing through regular Iranian ships and local production does not exceed 46 – 50 thousand barrels per day, that is, a quarter at best! Even at this level of energy austerity, the government needs to consume fifth of the budget to secure these small amounts. The government clearly says that it is only capable of securing energy needs by a quarter at best, which is what we are experiencing in the state of electricity and fuel rationing, which in the last six months has reached complete drought several times due to the inability to fund the basics of energy needs in the first place. As for sanctions, just like Suez Canal blockage, they are adaptable factors, and they are not the main obstacle. Securing a quarter of energy needs, at best, means a reduction of economic growth and production abilities at close rates. This production is hindered by many other obdurate factors in addition to lack of fuel; from the situation of the Syrian pound, to costs of corruption, to lack of funding, to lack of young and professional workforce and many others, all of which are combined together to reduce what has remained of the GDP.    

Solutions are Limited to Political Orientations.

Securing energy cannot be solved with the current indications, even if monetary authorities were able to retrieve part of the foreign exchange received through remittances after a relative increase in their exchange rate. The bloc of funding energy imports remains the largest and solutions are limited in specific orientations:

Either by getting credit facilities to be paid later, which is not something politically available, as the previous experience of the Iranian credit line practically ended since 2018, and supply has become conditional on cash payment after not paying all previous payments. Or by liberalization of local energy market for it to become imported through the private sector, hence, the last rope in the economic role of the state apparatus will be cut off, and all its capabilities to take control (even if ostensibly) over the levels of prices will end. This orientation has powers supporting it and economic groups that want it, however, it practically ends the gains that other powers used to achieve from the difference of the prices of government fuels from the prices of the market. Those other powers are the major corruption bloc in distribution which constitute indirect funding to a wide segment of corruption men and their employees, who live on the allocations of subsidizing fuels. This orientation, based on the abovementioned, will have powers that oppose it from influential people who will not be able to secure funding in return for their peers after they used to fund them from the plunder of the subsidy of the state apparatus.

The other orientation is opening the door to obtain energy from Syrian fields in the upper Mesopotamia, which the US is obstructing till now, and which Syrian parties do not seem to find a solution to, despite their periodic negotiations with each other! It is the objective and healthy orientation that is conditional on finding compatibility between Syrians and opening the door to settlements. This is also obstructed by obdurate powers that do not see a problem, but rather see a benefit in the continuation of the dismemberment of the country. Finally, there are some theoretically possible solutions, which are practically impossible according to current political indicators, such as regaining the great bloc of foreign exchange accumulated in the black market and with the great powers that are capable of making exceptional speculation waves, such as the ones we witnessed at least twice since the beginning of this year. However, confiscating the capabilities, money, and wealth of those is a political decision that no one seems to have an interest or determination to do. Even if confiscating this money has been mentioned, we will not see any effective action to direct it towards supporting the continuation of economic life in Syria. Rather, it will be enough to make some suggestions of movement, such as dismissing a senior employee here or there and paying (oriented media) to hold him accountable without any official accountability or (frankness) as they say. Otherwise, laws that pursue the final prices of materials in the market would be issued, looking for (the thieves who raise the prices), while the prices are practically set in very narrow circles that control funding in the Syrian pound and the dollar and control the monopolization of basic products. This is similar to previous procedures of the (black market) combating foreign exchange by pursuing the movement of the dollar in weaker powers, which are laws that everyone knows have turned into a “door of livelihood” through the relationship of some authorities with the half-wholesale and retail market. Nonetheless, those higher-ups who are able to raise the exchange rate by 17% and reduce it within less than 20 days are left unaffected, to prove to us soon that they are capable of fabricating other waves of devaluation of the Syrian pound, regardless of the laws floating on the surface of the crisis, and nothing more.

Last modified on Thursday, 06 May 2021 02:18