THE SARG OVERSTATES THE POWER OF A TURKISH-SYRIAN

C O N F I D E N T I A L DAMASCUS 004876 SIPDIS SIPDIS NEA/ELA NSC FOR MORCHESE E.O. 12958: DECL: 10/11/2016 TAGS: ECON ENRG ETRD PREL SY SUBJECT: THE SARG OVERSTATES THE POWER OF A TURKISH-SYRIAN ELECTRICITY AGREEMENT Classified By: CDA Michael H. Corbin for reasons 1.5 b/d ¶1. (C) Summary: Turkey will begin supplying Syria with approximately 200 megawatts of electricity per year through an electrical grid connection with Turkey's Birecik power plant. After having remained static for three years, the implementation of this agreement will still only provide 3.3% of Syria's total power generation while Syria's ongoing electricity shortfall is currently estimated at 750 megawatts per year. However, the SARG is using the implementation of the agreement as an example of new economic development and to assert that ties between Turkey and Syria have never been stronger. End Summary. ¶2. (U) Turkey has agreed to begin supplying Syria on October 11 with approximately 200 megawatts of electricity (1.4 billion kilowatts per year) through an electrical grid connection with Turkey's Birecik power plant. In 2003, Syria completed all the work on its side to connect the two grids, but the final agreement was only signed by the Director General of the Turkish Electricity Company, Haji Doran Koyaka and the Director General of Syria's state owned electric company, Mohammed Abu Jaish, in Aleppo on October 4. ¶3. (U) The Syrian news agency (SANA) reported that the Syrian Minister of Electricity, Ahmed Khaled al-Ali gave a speech saying, "the accord reflects the two neighboring countries desire to deepen relations between them when it stipulates to provide Syria with 1.4 billion kilowatts for one year that can be extended." However, sources at the Syrian Public Establishment of Electricity Generation and Transmission (PEGT) downplay this agreement with Turkey, noting it will provide only up to 3.3% of Syria's total power generation (which in 2005 was about 6000 megawatts). ¶4. (C) Ferit Orcun Basaran, economic officer at Turkey's Embassy in Damascus also downplayed the significance of the agreement. He stressed that while Syria's public approval of Turkey's management of the Euphrates headwaters over the past year has helped to warm relations, Syria remains insignificant to Turkey's economic perspective. The 2005 trade volume between Syria and Turkey was $800 million, with Syrian exports representing $270 million and imports from Turkey representing $550 million. Prior to 2004 Syria had exported more to Turkey, but with declining oil production it now receives an increasingly greater share of imports. Basaran also stressed that Turkish investors do not view Syria as a good investment opportunity which explains why only 20 Turkish companies are currently invested in Syria. Yet, while this is an insignificant number for Turkey, Turkish investment is significant given the historically low levels of foreign direct investment (FDI) in Syria. Syria's government-owned paper Tishreen reported that in 2005 Turkish investors accounted for the largest number of all government approved foreign investment projects. ¶5. (C) Comment: The SARG is using this project as an opportunity to demonstrate to the public that it is making significant strides in economic development and that the country is not politically isolated. Syria is also utilizing this project to publicly praise Turkey and claim a deepening of relations, a pattern that has increased over the past year. However, in both instances, the SARG's public claims overstate the facts. End Comment. CORBIN