This is the first of a two-part article highlighting the influence of Syria’s wealthiest businessman on the power structure of the Syrian Arab Republic, as well as some of his contributions to the Syrian Conflict.
Global media coverage of the Syrian conflict has a characteristic tendency to represent or depict the policies of the Syrian Arab Republic as being principally directed by President Bashar al-Assad. This depiction will vary depending on the particular media outlets stance on the Syrian regime’s role and burden of responsibility in the conflict, alternating between depicting the Assad as a ruthless and monolithic dictator, or a statesman with popular backing who is leading his nation against an attempted regime-change concocted by foreign powers. What is seldom highlighted and researched outside of the realm of academic studies and the reports of intelligence agencies and foreign policy think tanks are the individuals who make up the deeply-embedded power structure of the Syrian Ba’ath Party and its allies within the business sector of Syria. This network comprises part of what may be termed as a “Deep State” within Syria, and is a structure primarily inherited by Bashar al-Assad from the network established by his father Hafez al-Assad, who ruled Syria as an autocratic dictator from 1970 until his death in 2000.
Some Historical Background
Prior to Hafez al-Assad’s seizure of power through a military coup in 1970, the leadership demographics of the Syrian military had become heavily dominated by members of the Alawite and Druze ethno-religious minorities, which had historically endured a disenfranchised socioeconomic position during the centuries of Ottoman rule in Syria which persisted into the French Mandate period and subsequent Syrian national independence. Following his coup, the elder Assad maintained a balance of power between Syria’s diverse communities by largely leaving Syria’s economic sector in the hands of the urban Sunni Arab class, while a monopoly of force and key positions in the military were mostly filled by Alawites connected by a network of patronage to the Assad family.
Hafez al-Assad (L) and his son and successor Bashar (R), depicted on a billboard in Syria.
This balance of political power that enabled a small demographic minority to hold a monopoly of force in Syria for several decades began to unravel in the 1990s when the second and third-generation descendants of the original Alawite Ba’athist military power bloc began pushing their way into privileged positions in the business sector, coinciding in the 2000s with a sweeping set of neoliberal-styled economic reforms instated by Bashar al-Assad that legalized the creation of private banks and provided lucrative opportunities in the commercial, transportation and telecommunications sectors — opportunities however that were only accessible in their entirety to those who had a close relationship with the Syrian government, thereby making this new “private sector” something that would arguably be better described an extension of the Syrian State itself.
The Magnate
Rami Makhlouf in a rare press conference.
Rami Makhlouf is probably the most dramatic example of those government-affiliates who cornered much of the business sector in Syria during this period. Makhlouf is Assad’s cousin (related through Assad’s mother, the late Anisa Makhlouf) and is reported to be the wealthiest individual in Syria, last valued at a net work of $5 Billion USD before the war. Rami Makhlouf is the owner of Syriatel (one of only two mobile network providers in Syria), and has accumulated the majority of the Makhlouf family’s wealth through the telecommunications business as well as controlling monopolies in tobacco imports, the State Real Estate bank, establishing “free-trade zones” and duty-free shops on the border of Lebanon, the creation of luxury shopping malls in Damascus and elsewhere in western Syria, and various other business ventures.
Makhlouf’s position as Syria’s wealthiest individual who has made his fortune in telecommunications may be compared in some ways to that of Mexico’s Carlos Slim, a billionaire entrepreneur of Lebanese descent who maintains a near monopoly on Mexican mobile cell service, and who as recently as 2015 personally accounted for roughly 6% of Mexico’s gross domestic product. A key distinction however is that Makhlouf’s ascent into affluence has been aggressively promoted by the Syrian government and has coincided with the economic restructuring which has pivoted Syrian state policy further away from the old centralized, nationalized-socialist state control of private business that persisted for decades, and transformed it into something more decentralized (while still being occupied by individuals enjoying privileged government support).
In 2005 Makhlouf began to move sizeable portions of his assets outside of Syria, beginning with the opening of accounts in Dubai. In 2008 he was targeted with sanctions by the United States as well as by the European Union. In 2015, 27.5 million USD worth of assets connected to Maklouf in eighteen separate HSBC Private Bank accounts were uncovered by the Swiss Leaks investigation. And most recently Makhlouf’s name has appeared in 2016’s Panama Papers, with his offshore assets in Mossack Fonseca-safeguarded accounts sharing some truly global companionship.
Despite his elusive public presence, Makhlouf is most certainly still strongly connected with the Syrian regime and can be assumed to be an active participant in the Syrian conflict through his crucial role in the Syrian economy. There is no clear evidence that Makhlouf actually directs Syrian government policy in a discernible way, but Syriatel is alleged to have blocked the texts of Syrian citizens who participated in the 2011 protests, and Makhlouf’s assets are speculated to have been poured into the Central Bank of Syria to prop-up the Syrian Pound and prevent its collapse. In addition to this, Makhlouf has been identified as the backer of several militias that operate outside of the command structure of the Syrian Armed Forces, details of which will be explored in the second part of this article.
For those interested in learning more about the links between business and government in Assad’s Syria, Bassam Haddad’s comprehensive 2012 book Business Networks in Syria: The Political Economy of Authoritarian Resistance is highly recommended.
