Be respectful in your interactions with fellow members. You can Go Here to read our Terms and Rules. Visit My Profile to create your avatar and see your posts. If you to report a bug or issue, email us at support.GI US.com

Title: December 21, 2025

GRAY ZONE BRIEF 21 DECEMBER 2025
 
RUSSIAN CRUDE DISCOUNT
 
BLUF: Russia’s revenue on fossil fuel exports fell to its lowest level since the full-scale invasion of Ukraine.
 
Russia has sharply reduced its oil export prices, offering steep discounts on crude. Urals, the country’s flagship blend, was priced at $34.52 per barrel in Novorossiysk in December. With average production costs running between $25 and $40 per barrel, producers are operating at or near zero profit.
 
The market outlook remains bleak. Russian firms have had to deepen discounts for Chinese buyers to move cargoes that Indian refiners now reject over sanctions risks. As markdowns widen and volumes slip under sanctions pressure and softer global demand, Russia’s fossil fuel revenue fell to 489 million euros ($573 million) per day in November, its lowest level since the full-scale invasion of Ukraine.
 
The stakes for Moscow are high. Energy exports, especially oil and petroleum products, remain central to financing both social spending and the war effort, which is why the sector was an early target of Western sanctions. Although price matters, maintaining the perception of reliability and protecting market share has become just as important for the Kremlin.
 
Deep discounts and below-market prices on other fuels still allow Russia to place significant volumes in Asia and parts of Europe despite bans and restrictions. This has helped Moscow consolidate its exports around three key destinations: coal and oil shipments to China, petroleum products to Turkey, and continued sales of liquefied natural gas and pipeline gas to the European Union, which remains its largest customer for those fuels.
 
EU AID TO UKRAINE
 
Financial support. EU leaders agreed to provide Ukraine with a 90 billion-euro ($105 billion) loan to finance its military and economic needs for 2026-27, using funds from the bloc’s general budget. Member states failed to agree on a plan to use frozen Russian assets, instead of the EU's own finances, to fund a reparations loan. Belgium, where most of the assets are held, had opposed that proposal, arguing that it would need sufficient guarantees against financial and legal reprisals from Russia.
 
JAPAN
 
Japan's EV industry. Nine Japanese companies are teaming up to establish a joint venture to build an electric vehicle battery production system. The project aims to develop a new production model that will speed up and reduce the costs of manufacturing EV batteries, making Japan more competitive with its Chinese and South Korean rivals. It is set to launch as early as April next year.
 
RUSSIA & NORWAY
 
Fishing for a deal. Russia and Norway reached a cooperation agreement on fisheries for 2026. The deal allows fishing vessels from both countries to operate in Russian and Norwegian economic zones and establishes catch quotas for cod and haddock in the Barents Sea.
 
BELARUS
 
Belarusian defenses. Russia’s nuclear-capable Oreshnik missile system has already been deployed to Belarus, Belarusian President Alexander Lukashenko said in an address to the nation. Russian President Vladimir Putin had earlier said the system would enter combat duty in Belarus this month, without providing a specific date. Lukashenko also warned that any movements toward the Belarusian border by foreign forces would be perceived as a threat as well to Russia, which would deploy troops to Belarus if needed.
 
NATO
 
NATO and the Caucasus. Armenian Prime Minister Nikol Pashinyan held talks with NATO Deputy Secretary-General Radmila Shekerinska on Thursday. They discussed Armenia’s peace agreement with Azerbaijan, signed in Washington earlier this year, as well as regional communications and transport projects. Shekerinska also met with Armenia’s foreign minister to discuss cooperation and Armenia’s reform agenda.
 
ISRAEL & EGYPT
 
Strictly business. A $35 billion natural gas deal signed between Egypt and Israel earlier this week is “a purely commercial transaction,” according to an Egyptian government spokesperson. The official insisted that the agreement does not involve any “political dimensions or understandings whatsoever.”
 
JAPAN & CHINA
 
Chinese objection. The Japanese government’s signing of an agreement to lease land on a remote island in Okinawa prefecture on which it plans to deploy a mobile warning and control radar system is a “provocation,” a Chinese Foreign Ministry spokesperson said. The project aimed at strengthening Japan’s surveillance capabilities.
 
GREECE & ARMENIA
 
Defense partners. Armenia and Greece signed on Thursday a defense cooperation plan for 2026 following talks between their defense ministries in Yerevan. Officials touted recent joint efforts, saying cooperation had reached new heights.
 
GZB INFOCUS: SYRIA & LEBANON
 
U.S. envoy to Syria and Lebanon Tom Barrack has established himself as a maverick diplomat, issuing bold declarations that have at times angered politicians in the Middle East and the United States. Among his many claims, he has argued that Middle Eastern countries are best suited to be ruled by monarchies, that Israel is not a democracy, and that Britain and France disrupted the region’s evolution by signing the Sykes-Picot Agreement in 1916, which tampered with its social and cultural ecology and created artificial states without foundations in Iraq and Greater Syria. Earlier this month, he lashed out at Lebanon, describing it as a failed state and urging that Syria and Lebanon merge into one, given their shared cultural and political background. The ambitious proposal, however, seems incongruent with reality.
 
Enduring Friction
 
In Syria, many are still angry over France’s formation of Greater Lebanon from Syrian territory in 1920. Late Syrian President Hafez Assad used to say that the Syrians and the Lebanese are one people in two states, and he shaped his relations with the Lebanese government accordingly. He viewed Lebanon as a country unable to govern itself, implying that Syria should assume responsibility for its domestic and foreign policies.
Relations between Lebanon and Syria have been fraught with tension since the two countries gained independence in the 1940s. Frequent exaggerated expressions of the depth of their fraternal relationship did not conceal the intensity of the friction and mutual suspicion. At heart, Syrians have always rejected independence for Lebanon, which they considered part of their own nation.
 
When Hafez Assad became president of Syria in 1971, he sought to dominate Lebanese politics, and he succeeded after the breakout of the Lebanese Civil War in 1975. But mounting pressure on Syria after the assassination of former Lebanese Prime Minister Rafik Hariri in 2005 forced the Syrian army out of Lebanon, three decades after it unofficially colonized the country. Six years later, a civil war broke out in Syria, again demonstrating the ability of events in one of these countries to impact the other. In the aftermath of the conflict’s eruption, Syrian refugees flooded into Lebanon, Lebanese Sunnis supported the uprising against Syrian President Bashar Assad, and Hezbollah announced that it was joining the war in support of Assad.
 
The Assad dynasty collapsed a year ago, but tensions between the two countries remain. The return of displaced Syrians to their country, in addition to border demarcation, is a priority issue for Lebanon, while Damascus is focused on repatriating Syrian prisoners held in Lebanese prisons without trial in inhumane conditions. Facing opposition from Hezbollah, the Lebanese government has rejected Damascus’ demands to release 2,000 Syrian and Lebanese prisoners who supported the anti-Assad uprising. It continues to detain them without trial, citing a slow judicial process.
Indeed, lengthy trial delays and prolonged pretrial detention are serious problems for the Lebanese judicial system. In many instances, the duration of legal proceedings surpasses the eventual prison sentences imposed. Some detainees have remained on trial for years before ultimately being acquitted. Still, addressing the prisoner issue is comparatively more manageable than resolving the border demarcation matter.
 
The ambiguous borders between Lebanon and Syria have resulted in the smuggling of goods, illegal crossings and trafficking of drugs and weapons. They have also facilitated the unauthorized entry of Syrians into Lebanon for settlement, and vice versa. Lebanese people have taken over 23 Syrian border villages and 12 farms. There are now at least 36 border areas under dispute. During the Syrian war, residents of these areas holding Lebanese identity cards enjoyed freedom of movement between the two countries due to the absence of security forces and controlled borders. After Assad’s fall, smuggling continued and led to border clashes.
 
Regardless of who rules in Damascus, Syria has never shown a serious interest in demarcating the border because it considers Lebanon part of its territory. Syria reluctantly agreed to exchange diplomatic missions with Lebanon in 1994, but Syrian officials typically treat their Lebanese counterparts with condescension. The new regime in Damascus has refused to send an ambassador to Beirut despite being in power for more than a year.
 
When the uprising against Assad’s repressive policies started in 2011, many Syrians fled to Lebanon. While there are no statistics on the number of Syrians who resettled in Lebanon, estimates range from 1.5 million to 2 million – an alarming total for a country whose population does not exceed 5 million. Interim Syrian President Ahmed al-Sharaa’s government has been reluctant to endorse their return because the prolonged civil war shattered Syria’s economy, and most of the refugees’ homes have been destroyed. But the Lebanese government sees the large number of Syrians in Lebanon as a major security and political threat, which the government in Damascus isn’t opposed to.
 
Syria Today
 
After ruling Syria for more than six decades, the Assads destroyed the country’s civil society and banned political plurality. They clamped down on political expression and silenced the demands for inclusion from Syria’s ethnic and religious sects. The Assads used the Alawite minority to dominate Syria’s security apparatus. Their control kept the population from expressing political views. In contrast, Lebanese people have enjoyed a greater measure of self-expression than any other citizenry in the Arab world.
It has become clear that the Alawites are growing increasingly restless about the serious abuses committed against them since Bashar Assad’s ouster in December 2024. They have vociferously demanded the establishment of a federal system, even if it requires an insurrection. The acts of violence in western Syria committed against Alawites also targeted Christians for allegedly collaborating with the former regime. Despite al-Sharaa’s recognition of the United States’ sensitivity to this issue, he has been unable to rein in the troops who supposedly fall under his command.
 
Local observers familiar with the situation along the Syrian coast say that some of Assad’s close associates are forming Alawite militias, believing that the Syrian state is on the verge of collapse. Following the massacres committed against Alawites in March, prominent Alawite community leaders called on Israeli Prime Minister Benjamin Netanyahu to provide them with protection, as he did for the Druze in Syria.
 
Syria is facing potential territorial disintegration. The Kurds already control 25 percent of the country, and they do not submit to the authority of the central government. Israel has announced that it is the protector of the Druze-populated areas of southwestern Syria. Many Druze seek autonomy from Damascus, while others demand statehood. The Alawites on the Syrian coast remain restive, especially after the massacres last March, and there are reports that they are planning an armed insurgency aimed at claiming independence. The damage that has shattered the fragile social fabric of heterogeneous Syria seems irreparable.
 
Last month, Syria joined the international coalition against the Islamic State during al-Sharaa’s visit to Washington. Since then, it has been coordinating joint security operations with U.S. troops in central Syria. Last week, a joint force came under fire from an attacker associated with the Islamic State near Palmyra, killing three Americans. The attack was a reminder of the threat the Islamic State poses to Syria’s stability and al-Sharaa’s efforts to reunite the country.
 
Out of Touch
 
Given these challenges, Syria is in no position to merge with Lebanon, as Tom Barrack has advocated. Decades ago, France granted independence to both Syria and Lebanon under British pressure.
 
Following independence, Syria adopted a democratic parliamentary system, whereas Lebanon implemented a political structure grounded in sectarian accommodation and consensus. The political elite in Lebanon agreed to establish a system that rejected both unification with predominantly Muslim Syria and the continuation of the French mandate, which was favored by most Christians. The country’s political system was built on a set of contradictions, including the sectarian power-sharing arrangement, dominance of the elite over the state’s resources and deeply rooted foreign intervention, which further exacerbated tensions among its sectarian components.
 
The idea of reintegrating Lebanon and Syria today, more than a century after their split, is out of touch with reality. The Lebanese people have always been divided over their identity, though the intensity of this division has abated in recent years. Sunnis longed for reunion with Syria, especially during Syria’s merger with Egypt between 1958 and 1961, but in the post-civil war era, they came to terms with the idea of Lebanon, accepting it as the embodiment of their national aspirations. Shiites, meanwhile, remained divided between their affinity with Lebanon and identification with the Iranian Revolution. But despite their political divisions, most Lebanese expressed no desire to join a pan-Syrian state.
 
It’s therefore hardly conceivable that the two countries could merge into one. Any motivations to bring them back together in the 1950s have since disappeared. They have developed two peoples with distinctive characteristics that set them apart politically, culturally and economically.
 
Over the past four decades, Hezbollah has presented itself as the main hurdle standing in the way of relaunching a new Lebanon. However, its defeat in last year’s war with Israel and inescapable disarmament will put Lebanon on the road to political and economic recovery. In addition, the standards of living in Lebanon far exceed those in Syria. Freedom of expression and Lebanon’s Western-style educational system have no equivalent in the Arab region. Thus, the Lebanese, divided as they might be, will continue to resist any proposals for a merger.
 
Pray.
 
Train.
 
Stay informed.
 
Build resilient communities.
 
—END REPORT