Across the Bay

Friday, February 22, 2008

EIU on the Makhlouf Designation

The following EIU briefing briefly discusses the Makhlouf designation, and places it in the context of a broader effort at pressuring the Assad regime:

The US decision to step up pressure against Syria comes amid an intensification of Saudi Arabia's diplomatic efforts to put the squeeze on the Assad regime.
Given the wide range of business activities of Mr Makhlouf within Syria, the US move against him is likely to have a significant effect on the government's plans to attract inward investment. Foreign investors will also have to take into account the possibility that the US might add other leading Syrian business people to the list of figures designated as benefiting from corruption.

The US action is clearly designed to portray the Assad regime as being increasingly isolated. Syria itself is seeking to present the opposite impression, pointing to its success in laying the preparations for an Arab League summit conference, scheduled to take place in Damascus at the end of March. However, this success, as measured by acceptances from several Arab heads of state, has been qualified by the apparent refusal of Saudi Arabia even to allow the Syrian foreign minister, Walid al-Muallim, into the kingdom to present his invitation to the Saudi monarch.

The EIU briefing raises the specific issue of the fate of Makhlouf's dealings with Gulfsands Petroleum (which has expatriate Syrian money behind it), which has been trying, with not much success (they hit dry holes and where there has been finds, the payload is minimal. Furthermore, it's in small pockets not easy to develop and with a short shelf life), to dig for more oil wells in Syria in an attempt to stave off the inevitable dry-up, which will have severe repercussions on the regime's budget, given the high percentage of its reliance on oil revenues.

It'll be interesting to watch how that plays out now that Makhlouf's been blacklisted.