FISH KHABUR, Iraq — At the Halifax Security Forum, an annual event attended by high-powered government officials, business titans and assorted other movers and shakers from across the globe, national security adviser Robert O’Brien took the stage with PBS’ Nick Shifrin and let the cat out of the bag. When the veteran correspondent grilled O’Brien Nov. 23 about President Donald Trump’s decision to keep US troops in northeastern Syria “for the oil,” noting that the Pentagon’s Syrian Kurdish allies were selling it to the Syrian regime in defiance of sanctions, O’Brien responded, “Some of it goes to the regime. Some of it is used locally. Some of it goes to Iraqi Kurdistan. Some of it goes to Turkey. The key, though, is not where the oil goes but where the revenue goes.” The main thing, he concluded, was to ensure that none of it got to the Islamic State.

It is by now well established that the US-backed Syrian Democratic Forces (SDF) has been involved in selling oil produced in fields in eastern Syria mainly to regime-held areas. But trade with neighboring Iraqi Kurdistan and Turkey has rarely been reported and the parties involved, including the United States, have sought to keep it that way. For one, it flies in the face of US sanctions. But for Turkey, it's even more awkward.

As matters currently stand, Turkey, through oil, is helping to indirectly subsidize the very same Syrian Kurdish administration that it's seeking to crush on the grounds that it poses a threat to Turkey’s national security. Turkey’s successive military offensives against the Syrian Kurdish People’s Protection Units (YPG), which forms the backbone of the SDF, have cost hundreds of millions of dollars in treasure and at least 100 Turkish soldiers’ lives. So why is it beating the Syrian Kurds with one hand while feeding them with the other? The main reason appears to be profit. The others are leverage over the Syrian Kurds, and — according to Iraqi Kurdish officials — pressure from the United States.

But there are growing signs that Turkey’s laissez faire attitude may be changing, part of an all-out effort to bring the YPG and its Turkish affiliate, the Kurdistan Workers Party (PKK), to their knees. Russia, which is leaning on the Kurds to reach an accommodation with the regime, knows that it's more likely to do so if financially squeezed.

Follow the money

In a series of interviews conducted over the past year with current and former US, Iraqi Kurdish and Syrian Kurdish officials and with well informed sources with close knowledge of the oil trade, Al-Monitor learned that oil, mainly from fields in Rmeilan, Syria’s second largest field, and Qaytaniyah, near the Turkish and Iraqi borders, is being carried to Iraqi Kurdistan and then on to Turkey. These fields have been in Kurdish hands since 2012, when regime forces redeployed to fight Sunni rebels elsewhere. The sources spoke on condition of strict anonymity, citing the sensitivity of the topic.

A high-ranking Iraqi Kurdish official confirmed to Al-Monitor that “some” Syrian oil from the SDF-controlled fields is carried via Iraqi Kurdistan to Turkey. The Syrian oil is labeled as Iraqi Kurdish when going though the Habur border crossing with Turkey, an oil smuggler from Turkey’s southeastern town of Silopi speaking not for attribution told Al-Monitor. A second KRG official who corroborated the smuggler's account insisted that “most of the SDF oil goes to Turkey.”

“There’s some wheeling and dealing going on,” the first Iraqi Kurdish official acknowledged without elaborating.

Because of the secret nature of business with Iraqi Kurdistan and Turkey, Syrian Kurdish officials decline to formally confirm its existence. But nor do they deny it's going on. “The oil issue is burning us,” said an SDF-linked source who blamed Trump for exciting unwelcome interest in the trade.

Oil revenue is what sustains the Syrian Kurds’ autonomous administration, allowing it to pay the salaries of its civil and military arms. Control over the fields also strengthens the SDF’s hand in negotiations with the regime. “If we lose the oil revenue, our whole system will collapse; it's critical,” acknowledged an SDF-linked security official.

Oil revenues have grown even more critical since Trump froze some $200 million in stabilization funding for Syria in March 2018. The European Union in turn refuses to commit more money, telling the Americans, “We are either in with you or out with you.”

Cash injections from Saudi Arabia and the UAE amounting to $150 million are due to run out early next year. SDF commander Mazlum Kobane’s mysterious visit to the UAE in late November is believed to be connected in part to a quest for further funds.

Wheeling and dealing

“We believe that around 300 tankers worth of oil goes to Iraqi Kurdistan per day,” a former Trump administration official told Al-Monitor. “The oil trade is shady. The deals are cut at the top then subcontracted. There are many middlemen. I would imagine that some of the oil ends up in Turkey.”

An Iraq-based oil analyst put the volume at 6-8,000 barrels per day. “The oil is very cheap. In July it was less than $20 per barrel while the world price was around $60,” he told Al-Monitor. The big discrepancy between the analyst and the former Trump Administration official's figures underscore how hard it is to pin down volumes in the illicit trade. In any case, low prices make for huge profits.

The analyst continued, "We know that some oil that goes to Iraqi Kurdistan is sold to small, unlicensed refineries in Dohuk and Erbil. And most of the traders are somehow linked to KDP leaders in the same way that traders for the oil going to regime-held areas are connected to [Syrian President] Bashar al-Assad. And I wouldn’t be surprised if some of the Syrian oil ends up in Turkey because the oil traders from both sides are very well connected with government officials from both sides.” KDP is the acronym for the Kurdistan Democratic Party led by the powerful Barzani family.

The Iraqi Kurdistan Region’s president is Nechirvan Barzani, who in his earlier stint as prime minister oversaw the KRG’s oil business, most notably a landmark deal with Turkey in 2013. The agreement, which has been fiercely criticized for its opacity, allowed the Iraqi Kurds to sell their oil independently of Baghdad via a purpose-built pipeline running to export terminals in Ceyhan on Turkey’s southern Mediterranean coast.

The deal escalated tensions between Erbil and Baghdad, which is suing Turkey in the International Court of Arbitration for its role in the affair. It's impossible to prove, but a fair amount of oil is believed to go to Israel. In July, a senior Israeli official told Al-Monitor that the KRG was currently its biggest supplier of crude.

There are conflicting accounts of how the oil gets to Iraqi Kurdistan. A second former Trump administration official who spent time in Syria said it was trucked. “There were shitloads of trucks,” he told Al-Monitor.

On a recent morning at the Fish Khabur customs complex, there were no tanker trucks in sight.

A reporter’s attempt to follow a skinny pipeline that ran along the road to the Sahela crossing to Syria, which lies roughly five kilometers (three miles) south of the main crossing at Fish Khabur, was interrupted by an armed Iraqi Kurdish border guard, who told her, “This is a military zone. You have no business here. Now go.”

Open-source intelligence mined by Al-Monitor, and as first observed in October 2019 by the researcher known as @obretix on Twitter, revealed that one of the pontoon bridges connecting Fish Khabur to the Semelka crossing on the Syrian side features a makeshift pipeline. This pipeline runs across the southern bridge, where it connects to an oil depot on the KRG side consisting of 22 storage tanks. Some tankers do use the bridge, however. (Read our full report here.)

Oil for access

An SDF official told Al-Monitor that tanker trucks that cross over the pontoon bridge typically carry Iraqi Kurdish fuel to coalition forces in Syria.

Long before the Trump administration took over, the US-led coalition had been tacitly condoning oil sales to Iraqi Kurdistan. But in the early days of the Syrian uprising, the KRG was squeezing access through the Fish Khabur border crossing and charging high taxes on goods going into Syrian Kurdistan, also known as Rojava. The hostility stemmed from its poor relations with the YPG and pressure from Turkey.

The State Department did not respond to Al-Monitor's request for comment on O'Brien's remarks.

Turkish officials did not respond to Al-Monitor's requests for comment.

The United States brokered a deal whereby the Syrian Kurds would sell some of their oil via the KRG in exchange for unfettered access via Fish Khabur, which is their lifeline for humanitarian and commercial goods as well as military assistance from the US-led coalition. “Getting the deal done was key to keeping Fish Khabur open. The KDP-YPG deal on oil allowed us to keep everything smooth,” a former US government official told Al-Monitor. “But it was never publicized,” the official noted.

In a recent research note, the International Crisis Group observed, “YPG leaders believe that a continued US presence at the [Rmeilan] oil field in al-Hasaka will compel Washington to keep a land supply route open” through Fish Khabur.

“For Washington, control of the crossing would ensure a steady supply line from US military depots in Iraq. Loss of the crossing would severely harm the local economy, end foreign stabilization and humanitarian funding, and render the YPG more dependent on Damascus.”

When the Islamic State controlled oil fields in parts of Al-Hasakah and most of Deir ez-Zor, Turkey’s President Recep Tayyip Erdogan was accused of personally benefitting from what was a thriving multi-million-dollar trade at the time. A hacktivist group known as Redhack hacked the emails of his son-in-law Berat Albayrak, the country’s current finance minister and former energy minister. The most damning messages in the leaked trove pertained to Powertrans, an energy company that was granted a monopoly on trucking Iraqi Kurdish oil to Turkey before the KRG pipeline became operational. Albayrak denied any connection to Powertrans, but the dump exposed 32 messages with the keyword “Powertrans” in which he appeared to be providing advice on personnel decisions for the company.

Turkish media outlets claimed that Powertrans mixed IS-produced oil into their shipments to Turkey, though they provided no evidence.

In November 2015, after Turkey downed one its fighter jets, however, Russia jumped in with its own claims that Turkey was buying IS oil and circulated satellite imagery that purportedly proved it. Briefing the foreign media shortly after, Russia’s deputy Defense Minister Anatoly Antonov charged that Erdogan was personally involved “in this criminal business.” Erdogan issued an angry denial. When Turkey and Russia kissed and made up, the allegations disappeared.

A Barack Obama administration official involved in Syria policy told Al-Monitor at the time they had no proof that the Turkish government was directly engaged in any commercial activities with IS.

Oil for peace

But Syrian oil was making its way to Turkey, a Turkish official linked to the intelligence community noted in written comments relayed to Al-Monitor. Starting in July 2012, the YPG began allowing oil sales to Turkish companies via the towns of Kobani, Qamishli and Afrin, prompting the Syrian government to accuse Turkey of “stealing” Syrian oil.

The first former Trump administration official reckons that around 100 tankers currently carry oil from SDF-controlled fields to the Turkish-run Euphrates Shield zone in Jarablus.

But the Turkish official said that direct sales to Turkey proper halted when peace talks between Ankara and the imprisoned PKK leader Abdullah Ocalan collapsed. Peaceful cohabitation with the Syrian Kurdish administration, including oil, was meant to have been part of a grand bargain that would have ended the PKK’s 35-year-old armed insurgency against the Turkish state. Yet, lucratively cheap Syrian oil is still making its way to Turkey via the KRG.

Merve Tahiroglu is the Turkey program coordinator at the Project for Middle East Democracy, a Washington-based think tank, who has written extensively on the IS oil trade. She told Al-Monitor, “Open source information on IS smuggling indicates that the oil passed through Kurdish-held territories in Syria and Iraq before reaching Turkey. Regardless of the oil’s origin and how many times it changed hands, it appears to have come to Turkey through Kurdish middlemen and smugglers. This is all part of the war economy we’ve been tracking along the Turkish-Syrian border."

Tahiroglu acknowledged that the same smuggling networks may well be in play for sales to Turkey via the KRG. “Erdogan will likely deny these reports lest they hurt his political image. That said, Erdogan controls most of the narrative in Turkey thanks to his tight grip on the media. He is able to get away with such political scandals thanks to his outsized power to influence public opinion.”

A Turkish turn

Trump’s decision to maintain troops to protect the SDF-run oil fields has upset Turkey's calculations. Its game plan is to unravel the Syrian Kurds’ self-governance project and for as long as they have the means to finance and defend themselves under US protection, this cannot materialize.

Turkey’s hawkish security establishment recalls how the Iraqi Kurds began building their quasi-independent statelet throughout the 1990s on the back of oil that was smuggled to Turkey in large quantities in breach of UN sanctions. Ankara turned a blind eye. Assorted Turkish military and police officials were widely reported to have benefited.

The last thing Turkey wants, however, is a second Kurdish entity, much less a PKK-friendly one, as it sees things, on its borders. Hence, perceived national interest in this case is poised to trump personal profit, and Turkey is seriously weighing putting the kibosh on the trade even though comparatively it is vastly more modest by all accounts, according to a well-informed source familiar with the Turkish government's internal debates.

The message was reportedly relayed to KRG Prime Minister Masrour Barzani during his recent meeting with Erdogan in Ankara. “The Americans are sure to push back,” the first Iraqi Kurdish official predicted, saying Turkey had acquiesced to the trade under American pressure to begin with. Turkey’s recent behavior plainly indicates, however, that it no longer cares. It bought Russian-made missiles despite threats of US sanctions and invaded northeastern Syria, triggering a fresh cocktail of sanctions bills.

Ominously, the spokesman for Erdogan’s Justice and Development Party, Omer Celik, took a thinly veiled swipe at Trump today, saying, “To claim rights over resources belonging to the Syrian people is colonization.” He railed at Washington’s plans to guard the oil fields so that the SDF may continue to benefit from oil revenues, claiming, “This proves yet again that they are on the side of the terrorists, not the Syrian people.”

Russia has been far blunter. Its Foreign Minister Sergey Lavrov said the US plan to protect the oil was “tantamount to robbery” and warned the Syrian Kurds that relying on the United States “won’t bring any good.”

For Russia, any Turkish move that deepens the rift with the United States and forces the SDF/YPG’s hand in its talks with the regime is welcome. Curbing the oil trade results in both. Should the regime become the Syrian Kurds' sole customer, it will push prices even further down.

Nicholas Danforth is a senior visiting fellow at the German Marshall Fund of the United States. He told Al-Monitor, “From Moscow and Damascus’ perspective, this would be a more helpful way for Turkey to put pressure on the YPG than continuing its military operations on Syrian territory.”

But there are signs that Russia and the regime may already be taking matters into their own hands.

A series of mysterious airstrikes on makeshift oil refineries and oil tankers around al-Bab and Jarablus, reported by Russia’s RT, may be the opening salvo in a campaign to pressure the SDF. The RT report was picking up on a Nov. 26 story by Syria’s government news agency SANA, which quoted an unnamed “field source” who had investigated “Kurdish organizations in Syria’s Jazira area” who were smuggling oil via Jarablus “as well as [via] northern Iraq, to the Turkey regime —which the Kurds claim as their main enemy.” SANA asserted that the source had “emphasized that strict measures will be taken against any smuggling operations of stolen oil from Syrian land to outside Syria.” Neither RT nor SANA mentioned who was responsible for the strikes. But Sunni opposition rebel commanders pointed to Russia.