Greece is throwing a slender economic lifeline to Syrian President Bashar al-Assad by reviving phosphate imports from mines near the ancient city of Palmyra.
Sales of the mineral — mainly used as a fertilizer — are increasingly important to Assad because international sanctions against the war-shattered nation’s crude oil are restricting his access to hard currency. From 2009 to 2011, Syria supplied almost a fifth of EU imports of phosphate, but those sales collapsed during the war.
Official EU import data shows that phosphate shipments to Europe — heading almost exclusively to Greece — are resuming and more than tripled between December 2017 to April 2018. The volumes remain small compared to the pre-war heyday, but Syria is making a clear push to return to the EU market and its giant farm sector.
Syrian data show that total phosphate exports were more than $200 million in 2010.
Three people either working in the phosphate industry or involved with trading the commodity said Syria is able to export again because Russian investors have resurrected the Palmyra mines, which Islamic State militia captured in 2015. Assad awarded these reserves to the Russians last year after Moscow helped him turn the tide against ISIS.
The concession to develop phosphate went to Russia’s OAO Stroytransgaz, owned by Gennady Timchenko, according to the Russian website RBC and a market observer, who spoke on condition of anonymity. Stroytransgaz and Timchenko were both placed on the U.S. sanctions list in 2014 after the invasion of Crimea.
Neither Timchenko nor Stroytransgaz are sanctioned by the EU. This means it is legal for Europeans to buy rock from the Russians, although lawyers point out there is a risk that the U.S. could target European partners for dealing with the mine.
Stroytransgaz declined to comment on its concession in Syria, on its trading partners or whether it was taking any precautionary measures to comply with U.S. sanctions.
One market observer with knowledge of the Russian investment said that the shipments are heading to Greece from the port of Tartus, home port of Russia’s Mediterranean fleet. “Availability is about 60,000 tons for export per month,” he said. He declined to be named due to his own commercial interests in the market.
Before the war, Greece was a big importer of Syrian phosphates.
Diplomats recall that Greece defended that economic interest in 2012, when it was the main opponent to EU sanctions on Syrian phosphates during debates in Brussels.
Greece’s ties to Moscow also run deep, and Athens was one of the most vocal proponents of a softer line against Russian President Vladimir Putin in response to the Ukraine conflict of 2014.
“In discussions around Russia’s role in Syria, there is a small but vocal bloc of member states, who, for most likely national interests, have vetoed more robust sanctions against Russia,” said Abdy Yeganeh, a security expert at the Independent Diplomat, a nonprofit consultancy that advises the Syrian opposition. “This has been a missed opportunity by the EU and its policy on Syria.”
One former senior EU diplomat who was present in the 2012 Syria sanctions discussions said Athens fought off pressure from Britain and France to avoid any form of restrictions on phosphate.
“It’s always been clear that they are doing it for their own national interests,” the former diplomat said.
The official said Greece’s position was made clear during discussions inside the Mashreq/Maghreb Working Party as well as the Political and Security Committee inside the Council of the European Union.
Alex Yennimatas, a spokesperson for the Greek foreign ministry, rejected that account of the sanctions debate of 2012. “The foreign ministry has never opposed such sanctions” on Syrian phosphates, he said. He declined, however, to address discussions inside the Mashreq/Maghreb Working Party and the Political and Security Committee.
Ramping up the rock
Trade data show that EU phosphate imports from Syria are nowhere near their pre-war levels, but are increasing fast.
In December 2017, Greece was importing 5,000 tons. By April 2018, this surged to 16,900 tons worth nearly €900,000, just as Assad, backed by Russian fighter jets, began retaking control over southwest Syria and other regions that were once home to ISIS fighters. The data do not show where exactly in Syria the phosphate rock comes from.
Some 16,900 tons a month would put April’s imports from Syria at about one-sixth of the level of peak business to the rest of the world in 2010 and 2011. Over the full years of 2010 and 2011, Syria was supplying about 1.2 million tons out of a total EU demand of almost 7 million tons.
Two market experts, who spoke on condition of anonymity due to the sensitivity of the trade, said the current volumes are just a fraction of the resource’s total capacity, with the mines having produced roughly 3.8 million tons of phosphate rock before ISIS captured them.
To place this in the broader international context, the lion’s share of EU imports — some 30 percent to 35 percent — originates in Morocco. Another 30 percent come from Russia.
One of the attractions of Syria to Europe is that it has some of the cleanest phosphate in the world — largely free from cadmium, a toxic, carcinogenic metal. This is important because Brussels is in the middle of a push to reduce the permissible level of cadmium in the EU’s phosphate imports.
Click Here: liverpool mens jersey
If the reforms go through, European farmers will be pushed to cut ties with countries such as Senegal, Algeria and Morocco and switch to imports from locations like Russia and Syria, where the phosphate has far lower natural cadmium levels.
Importing phosphate from Syria does not break the EU’s sanctions against Russian individuals and entities, but such commercial ties do come with risks because Washington is targeting Timchenko and Stroytransgaz.
“In this case, where phosphates in Syria coming from an entity sanctioned by the U.S. are going to a Greek company, the risk is that the Greek company could itself be designated as a sanctions target and be added to the U.S. sanctions list for dealing with the designated Russian company on a regular basis,” said Hal Eren, a Washington-based attorney specializing in economic sanctions.
“If you deal with a blacklisted company, you yourself can become blacklisted, and you would not be able to do business with the U.S., and no bank in the world would deal with you for fear of them getting involved with dealing with sanctioned entities. In other words, as a practical matter, no one, especially banks, wants to touch any entity that appears on the U.S. sanctions list even if what they are doing is perfectly legal.”
It is unclear who imports the phosphate rock into Greece from Syria, though several traders and industry executives who spoke on condition of anonymity said the only major importers of phosphate rock in Greece were located close to the city of Kavala in the north of the country.
POLITICO contacted the three most prominent companies involved in the sector: Phosphoric Fertilizers Industry and Chemical Ltd (PFIC), Hellagrolip SA and New Karvali Fertilisers SA, but was unable to determine the buyer of the Syrian rock. All three companies broke out of the Greek fertilizers and chemicals company ELFE SA in 2015, court documents show.
Emmanouela Genetzaki, legal counsel for Hellagrolip, said that “Hellagrolip does not purchase phosphate rock from the sanctioned Russian entities like OAO Stroytransgaz.”
“Since the beginning of the war, the basic phosphate rock markets for Hellagrolip was Morocco and Algeria,” she said.
Officials at PFIC and New Karvali Fertilisers did not respond to several requests for comment.