Opinion |

Is Syria’s No. 1 Oligarch Being Fed to the Russian Bear?

No one knows why Rami Makhlouf took to Facebook to plead for tax relief, but it could be to save his assets from Russia

David Rosenberg
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Syrian rebel fighter takes a picture with a mobile phone during a protest against the agreement on joint Russian and Turkish patrols, at M4 highway in Idlib province, Syria, March 15, 2020.
Cellphones in Syria: Rebel taking picture with mobile phoneCredit: KHALIL ASHAWI/ REUTERS
David Rosenberg

Why did Rami Makhlouf, Syria’s richest man, cousin to President Bashir Assad, and bankroller of the regime, take to Facebook late last week to plead his case against paying $255 million or so in back taxes, and against relinquishing his crown jewel, Syriatel?

From the least to the most likely possibilities, it could be:

(1) Makhlouf really owes the money. He is Syria’s most powerful businessman and was believed, before the civil war broke out in 2011, to have controlled 60% of the economy. Even if the country has since been decimated, he still controls Syriatel, by far the country’s biggest cellular provider, and umpteen other businesses. 

(2) Assad’s wife Asma is making a bid for Makhlouf’s assets. As Makhlouf said about his tax bill, “By God, we are not evading tax or cheating the country and the state. How can someone steal from his own family?” The Syrian economy, just like the Syrian state, is an Assad family business. Asma just wants more for her wing of the family.

(3) The Syrian government is so hard up for cash that even oligarchs are being squeezed. The economy is in dire straits, and the crash of the Lebanese pound and now the coronavirus have made things worse. The fighting has shattered Syria’s infrastructure, nearly 12 million of its people are refugees or internally displaced, and reconstruction is a distant dream. Someone has to pay the bills.

(4) Russia is calling in its IOUs for the money and materiel it has expended keeping the Assad regime alive since 2015. Moscow’s main motivation for entering the Syrian Civil War was geopolitical, but Vladimir Putin has a deserved reputation as a fiscal skinflint and would certainly welcome a chance to earn back through contracts and concessions some of the $5 billion or so he has spent propping up the regime.

In the final analysis, no one can be any more sure why Makhlouf took to social media to make his case any more than they can be sure why North Korean leader Kim Jong-un disappeared from the public for weeks before suddenly resurfacing without any official explanation.

However, the Russia angle is certainly the most intriguing and, under the circumstances, quite plausible.  In recent weeks, there’s been a flurry of media reports and semi-official think-tank analyses taking aim at the way Assad is dragging his heels on the issue of rebuilding post-war Syria and restoring some normalcy to the country.

“It is becoming increasingly obvious that the regime is reluctant or unable to develop a system of government that can mitigate corruption and crime and go from a military economy to normal trade and economic relations,” said one penned by a former ambassador.

But why wouldn’t Assad want to rebuild the country?

Rami Makhlouf
Rami Makhlouf, April 24, 2010Credit: STR,AP

One reason might be that his other patron, Iran, seems to have a strong preference for weak, chronically beleaguered allies whose governments have to share power with Tehran-backed militias and political flunkies. Witness Iraq, Lebanon and Yemen. Rebuilding Syria would require strong central government and ceding influence in Damascus to other powers with far more money and technical know-how than Iran could ever hope to supply.

Fortunately for Tehran, nor does Assad seem too keen for reconstruction on those terms. As an autocrat, he prefers strong government, but he is in no hurry to open the Syrian economy to outsiders, certainly the kind of outsiders that would demand transparency, accountability and a crackdown on Syria’s notorious corruption.

In all events, a rebuild would require many, if not most of the refugees to be repatriated, something Assad reportedly has zero interest in doing for fear they become a persistent mass of political discontent ad future rebellion.

Still, the Russian bear must be fed. Syrian reconstruction is going nowhere, so Russia can’t get a return from its investment there. Neither Russia nor Iran have the money to finance it. The U.S. and Europe aren’t interested in paying for it either so long as it isn’t accompanied by the political reforms Assad is resisting. China has an appetite for investing in high-risk countries, but Chinese companies aren’t going to like competing for contracts in a place where Russia and Iran have so much political sway.

With no reconstruction boom on the way, what’s left for Assad is to turn over a few of Syria’s few assets worth anything. Already, Russia seems to have beaten out Iran to gain control of at least part of Syria’s phosphate industry. Syriatel is another prize asset. Is it coincidence that Assad seems to be employing the same modus operandi as Putin of imposing confiscatory taxes to wrest control of oligarch assets?

All this maneuvering spells a dismal future for Syria. It’s all about redistributing assets, with Syrian oligarchs and Iran mainly losing and Russia winning, while average Syrian watches from the side, powerless to do anything.

About the only good news may be geopolitical: Combined with economic distress at home and the relentless Israeli assault on its military assets, Iran’s failure to win any prizes from its big investment in the civil war and the regime (by some accounts some $50 billion) just might convince it that Syria was a bad bet and cut its losses.

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