Syria's Smuggling Problem

In recent days, anti-Syrian politicians in Beirut have been crying wolf about an increase in Syrian soldiers on the border with northern Lebanon. They worry that the buildup is a prelude to Syrian incursions on the pretext of stamping out radical Islamist fighters there, but really aimed at reasserting Syrian hegemony. On the other hand, the Syrians say that the buildup is part of an attempt to clamp down on smuggling, and there is reason to believe them.

The double whammy of rising global energy prices and Syria's social subsidies on diesel and gasoline, has created a big black market in oil smuggling that is one of Syria's biggest financial problems. Until recently, the price of diesel fuel oil, the most commonly used petrol product there, was up to six times higher in neighboring Lebanon than in Syria. (Since Syria increased diesel prices this year, the figure is three or four times higher in Lebanon.) The Syrian government estimated that the 1.5 billion liters of diesel smuggled out of the country last year cost $1.2 billion USD, and accounted for 15 percent of all Syrian consumption.

Lebanese farmers with land in Syria come over the mountains in specially built 4x4's or vans with extra tanks that can hold an additional 300 liters. Lebanese and Syrian smugglers also use mules, which can carry 100 liters each. A mule train can cross the mountain paths at night without any guides, since they know the routes by memory. “With two mules, you don't need to work for a living,” said one Syrian gas station owner who lives in the mountains near Lebanon where smuggling is one of the main local industries. Even if the mules are caught, they can't sing to the police. “The mules have no passports.  What are the police going to do arrest them?”

Actually, police snipers have begun shooting mules, and burning their carcasses with the black market diesel the animals carry.  The Syrian government has also begun to crack down on diesel smugglers, and in mid-August, it increased jail sentences from 6 years to 12 years and declared that diesel smugglers would be treated like drug smugglers.

Energy costs are an existential issue for the Assad regime. Oil production once accounted for 90 percent of government revenue, but the country's aging oilfields have been in steep decline to the extent that Syria is now a net importer of oil. So Syria ran a budget deficit of almost 2 percent of GDP last year, and the government predicts a 10 percent defict this year. When a country with a controversial reputation starts running a budget deficit this is a big problem -- there aren't a whole lot of international investors who want to buy Syrian debt.

The difficulty with cracking down on illegal activity like oil smuggling is that some elements within the government are almost certainly profiting from it. Which is one reason why the Assad regime declared that fighting corruption is one of its biggest priorities, and perhaps why some of the soldiers recently sent to the border may have been elite troops. Those movements suggest that the Assad regime isn't reading the attack, but circling the wagons.

--Andrew Lee Butters in Beirut, with reporting by Obaida Hamad in Damascus