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EU Moves Towards Ban on Syrian Oil Sector Investment

Source: Reuters 9/9/2011, Location: Middle East

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The European Union has moved closer to banning investment in Syria's oil industry to apply economic pressure on President Bashar al-Assad and his government, EU diplomats said on Friday, a week after the EU banned imports of Syrian crude.

Envoys from the EU's 27 capitals have given preliminary agreement for an investment ban, part of economic sanctions aimed at persuading Assad to halt a violent crackdown on pro-democracy demonstrations. Pending final approval, the investment ban could be put in place in the coming days or weeks. Syria is only a small oil producer, accounting for 0.5 percent of global production. Net exports in 2010 were just 109,000 barrels per day, but 99 percent of that was sent to Europe, according to the U.S. Energy Information Administration. Several European oil firms, such as Anglo-Dutch Royal Dutch Shell and France's Total have significant investments there. Western countries have imposed limited economic sanctions on Syria's leadership to try to halt a violent six-month crackdown on protesters, but have not considered more forceful action comparable to the NATO military strikes deployed against Libya.

Europe's new round of sanctions against Syria may also include a ban on Europeans doing business with several firms, such as the country's largest mobile phone company, Syriatel, which provide funds to Assad, the diplomats said. Talks on the issue were not finished yet.

"The investment ban has been agreed and there is another package of ideas being discussed," one EU diplomat said, speaking on condition of anonymity. "But there is no decision yet on those and it is unclear whether there will be a push to finalize all measures together or in separate steps." On Friday, Syrian forces arrested dozens of people in house-to-house raids in the city of Homs following military operations that killed at least 27 civilians on Wednesday. A grassroots activists group says more than 3,000 civilians have been killed in the Syrian uprising. Europe has taken a slower approach to sanctions than the United States, largely because of concern in some EU capitals about risks to commercial interests of European companies.

European governments have also been concerned that EU measures would simply shift Syria's business links from Europe to elsewhere, blunting the impact of international sanctions. Russia and China have opposed U.N. sanctions. More discussions are scheduled in Brussels next week to iron out details of the investment ban, including whether there should be a grace period for existing investments.

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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

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