By Franz Schurmann

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Prediction #53 for Tuesday, March 28th, 2000

An old general and mystic will decide whether the oil and Lebanon crises are really over

On the markets oil prices are going down. No matter what the diplomats say this means the big dealers in the oil markets believe the oil crisis is over. Gold prices too are going down and this means the big dealers in gold believe the Israeli-Arab crisis too is over.

The two crises are linked. As earlier and recent market behavior has shown when one market moved into crisis so did the other. And when one moved out of crisis so did the other. For both there have been price ceilings that, when pierced, set off crisis alarms. For oil it recently has been $30 a barrel and for gold $300 an ounce. Oil is now significantly below $30 and gold significantly below $300.

For ages people have hoarded gold when worried about war and sold it when peace returned. A few weeks ago when heavy fighting raged in southern Lebanon both gold and oil prices went up. The reason was that two key OPEC members, oil giant Saudi Arabia and oil muscle man Iran, are deeply involved in the Lebanon situation.

The Saudis and Iranians are now arguing over how many more barrels of oil should be lifted every day to bring down the high prices. The Saudis are insisting oil output should be raised 1.7 million barrels a day while the Iranians want only 1.2 million barrels more.

The reason for the dispute has nothing to do with oil prices but with the tripartite drama over peace talks now going on between Syria, Israel and America. In 1990 Saudi Arabia brought the bloody 15 year civil war in Lebanon to an end by brokering peace accords between the warring factions. By design, the accords were reached in the Saudi mountain town of Ta'if which has the same linguistic roots as the Lebanese Arabic word for faction, ta'ifa.

And one of the most powerful of Lebanon's ta'ifa are the Shi'ite Hizbollah who have close religious and political links to Iran. Iran also has close ties with Syria whose leader President Hafiz al-Assad long had been a bitter enemy of Iraq's Saddam Hussein. But Assad's background also is a reason why some observers are not so sure the reported peace deal between Syria and Israel will actually come to pass..

Israeli prime minister Ehud Barak has taken an openly optimistic stance even as some high ranking Americans who accompanied President Clinton to the Geneva talks with Assad voiced pessimism. Israel will return all of the Golan Heights if Syria is willing to cede it a strip of land on the eastern shore of the Sea of Galilee. That strip has springs that are vital to Israel's critically low water supply.

The entire region encompassing Syria, Israel, Jordan and Iraq has suffered the worst drought since 1908. The Israeli government last year reduced water allocations to its farmers by 25 percent. If Syria were to divert that water to Palestinian settlers from overcrowded refugee camps in Lebanon and Syria the water loss to Israel would be much greater.

The rumored deal brokered by Clinton is that Syria will be fully compensated for its losses by additional water from the Euphrates River. Since Turkey now has full control over Euphrates water through its huge Ataturk dam complex that will require its consent. Clearly as a NATO member Turkey must have consented because otherwise Clinton couldn't have offered the deal in good faith.

But Assad remains adamant that Israel must first return to Syria the entire Golan Heights up to their pre-June 1967 borders. Assad has ruled Syria since 1970. Before then he was the general who brought the Ba'ath (Arab Renewal) Party to power in 1963. During the last 30 years every neighboring country and many of the great powers, including America, were hostile to him and Syria. He trusts no foreigners, including foreign Arabs.

During the 1960's and 1970's both Assad and Saddam Hussein were members of the Ba'ath which was founded by a Christian Arab, Michel Aflak. But they broke with each other and then the Ba'ath split into two parts.. Saddam became a ruthless Arab nationalist while Assad had only one main goal: keep Syria intact and avoid any more wars along its threatened borders.

One result was the peace and quiet that has reigned for three decades in the Golan Heights region both within and beyond the Israeli borders. When Israeli troops crashed into Lebanon in 1982, inflaming southern Lebanon to this day, the Syrian-Israel borders, while closed, were quiet.

One reason why Assad was able to keep the peace in Syria is that he is an Alawi. The Alawi are a Sufi order that has many followers in Syria and Turkey. Sufis in general and the Alawis in particular stress the inner and mystical aspects of the Islamic faith.

But the price Syrians paid for peace was economic stagnation. Syrian soldiers stationed in Lebanon saw the furious building going on even as Damascus remained an old museum city. Assad knows Syrians want economic development. And he has decided that development must finally come. Recently he appointed an entirely new government mostly staffed by modernizers and technocrats. That shows he is not against the allegedly done Israeli-Syrian deal.

Hafiz al-Assad knows he doesn't have that many years left on this earth. He must use all of his Alawite shrewdness to make sure that whatever deal is finally concluded with America and Israel be honored for decades to come and not forgotten once the peace euphoria fades away.