DAMASCUS — In Syria, it’s business as usual.
Despite the desolate landscape of destruction that loyalist troops leave behind and the sanctions imposed by Western countries, a few entrepreneurs in the power's sphere of influence are still amassing profits, say experts of the Syrian regime. They are lifting the veil on part of this occult and predatory system that allows President Bashar al-Assad to keep the allegiance of his followers and to finance his war against the opposition.
Just as the government-controlled parts of the country took part in a pseudo-presidential election that have given al-Assad his third term in office, the systematic bleed of the country and Damascus" dependency on its allies, particularly Iran, have never been so severe.
"There's almost not a single dollar legally going into the state's coffers," says a former close friend of the al-Assad clan. "The oil wells are now under the control of the rebels or of the Kurds. People don't pay their taxes anymore, nor their water or electricity bills. All the regime has left to pay the civil servants' wages are its schemes and direct aid from Iran and Iraq."
In terms of scheming, the master is still Rami Makhlouf. A cousin of Bashar al-Assad's, he controls large sections of the Syrian economy, including the country's main mobile network Syriatel. With Ayman Jaber and Abdel Kader Sabra, two businessmen from the coast, and Samir Hassan, a former employee at Nestlé, he invested in imports of food supplies, in particular wheat, rice, sugar and tea. This new market appeared after the previous year's bad harvests and after the rebels took control of vast rural areas. And unlike oil, food supplies do not fall under the European embargo.
Another godsend created by the crisis was the importation of oil, which was handed over to the private sector after the state lost its grip on the extraction sites of Deir ez-Zor and al-Hasakah. This market is all the more attractive since Iran awarded Syria a $3.6 billion credit for the purchase of crude oil and other petroleum products last year. The lucky winners get their supplies from Iran and Iraq, but also from rebel groups who had taken hold of the wells. At the beginning of the year, Western chancelleries were already saying that regime envoys had bought oil from the al-Nusra Front, a jihadist group present in Deir ez-Zor.
"From an economic point of view, the conflict has reshuffled the cards," says the International Crisis Group's Peter Harling. "It forced large families to exile or to shut their businesses down and allowed a new generation of wheeler-dealers to emerge." One of the middlemen on the wheat market is the Foz family, from Latakia, which works for General Dhu al-Himma Shalish, a cousin of Bashar al-Assad's who heads presidential security and is targeted by Western sanctions.
To avoid international sanctions, those who profit from the war work under cover. "Rami Makhlouf has a group of lawyers working for him who spend their time creating shell companies," claims a member of Damascus’ financial elite. Some of these smoke screens have been identified by sleuths from the U.S. Treasury and the European Commission. An investments fund in the Cayman Islands and a Drex Technologies holding in Luxembourg were added in 2012 to the black list of companies and entrepreneurs accused of financing the al-Assad regime.
But according to a well-informed Syrian businessman, Assad's cousin Rami managed to shield most of his wealth, part of it in Dubai. The Gulf emirate, where the Syrian president's sister Bushra al-Assad lives, boasts of having received many assets of Middle East elite since the beginning of the Arab Spring. "Since 2011, Dubai has been playing in our region the same role that Switzerland played in Europe during World War II," the Syrian source explains.
Via his father Mohammed, who lives between Damascus and Moscow, the owner of Syriatel also has access to facilities in Russia. It is there that Syrian money is printed, since Austria was forced to give up that contract because of the European sanctions decided in the fall of 2011. In December of that year, the Kremlin, an unfailing protector of Damascus, authorized Syria's central bank to open accounts in rubles in Russian banks, a ploy intended to get around Western sanctions, which forbid Syrians from doing business in dollars.
The Makhlouf empire also has branches in Romania, where Rami's father-in-law Walid Othman is ambassador. "His son's activities in Europe, particularly in Vienna and Bucharest, generate millions of dollars in cash, which are sent back to Syria," says Ayman Abdel Nour, editor of news website All4Syria and a former advisor to Bashar al-Assad who is now on the opposition's side.
The gang of Syrian oligarchs also includes Maher al-Assad, the president’s brother, and his servants Mohamed Hamsho, Samer Debs and Khalid Qaddur. The first, who owns the very profitable market of VOIP (Voice Over Internet Protocol) towards Syria, is about to be awarded a permit by the country's Tourism Ministry to develop an artificial island project near Tartus.
In exchange for the state's contribution, these industrialists transfer back part of their benefits. Syriatel's hoard evidently pays for civil servant wages, and possibly for the Shabiha, the pro-regime militias. According to economist Jihad Yazigi, who wrote a report on Syria's war economy, bus companies put their fleet at the army's disposal. Another sign of this caste's resiliency is that almost none of the businessmen whose names appear of the black list have joined the opposition. A few people have managed to have their names erased from the list, after having invoked a case of mistaken identity in front of American and European courts.
But let us not be mistaken: For the immense majority of Syrian entrepreneurs, the conflict is a disaster. United Nations experts calculated that even with a annual growth of 5%, Syria will need 30 years before its GDP recovers to its pre-war level.
The Saudis may be awaiting the outcome of Iran's nuclear talks with the West, to see whether Tehran will moderate its regional policies, or lash out like never before.
LONDON — The Iranian Foreign Ministry spokesman Saeed Khatibzadeh said earlier this month that Iranian and Saudi negotiators had so far had four rounds of "continuous" talks, though both sides had agreed to keep them private. The talks are to ease fraught relations between Iran's radical Shia regime and the Saudi kingdom, a key Western ally in the Middle East.
Iran's Foreign Minister Hossein Amirabdollahian has said that the talks were going in the right direction, while an Iranian trade official was recently hopeful these might even allow trade opportunities for Iranian businessmen in Saudi Arabia. As the broadcaster France 24 observed separately, it will take more than positive signals to heal a five-year-rift and decades of mutual suspicions.
Agence France-Presse news agency, meanwhile, has cited an unnamed French diplomat as saying that Saudi Arabia wants to end its costly discord with Tehran. The sides may already have agreed to reopen consular offices. For Saudi Arabia, the costs include its war on Iran-backed Houthis rebels fighting an UN-recognized government in next-door Yemen.
The role of the nuclear pact
Bilateral relations were severed in January 2016, after regime militiamen stormed the Saudi embassy in Tehran. Amirabdollahian was then the deputy foreign minister for Arab affairs. In 2019, he told the website Iranian Diplomacy that Saudi Arabia had taken measures vis-a-vis Iran's nuclear pact with the world powers.
It's unlikely Ali Khamenei will tolerate the Saudi kingdom's rising power in the region.
He said "the Saudis' insane conduct toward [the pact] led them to conclude that they must prevent [its implementation] in a peaceful environment ... I think the Saudis are quite deluded, and their delusion consists in thinking that Trump is an opportunity for them to place themselves on the path of conflict with the Islamic Republic while relying on Trump." He meant the administration led by the U.S. President Donald J.Trump, which was hostile to Iran's regime. This, he said, "is not how we view Saudi Arabia. I think Yemen should have been a big lesson for the Saudis."
The minister was effectively admitting the Houthis were the Islamic Republic's tool for getting back at Saudi Arabia.
Yet in the past two years, both sides have taken steps to improve relations, without firm results as yet. Nor is the situation likely to change this time.
Iranian Supreme Leader Ali Khamenei in 2020commons.wikimedia.org
Riyadh's warming relations with Israel
Iran's former ambassador in Lebanon, Ahmad Dastmalchian, told the ILNA news agency in Tehran that Saudi Arabia is doing Israel's bidding in the region, and has "entrusted its national security, and life and death to Tel Aviv." Riyadh, he said, had been financing a good many "security and political projects in the region," or acting as a "logistical supplier."
The United States, said Dastmalchian, has "in turn tried to provide intelligence and security backing, while Israel has simply followed its own interests in all this."
Furthermore, it seems unlikely Iran's Supreme Leader Ali Khamenei will tolerate, even in this weak period of his leadership, the kingdom's rising power in the region and beyond, and especially its financial clout. He is usually disparaging when he speaks of Riyadh's princely rulers. In 2017, he compared them to "dairy cows," saying, "the idiots think that by giving money and aid, they can attract the goodwill of Islam's enemies."
Iranian regime officials are hopeful of moving toward better diplomatic ties and a reopening of embassies. Yet the balance of power between the sides began to change in Riyadh's favor years ago. For the kingdom's power has shifted from relying mostly on arms, to economic and political clout. The countries might have had peaceful relations before in considerably quieter, and more equitable, conditions than today's acute clash of interests.
If nuclear talks break down, Iran's regime may become more aggressive.
Beyond this, the Abraham Accord or reconciliation of Arab states and Israel has been possible thanks to the green light that the Saudis gave their regional partners, and it is a considerable political and ideological defeat for the Islamic Republic.
Assuming all Houthis follow Tehran's instructions — and they may not — improved ties may curb attacks on Saudi interests and aid its economy. Tehran will also benefit from no longer having to support them. Unlike Iran's regime, the Saudis are not pressed for cash or resources and could even offer the Houthis a better deal. Presently, they may consider it more convenient to keep the softer approach toward Tehran.
For if nuclear talks with the West break down, Iran's regime may become more aggressive, and as experience has shown, tensions often prompt a renewal of missile or drone attacks on the Saudis, on tankers and on foreign shipping. Riyadh must have a way of keeping the Tehran regime quiet, in a distinctly unquiet time.
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