Amid a faltering economy, Assad’s corruption crackdown divides Syria

Syria’s economy has been ravaged by civil war for the past nine years, leaving it’s economy in ruins. As the country is desperately seeking funds to rebuild the country and hinder an economic depression, it’s strongman appears to be turning on previous allies.

“There is a saying here – ‘At least nobody in Syria dies of hunger’. But even that does not hold true anymore”.

The words come from Shaza*, a Syrian woman from the coastal city of Latakia. She is working within the service sector, earning a monthly salary of 30,000 Syrian Pounds. Before the war, that would have been the equivalent of $750. Today, it equals around $60 – half of the typical rent in central Latakia.

Since the outbreak of civil war in 2011, the Syrian economy is left crippled. The regime is put under heavy international sanctions and the reconstruction of the country is estimated by the UN to be worth $250 billion – more than fifty times the amount of Syria’s current national budget. According to recent UN figures, close to ten million Syrians do not have enough to eat.

For decades, one man has been at the heart of the Syrian economy – Rami Makhlouf. Being the cousin of President Bashar al-Assad, he profited immensely when he took part in monopolizing the country’s private sector in the 1990’s. Today, he is by far the richest man in Syria.

According to statistics compiled by CNN and Le Monde, his pre-war personal wealth was estimated to be $5-6 billion – more than the country’s current national budget of around $4 billion. Although due to a spiralling inflation of the Syrian pound, it is now likely substantially less.

“While Syria is getting safer, the economy is incredibly bad”, said Amer, a Syrian man native to the city of Aleppo, once the epicenter of some of the fiercest clashes of the war. “In 2011, the exchange rate of a dollar was 40 Syrian pounds. Today you have to pay 1700.”

The bulk of Makhlouf’s profits are believed to have been made with the blessing of the regime – so for many, it came as a shock when Makhlouf announced in a series of videos released on Facebook that the government had put him under house arrest, due to tens of millions of dollars of supposedly unpaid taxes. He also implied that he was asked to step down as CEO of Syriatel, the country’s main mobile network provider and his largest enterprise.

“I will not step down. If I resign, I would be failing both the company and the country. At the height of the war, I did not abandon my country, my president or my fellow citizens, just to do it now”, Mahklouf said.

According to Aron Lund, a fellow at The Century Foundation who has written extensively on Syrian political affairs, this event is unique in Syrian domestic politics and difficult to analyze in its early stages.

“Nothing like this has happened before in modern times. The Syrian regime is extremely secretive and it has a habit of spreading disinformation, so it is difficult to know exactly what’s going on”, he said.

There are, according to Lund, some key takeaways from the videos that Makhlouf published on Facebook.

“His main message seems to be that he thinks that he is asked to pay too much in taxes. It remains to be seen whether he will reach an agreement with Bashar al-Assad or be pushed into political periphery; perhaps even imprisoned, or forced into exile”.

In the videos, Makhlouf does not directly attack President al-Assad – instead he pleads with him for help, and vaguely directs blame at the country’s security apparatus and other elements of the government. Lund sees this approach as fully intentional.

“There is no doubt that al-Assad was either behind this, or had full knowledge that it would happen. Makhlouf knows this. But there is one main rule in Syrian politics – you can not touch the president. Whenever al-Assad is mentioned it has to be in favorable terms, or your door gets kicked in”, Lund said.

“To pass on criticism of this scope, you need to frame it as something that the president either was unaware of, or was deceived into doing by some corrupt official”.

Syrian President Bashar al-Assad with Russian President Vladimir Putin, on a trip to Moscow in 2015. Photo: Kremlin

It has been suggested in The Economist, Haaretz and TRT World that the move could be a part of a power struggle between Syria’s two main backers, Iran and Russia, given that Makhlouf allegedly has closer ties to Tehran than al-Assad does. The businessman also used a religious rhetoric in his speeches – something that could be appealing to the Islamic Republic of Iran. Lund, however, downplays it’s significance.

“They have different interests, but there doesn’t seem to be a huge power struggle going on between Iran and Russia in Syria. My guess is that both Tehran and Moscow are equally curious as to what is going on”, he said. “Instead, I think that the religious language was used to promote Makhlouf as someone who cares about justice and social issues, not just a greedy businessman. He’s trying to rally support from the Alawite community, and in particular the people he helped through his charity organization, Al-Bustan”.
Al-Bustan Association was set up during the civil war to give aid relief to Syrians affected by the conflict. In 2016 it was one of Unicef’s local partners, receiving funds to allocate winter clothes, sanitations products, and education material in Latakia. The organization also supports government militias. According to some accounts, they directly control some of them.

“My understanding is foremost that the body in question will at least pay salaries for the militias. On account of Rami Makhlouf’s links to the regime, this gives some sense of state control over militias with the al-Bustan affiliation” Aymenn al-Tamimi, a Middle East Forum analyst with pro-regime connections, told The Guardian in 2016.

“A friend of mine, fighting for a battalion affiliated to al-Bustan, got injured in the war. The organization paid for all his surgeries at a private hospital. They are helping Syrians. I was considering asking them for support with my eye operation”, Shaza said.

Asked about Makhlouf himself, Shaza appeared more uncertain.

“He is one of the people responsible for this poor economy. He stole money from Syria. At the same time, he is the only one giving it back to the people. It’s how it has always been and we can not change it. That’s why we also say here, ‘steal whatever you want, but at least do not let common people starve’. He stood by the poor people when everyone else left them, so he gained a lot of popularity”, she said.

On Makhlouf’s Facebook page, followed by half a million people, messages of support are pouring in. His recent video, released May 17, has so far received twelve thousand comments – the vast majority overwhelmingly positive.

“May God protect you and prolong your life, dear teacher, and support you for your charitable works. #SyriatelRemains, and we all continue to support the blessing of our company and achieve the best”, read the comment from one Syriatel employee.

“May God protect you, and we have the complete trust that the message is delivered to the president, who is the father of all Syrians; the way he has always been” read another, apparently wishing for reconciliation between al-Assad and Makhlouf.

Other Syrians are more determined in their opinion of the business tycoon.

“If anyone wants to start a business in Syria, Rami Makhlouf finds a way to get involved and take their money. Whenever any infrastructure is made, he gets paid, tricking and exploiting everyone. He is the biggest thief in all of Syria.”, said Majed*, a Syrian refugee now living in Lund.

* With Shaza fearing losing her job and Majed fearing government reprisals in case his asylum application is rejected and he is sent back to Syria, both have have requested anonymity and the names have been changed.

Fredrik Fahlman