Monthly Archives: December 2011

Repsol Rebounds in Time for 2012 but Challenges Loom

After a troubling year of internal strife and outside threats to production efforts around the world, Spain’s Repsol will begin the 2012 in a calmer and more stable place. However, political and funding factors could still derail the company from having what they expect will be an outstanding new year.

Repsol’s internal challenges this year centered on an attempt by two of the company’s largest shareholders to exert greater control over official decisions. Led by CEO Luis del Rivero, Spanish construction company Sacyr partnered with Mexico’s Pemex to try to force the company’s hand, leading to significant media attention dedicated to company cohesion and requests for government investigations into their actions by Repsol. Eventually, the move backfired on del Rivero, who was forced from his post by the Sacyr easing tension between the company and shareholders.

Thanks to a substantial presence in Libya, Repsol also faced production delays in the Mediterranean as the country’s civil conflict boiled over into violence that forced the evacuation of expatriate staff members. The conflict would go on to all but halt exploration and production efforts for foreign firms.

Challenges aside, it was not all bad news for Repsol in 2011. The company was on hand in Argentina when the country announced what has been predicted to be the third largest shale reserve in the world behind the United States and China. Despite having reduced their presence in the country over the past several through the sale of shares in their local subsidiary, Repsol still hold a substantial role in the country, representing two-thirds of the company’s overall output, according to the Financial Times. The company’s Argentinean efforts stand to be the quickest way to boost earnings and production levels, offering an estimated 927 million barrels within reach, 741 million of which are oil.

That Argentinean presence, combined with a significant return to production levels in Libya with Repsol and Italy’s Eni at the forefront of the country’s energy plan, have allowed Repsol some confidence moving into the new year. This week saw Libya’s National Oil Corporation announce a list of international energy firms that would receive preferential treatment for the county’s efforts to return to pre-conflict production levels. However, in spite of the company’s positive outlook for 2012, some political and financial factors could prove challenging both at home and aboard.

Following early elections at the end of November, Spain welcomed the conservative Partido Popular (PP) back to power after nearly eight years of Socialist rule. While ostensibly pro-business, the PP has a legacy of corporate interventionism that could prove challenging to the company’s directors. Under previous PP governments, the party has injected their input into corporate decisions on investment and leadership, which could pose a problem for the company’s plans for expansion and raising new capital.  Furthermore, the PP’s leader Mariano Rajoy has previously expressed a strong distaste for doing business with certain leaders in South America, including countries where Repsol currently operates.

During the eight years under Prime Minister José Luis Rodríguez Zapatero, Spain sought a more open relationship with both countries, as well as others sharing a political spirit in the region, such as Bolivia. During this period, Repsol established a strong regional presence with extensive projects in Argentina, Brazil, Peru and Ecuador. After nearly seven years of absence, Repsol recently announced a return to Cuban waters with a planned offshore effort that is scheduled to commence in January 2012, despite strong opposition from U.S. political actors.

The company’s Cuban efforts could invite further political problems, though not from home. The project has elicited strong opposition from U.S. lawmakers who worry both about the offshore effort’s environmental impact and Cuban energy endeavors so close to American territory. To counter such criticism, Repsol have invited U.S. officials to inspect the project before moving forward.

Political obstacles aside, Repsol will also face funding challenges in the new year that could hinder the company’s ability to capitalize on their projects with the most potential. In order to reach desired production levels in Argentina, the Spanish giant will need a significant level of investment, predicted to reach upwards of $20 billon to fully exploit the South American reserves over the coming years. The company began this process recently with the dedication of $400 million towards the effort over the next year. While investor confidence in the company and shareholder cohesion are likely to attract further investment, allowing for such obligations, the company’s domestic situation does not allow for such a positive outlook.

Furthermore, Spain’s downbeat economic forecast for the year could weigh down domestic investment as well as foreign investor’s confidence in a Spanish company. Economic data released this month predict almost non-existent growth rates for the first quarter of the New Year, leading to speculation that another national recession could be on the horizon. This lack of expected growth and related loss in domestic demand is unlikely to slow Repsol too much given its broad, international presence, though the company’s exposure to national firms like Gas Natural could cause some problems should Spain’s economic slowing continue.

Image: Arabian Business

 

 

 

Advertisements
Tagged , , ,

Aftershocks of the Revolution Pt. 2: LGBT Human Rights and Foreign Aid to MENA States

After coming across a Christian Science Monitor map displaying the treatment of LGBT citizens in each country in Africa earlier this week, I thought back to the speech recently delivered by U.S. Sec. of State Hillary Clinton. Delivered at the Palais des Nations, Geneva, Switzerland, the speech called for greater support for the human rights of LGBT citizens across the world and, in so many words, making it clear that State Department personnel would be advised to consider treatment of LGBT populations when making decisions about foreign support, including foreign aid. The message seemed clear – countries that tolerated or supported the abuse or lack of equal rights for LGBT citizens would run the risk of aid reviews and/or cancellations.

While we are still some time away from seeing just how the US State Department will follow up on Clinton’s speech, its worth exploring how closer attention to LGBT rights could impact much needed aid packages to countries emerging from the Arab Spring. This is especially relevant in countries that have seen more conservative parties make significant strides during recent elections, such as Egypt, Morocco and Tunisia. According the CSM summary, all countries in North Africa have policies of imprisonment from one to ten months for LGBT citizens. Further, every one of those countries receives some level of foreign aid from the United States, led by Egypt with $1.5 billion in support as of last year. According to the US government releases, Egypt is followed by Morocco with $43.6 m, Tunisia with $6.5 million, Algeria with $2.8 million and Libya with $1.6 million though that is likely to change after the country holds planned elections in the Spring.

There is little reason to believe that the US will base all or any of their attention on LGBT rights when making final aid decisions over the coming months given the weight of other factors in the region, including security and political stability. Furthermore, it may not even be advisable at this point to interfere in how foreign aid is spent at all so early in the process of building new governments, according to regional observers.

“The best thing is probably to just give the money to the governments and then encourage them to use it in ways that make sense and monitor it,” Frank Anderson, president of the Middle East Policy Council, told the International Business Times.”History has shown that there’s great sloppiness and opportunity for corruption when you give governments money, but attempting to manage the system ourselves has failed miserably in place after place after place.”

Still, given the timing of Clinton’s speech, it is worth being aware of the elevated status of the issue as countries across the region struggle to find a new political and social balance and what, if any, role does the State Department intend to play in that process.

Tagged , , ,

Spain and Rajoy: Still Waiting

 

 

Over two weeks on from the landslide election that gave Mariano Rajoy and Spain’s conservative Partido Popular a seemingly unstoppable majority and details about just what they plan to do to help put the country back on track remain vague. This week saw the first meeting of the national parliament and two cabinet postings, coming from, as expected, two long time party figures. However, short of again pointing out what the country now faces and promising no miracles as Spain looks ahead to almost non-existent growth in 2012 and a possible slip back into recession, Rajoy remained coy about what exactly he plans to do after being sworn in on December 21st. Given the scope of the challenges ahead and the reality that much of the country’s market stability and ability to continue borrowing under sustainable rates are now subject to forces beyond their own borders, it is not terribly surprising that Rajoy is taking his time unveiling actual policy proposals or appointees, including the highly anticipated finance minister. However, given the dour mood the country now finds itself in and the run-up time Rajoy and the PP had with the confident knowledge that they would indeed hand the outgoing PSOE a significant defeat, its difficult to understand why the new prime minister would hold out on offering even a hint that he came to the table with a few solutions. Instead, the incoming head of state has simply said he would offer no new revenue streams through taxes and would expand cuts to government services, though he left the deeply unpopular hits to health and education to the community level. Already hitting communities hard in Catalonia and Castile and Leon, these cuts will likely rise to make way for planned tax cuts aimed at small and medium sized businesses that Rajoy has placed at the center of his plan to kick-start job creation and chip away at the country’s 21 percent unemployment rate.

There is undoubtedly some sense to being clean and clear with a population that will be called upon to sacrifice for the greater good over the next few months but I find it hard to understand why Rajoy would offer so much salt without a little sugar. Is there not some plan he can offer to raise spirits and allow people to look beyond the difficulties of 2012 beyond, if we work hard, we’ll soon be back to zero? Is there not some solution he could offer that would help the Spanish economy adapt and evolve rather than, I plan to do exactly what the last party has been doing, but more? Furthermore, given the heavy evidence that has emerged to suggest simple austerity in the name of deficit reduction will do little to spur the growth Spain so desperately needs now, is it out of line to ask, beyond more of the same and broad promises to “reform the banking sector, the public sector and the labour market, and introduce greater competition in communications, energy and transportation, and open the way to economic growth starting after 2012, creating jobs,” what exactly does Rajoy plan on doing to move Spain forward?

As the holidays approach and businesses shutter for the new year, it seems increasingly unlikely any real answer to that question will come before 2012 arrives, leaving Spain to do what they are growing sadly accustomed to doing – waiting for a leader with a plan.

Image: Financial Times

Tagged , , ,

Italy Weighs Energy Future Under New Leadership

Following months of political upheaval and roller-coaster market instability, Italy now finds itself with new national leadership, promising a technical approach to governance and the institution of new financial aimed at calming global worries about the country’s ability to deal with its overwhelming debt. While the exit of controversial Prime Minister Silvio Berslusconi and the appointment of Mario Monti to lead the government in implementing a host of new regulations promoted by the European Union and the International Monetary Fund were welcomed by political and market leaders across the globe, it is far from clear how this new technocratic leadership will work in practice, including how it will impact the country’s precarious energy standing.

Although the news of Bersluconi’s exit was enough to drive up oil and gas prices across the globe last month, further allowing local companies such as Eni the spike in profits necessary to weather current challenges, it is far less clear how his exit will impact the country’s broader energy futures.

The last 18 months have left Italy with a novel collection of energy challenges, including issues pertaining to their domestic operations and production as well as their exploration and production efforts abroad. The country’s most prominent energy exporting partner Libya saw their long-standing government collapse as pro-Democracy movements led to an armed conflict lasting months, resulting in a complete halt in production as well as the end of the sitting government of Muammar Gadaffi. Despite international pressure, Italy had spent the last decade cultivating trade and diplomatic relations with the North African leader through billions in aid and development investment, establishing Libya as one of the country’s three main providers of oil and natural gas alongside Algeria and Russia. The armed conflict saw Italy threaten more than a third of energy imports as companies such as Eni were forced to remove expatriate staff from the country.

Meanwhile, at home, Italy has seen two domestic efforts to increase energy independence curtailed by local protest movements. Offshore drilling projects were restricted after the Deepwater Horizon spill in the Gulf of Mexico inspired calls for new project rules in the Mediterranean, leading to a ban on efforts within five nautical miles of the Italian coastline. While the new regulations mostly hindered smaller operators, such as Mediterranean Oil and Gas, new proposals from the European Union on drilling in the sea could further impact offshore endeavors in the region. Finally, the government’s push to revive Italy’s long-dormant nuclear power program after the events surrounding the tsunami in Japan this year and its impact on nuclear plants sparked a wave of protest from EU and local political leaders. After being tabled until political pressure had subsided, the campaign has now lost its strongest proponent in Berlusconi, causing further uncertainty about a nuclear future in Italy.

These events have left Italy and the country’s largest energy firms increasingly isolated when it comes to their immediate opportunities for not only growth but also the country’s immediate oil and gas needs. This situation may be further exacerbated by the absence of Bersluconi who demonstrated a willingness to seek out energy partnerships beyond and sometimes against wider regional sentiment. This approach, leading to close working and diplomatic relationships with Libya’s Gadaffi and Russia’s Vladimir Putin, will not likely be continued under the stewardship of Monti, a much stronger proponent of EU market integration and member state partnerships. Having announced his campaign to return to Russia’s highest office, Putin echoed this sentiment in a speech last week where he derided EU energy policies while praising the outgoing Berlusconi as a friend and “one of the last of the Mohicans of European politics”, according to the Wall Street Journal.

Although Putin is schedule to return to office, the change in political leadership in Libya may offer Italy some relief as Eni has returned to production efforts in the country after embracing the Libyan Transitional National Government (TNG) following early reservations. Eni has revived production efforts in the country, including their work in the Elephant field south of Tripoli, but levels remain modest. Fully supported by the EU, the TNG will provide a greater opportunity for Italy to expand their presence in North Africa in the months ahead, though infrastructure deficiencies and lingering worries concerning regional stability have slowed a return to pre-conflict production levels. Elsewhere in North Africa, Italy have sought more exposure to the region’s energy potential, recently moving forward on a long-delayed pipeline project linking Algeria, one of Italy’s largest energy providers, with the island of Sicily. The move would increase imports into Italy, as well as side-step potentially unstable transport systems in the transitional political environments of Tunisia and Libya. However, faced with likely spending cuts and a significant tightening of the belt, Italy may not be willing or able to pursue such costly infrastructure projects in the coming year.

For now, the country’s energy futures remain vague, with little allotted for traditional or novel approaches to meeting domestic energy needs or expanding their hydrocarbon presence abroad. Having announced that they have little to contribute to Europe’s expanding shale extraction marketplace and done little to build a government support system for renewables, the country again looks to its traditional providers for an energy answer.

 

Tagged , ,

Barcelona and the Power of the Pass

Taking a short break from heavier topics tonight, I wanted to quickly point out an excellent piece on the ability of Barcelona to overcome what might have been the quickest and harshest way to knock a team’s wind from their sails when Real Madrid took full advantage of a mistake by Vitor Valdes to pop an easy first goal – 23 seconds into the game. I would guess that a goal so quickly and easily taken in a game that has been elevated to near-mythical proportions here in Spain would create a sense of genuine panic among even the most seasoned players. But then you have a team like Barcelona who calmly gathered their thoughts and proceeded to play what appeared to be exactly the type of game they have always played under the guidance of trainer Pep Guardiola. Tight quick passes and lots of them. It did not seem to take at first, with Madrid continuing a frenzied but  fierce attack, but the consistency paid off with an equalizer before the half. After that, it seemed all but over for Madrid.

I’ve always felt that Barcelona is the type of team that if you give them enough time to figure you out that night, you’re as good as dead. Whether its after five minutes or twenty, a moment will come when they figure you out and they will play around you like professionals against school children. The Champions League Final against Manchester United being of note. That is, I thought, unless you are able to knock them off their stride early, hard and fast. That had to be the only way you could really beat them. Saturday night proved that theory very wrong. Its difficult to imagine Madrid or any team hitting them earlier or harder than 23 seconds and yet here they were – methodically taking Madrid apart until, as usual, tempers boiled over as the home team was forced to slump off the field in front of a crowd now thinned by disappointment.

Barcelona were lucky for many reasons Saturday night but their impact of their approach and willingness to stick with it in the face of the most daunting of odds cannot be denied.

Image: Getty Images

 

Tagged , ,

Spain’s Energy Future Under Rajoy

As Spain prepares for the return of a Partido Popular government this month, under the leadership of incoming Prime Minister Mariano Rajoy, calls for greater clarity about policy decisions have become more pronounced and the country’s energy sector is no exception.

Swept into office in late November with a significant and clear Parliamentary majority, Rajoy and the PP were able to win without many specific details about their plans thanks in part to the deeply unpopular standing of the incumbent PSOE and outgoing José Luis Rodríguez Zapatero.  However, with the November 20th early elections out of the way, demands for a clear path forward are becoming more pronounced, including what the incoming government will do to address the country’s energy sector. While details remain vague, it appears that a PP government will provide a shift in industry priorities and financial support and fewer government regulations.

Long recognized as a leader in renewable energy efforts, Spain will likely see a reduction in attention and investment as the PP has promised cuts to government subsidies for solar and wind projects. Unlike fellow renewable leaders in German and Portugal, Spain did not pass the cost of renewable subsidies on to consumers, instead relying on state funding and the sale of government bonds, which has become unsustainable in recent months.

To compensate, Spain’s PP have signaled that they will push for less regulation over the country’s nuclear efforts, allowing plants to remain open for as long as they are deemed safe. In regards to more traditional efforts, the PP have stated that they will push Europe to allow for greater Spanish access to the European power grids, especially in terms of the country’s access to oil and natural gas pipelines into France. Meant to address the current narrow lines of transport, the push would establish Spain as a more dependable entry point for North African reserves into the European market, though they will have to overcome a long history of resistance from France.

The PP has not yet expressed support or concern about the growing shale efforts in Spain, anchored by new projects in the country’s northern Basque Country, though the PP’s aversion to greater regulation suggest less support for the sort of official push-back similar campaigns have seen in Germany, France and the UK. In more immediate terms, the government will likely to support an Energy Ministry push to compensate one of the country’s largest energy actors, Gas Natural, for legal fees accrued during a pricing dispute with Algeria’s Sonatrach to the tune of 157.3 million euro.

 

 

 

Tagged , , , , ,

Libya and An Energy Return to Normalcy

Far exceeding the expectations of international observers, Libya’s energy production levels have moved closer to an expected return to pre-conflict levels by as early as Spring 2012. However, issues of security and new governance have threatened to slow the process when the country needs new revenue most.

After grinding to an almost complete halt amid violence between loyalists troops and anti-Muammar Gadaffi forces earlier this year, Libya’s hydrocarbon efforts have shown significant signs of life following the death of the country’s long-standing leader. Although estimates vary, a return to the country’s pre-conflict level of 1.6 million bpd from a current output of 840,000 bpd seems much more likely goal by the end of 2012, though some have suggested it could come even earlier. Nasser el-Ghali Sharif, chairman of the Zawiya oil refinery west of Tripoli, told the BBC that full production could come as early as March.

The amended production estimates come as members of the Libya’s National Oil Company have discovered that the country’s vital energy infrastructure has been left far less damaged than once feared. With some exceptions, the North African nation’s upstream operations emerged largely unscathed from the eight-month civil war as both sides realized their importance and made efforts to protect them. Some downstream sites, including the Es Sider crude export terminal at As Sidrah did not fare as well with authorities estimating a year’s worth of work before it can get back to acceptable levels, according to the Eurasia Review.

However, any significant return to the country’s pre-civil war output levels will face obstacles over the coming months in the form of security challenges and the government’s efforts to balance progress with a new level of transparency and accountability expected from a post-Gadaffi era.

While undoubtedly calmer than when air-strikes and direct military attacks halted production all together and forced mass evacuations of expatriate staff members, Libya’s security situation remains an obstacle for many international companies hoping to return. Although some companies have restarted existing projects, led by France’s Total and Italy’s Eni in September, others have hesitated at the prospect of still armed rebel groups and sporadic threats from former government loyalists. The assurance of general security has emerged as a vital step that needs to be achieved for both the country’s Transitional National Council (TNC) and foreign firms before new efforts can be pursued.

The ability to ensure a healthy environment for such international partnerships has emerged as an especially important goal as infrastructure deficits become clear, requiring substantial investment contributions in order to get production efforts back on line. In addition to establishing dialogues with international firms, the TNC have set out to build stronger ties with regional neighbors, including those they have recently found themselves at odds with. After questions of support arose during Libya’s armed conflict earlier this year, with the NTC accusing the Algerian government of siding with the Gadaffi government, representatives from Algiers and Tripoli met at the Gas Exporting Countries Forum (GECF) late last month for the first time, signaling greater cooperation between the two countries. This week saw NTC Chairman and head of Libya’s care-taker government Mustafa Abdel Jalil announce that he would travel to Algeria over the next month to help build on regional cooperation efforts.

The Cost of Good Governance

Once those partnerships are pursued and repaired, they will still face the newly evident obstacle of addressing the NTC’s pledges of transparency and accountability when it comes to agreeing on new and existing exploration and production contracts. Intent on distancing themselves from the corruption and cronyism that came to define the energy sector under Gadaffi, the NTC have worked to create a system that balances clarity, progress and general support for firms from countries that supported their anti-Gadaffi campaign, often with frustrating results.

While insisting that all existing contracts will be reviewed and considered, the NTC has again stated that they would be unlikely to support contracts with companies from countries that did not support them, including Russia, China and Germany. According to Reuters, the country’s National Oil Company has continued to revise deadlines and requirements for traders and international firms intent on accessing Africa’s largest proven reserves, leading some to accuse them of “back-trading” and taking advantage of the enormous interest in entering Libyan fields.

“They are surfing the wave. Everyone is knocking on their doors,” a senior oil-trading source told Reuters.

Further complicating the issue is criticism coming from within Libya that argues that the NTC and current energy ministers lack the authority to sign off on or close any contracts as they are an unelected, temporary government body.

“They are a caretaker government… They don’t have the mandate, the right, the ability to engage in any major signing of contracts for oil fields,” Sami Zaptia, the managing director of Know Libya, a consultancy in Tripoli told the BBC.

With months left before national elections have been planned or even hoped for, the NTC and current energy leadership are faced with the predicament of moving Libya’s energy industry forward in a way that ensures much needed national revenue but without over-extending their authority or giving reform-minded critics any cause for concern.

Image: Reuters

 

 

 

 

Tagged , ,

All Eyes on Credit Agencies Reaction to New EU Path

With a new strategy laid out for the Eurozone, all eyes are now on how greater oversight among the member states that have signed on will be received by the markets and credit rating agencies. While today suggests some positive receptions from markets in Europe and further afield, ratings agencies may be a different story. Standard and Poor’s said they would hold off until after this week’s Eurozone  conference to announce anything about European ratings, adding an element of unease to France who have suffered under the threat of a downgrade for weeks now. However, as the agencies ponder the new plans how much of an impact it will really have on the region – as well as what the UK’s new found positioning will mean for London and Brussels – it is worth considering how much of an effect a downgrade will actually have given the agencies’ track record and current standing in Europe and beyond. Having come under attack recently for rather questionable or late findings about everything from mortgage-backed investments to Greece’s overall well-being, agencies are now finding themselves in a defensive position, forced to defend their ratings, their methodologies or even their purpose. Even worse, their findings, including recent downgrades of government bonds in Italy and Spain, have been greeted largely by yawns by the market.

This is in no way meant to suggest that agencies like S&P or Moody’s will cease to be relevant. The threat of six countries in the Eurozone losing their AAA rating come next week would undoubtedly be a blow to the region’s momentum towards staving off a collapse. But given their timing and new questions about methodology and track records, I will be curious to see how much of an impact a possible downgrade of European bonds will have come next week.

Tagged , , ,

The New EU Treaty’s Impact on the Mediterranean

As the dust settles on last night’s historic separation of European paths, leaving the UK more isolated in the region then they have been in decades, its worth noting what this new treaty will mean for the countries at the heart of so much of the fiscal crisis shadowing the region – the Mediterranean. After all, the calls for greater financial oversight and reporting included in this new version of the EU treaty will have the quickest and most substantial effect in those countries already struggling to keep afloat, mainly Greece, Italy and Spain.

With the UK choosing to step back from the continent late last night, it appears more and more likely that these calls will be answered, resulting in a more economically integrated Eurozone, complete with constitutional limitations on debt, centralized budget approval and if a confidential paper leaked earlier this week has any truth to it, new levels of authority over austerity and spending in the hands of Brussels. For governments in Athens, Rome and Madrid, this step is unlikely to faze anyone already trying hard to introduce economic adjustments to fit EU demands, though it is certain to make their work much, much harder.

With parliaments in two of these countries weighed down by claims of illegitimacy from those fighting so hard against further cuts, any additional push to centralize EU authority over individual economies is sure to meet with resistance. Already derided as puppets of Merkel and Sarkozy, Italy’s Mario Monti and Greece’s Lucas Papademos by political opponents, these PMs are unlikely to find much support for handing over even more authority to Brussels, even if it means a slower path to restoring confidence. To be sure, these heads of state will likely join Spain’s Rajoy in embracing this new treaty and will ultimately be successful in garnering an acceptable level of support from populations that see closer integration as a necessary and logical next step to sustaining their position in the Eurozone and really the Euro altogether. Still, those already worried about salvaging state sovereignty within the EU are sure to push back on the floors of parliament and on the streets, making the path ahead a difficult or at least contentious one.

Further complicating these new leaders’ path forward is the fact that this treaty will be unlikely to have any real impact on the region’s immediate economic situation. That particular ship has already set sail. Regardless of what confidence-building efforts come from this new effort, there will be slower or non-existent growth rates from Lisbon to Athens next year, inviting further difficult cuts and unpopular decisions. It is no longer a question of if anything can be done to avoid another slowdown, but one of how long the inevitable slowdown will last.

While the lingering slow growth and possible recession may actually provide a more supportive setting for handing over control to anyone but the local leaders that got them into this mess, it is likely going to come at the expense of what little faith regional voters have in their national governments. Frustrated with what they see as a lack of clear choice when it comes to existing political parties, voters in Spain, Italy and Greece have turned their attentions towards regional parties, casting protest ballots or simply not voting at all.

A domestic loss of confidence aside, the new treaty could at least provide a somewhat concrete path forward for countries so weighed down by uncertainty for so long.

Image: Noticias de Gipuzkoa

Syria Seeks Options in New World

As new limitations on Syria’s economic and diplomatic capabilities arise with each passing day, it seems less and less likely that the Assad government is going to be able to pull away from this with many friends or a leg to stand on. Not to say they have reason to believe otherwise. After all, his father seemed to face any real, lasting consequences for laying waste to much of the city of Hama in 1982, as captured in a particularly chilling chapter of Tom Friedman’s From Beirut to Jerusalem. Freidman touched on the similarities between the experiences of father and son earlier this year. Assad’s father was able to act with impunity so it’s hardly surprising to think that he would think things would be the same. But today is not 1982, nor is it really even 2009.

The region is different and the consequences of suppressing one’s own people as if the world was not watching are increasingly real. Sure China, Russia and Iraq have balked at foreign intervention and refused to embrace the wave of sanctions now crippling the Syrian economy. However, a substantial majority has mobilized against the Assad government and their actions – after all, they have seen what happens when movements are dismissed on a basis of history or military strength. They’ve seen what is now possible. Wait long enough and you just might end up on the wrong side of history, not to mention access to the country’s economy under new leadership. Just ask Russian energy firms attempting to re-enter Libya. This new reality, complete with off-the-street updates courtesy of shaky cell phone videos, does not appear to have done much to persuade Assad to pursue a new path towards dealing with protest movements. Its worked for dad and it worked for me up until now, the reasoning seems to go, so why not continue. Assad’s interview this week sought to downplay the coverage of events in the streets, suggesting that the news had been overblown and while mistakes had been made, things were generally under control or getting there.

Still, simply saying so does little to combat the increasingly organized opposition outside Syria’s borders, with countries converging behind stricter sanctions and threats of further economic isolation. Its only a matter of time before Assad will start having trouble paying the bills, regardless of how much his remaining allies step up to help. Further complicating Assad’s remaining options are the demands from a newly revitalized Arab League to allow outside monitors into the country to observe the government’s actions and attempts to quell the violence. Would opening the doors show a sign of weakness for the head of state or will it really calm calls for his ouster inside the country and out? Only time will tell but the ways things are looking, time is not something Assad has much of.

Tagged ,