With Syria's Assad in Desperate Need of Cash, His Regime Is Siphoning Off International Aid

Ninety percent of Syrians live in poverty – in a parallel universe to that of the regime, as their president stuffs his pockets from the seizure of private companies and drug trafficking

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Women walk in Damascus in front of photo of President Bashar Assad.
Women walk in Damascus in front of photo of President Bashar Assad.Credit: Louai Beshara/AFP
A photo of Dr. Zvi Bar'el.
Zvi Bar'el

President Bashar Assad’s regime in Syria found an opportunity to get hold of a bit more revenue from an unexpected source. An international agreement that will supply electricity and natural gas from Egypt and Jordan to Lebanon via Syria could now provide Damascus with a new source of petty cash.

Syrian Electricity Minister Ghassan al-Zamel said Syria will charge $8 for every megawatt of electricity that passes through the country en route to Lebanon – four times the prevailing global price.

Syria won’t be receiving the proceeds in cash, but instead in kind – in the form of electricity and gas that it will consume domestically. The agreement, which was signed in October with America's encouragement and support, despite U.S. sanctions on Syria, was aimed at providing emergency assistance from Jordan and Egypt.

The quantities that will be transferred via Syria are not very large. And according to Zamel, the electric power that Syria will get isn’t enough to satisfy the needs of a small province – but with the regime in such dire straits and so desperate for cash, every dollar, or dollar equivalent, is a boost.

The fuel shortage has led the Syrian government to scrounge around from such strange sources as oil fields under the control of Kurdish rebels in the north of the country. They sell fuel to the government at a discount.

Bizarrely, that revenue enables them to fund military operations against the Turkish military and militias loyal to the Assad regime. Those transactions are also in violation of American sanctions, but the Biden administration has decided to turn a blind eye to them – in an additional bid to support the Kurds.

Granted that the Syrian president, who controls more than 75 percent of Syrian territory, is now perceived as someone who will remain in power for the long term, but the diplomatic steps that Syria has undertaken to advance a political solution are still far from bearing fruit. Arab countries including the United Arab Emirates, Bahrain, Egypt, Iraq and Algeria are already laying the ground for Syria’s return to the Arab League’s good graces. The decision is expected to be made at the Arab League summit in March.

But legitimizing Assad – if the energy deal is carried out – won’t generate cash for Syria. The Syrian president is resorting to novel and brutal means to address the shortfall, including seizure of control of private companies, drug trafficking and the imposition of additional taxes and fees. European security organizations say Syria exported $3.4 billion worth of drugs in 2020 – through networks and middlemen, many of whom are close to the regime.

In October, the South African mobile telecommunications firm the MTN Group announced it was leaving Syria, saying that it had become “intolerable” to operate in the country. That’s an elegant way of characterizing what Assad did to the company, which had operated in Syria since 2008.

Last year, five of its senior executives were arrested on charges of espionage and damaging national security. Assad demanded millions of dollars for their release – as well as some $40 million for renewing the company’s franchise, even though it has a 25-year operating license.

Lebanese Prime Minister Najib Mikati, who is a former senior partner in the company and has good relations with Assad, tried unsuccessfully to mediate the dispute. MTN Syria left its equipment and 6 million subscribers behind.

Lebanese Prime Minister Najib Makati in a 2011 photo.Credit: Assaad Ahmad/AP

The company’s management passed to Maher Ibrahim, a close confidant of Assad, who is in charge of the managing the Assad family’s income. Ibrahim is now replacing Assad’s cousin, Rami Makhlouf, as the official in charge of ill-gotten gains – after a bitter dispute between Makhlouf and Assad and his wife, Asma, over his management of the businesses. Makhlouf was arrested and his property confiscated.

Now we await seeing when Assad decides to get rid of Ibrahim, who also controls oil, communications and construction deals. Assad reaps hundreds of millions of dollars as his share of these businesses.

Smallest budget since 2011

Along with such major firms, the Assad family operates a network of aid and charity organizations, through which foreign aid passes that Syria receives for the needy. Asma Assad controls some of these organizations and decides the level of support given to the needy – and the size of the take that she and her family receive from them. The Washington-based Center for Strategic and International Studies think tank has shown that the Assad regime steals a dollar for every dollar of aid it allows through. The charitable organizations are all forced to buy the basic foodstuffs and equipment intended for the poor from government companies, which charge them particularly high prices – and the regime pockets the difference.

A market stall in Syria.Credit: Khaiil Ashawi/Reuters

And yet, such mafia methods – stealing from these companies and fees imposed by the government – are far from adequate in fulfilling the regime’s needs. The 2021 government budget provides for $2.7 billion in spending, but just $2.1 billion in revenue. It’s the smallest budget since 2011 and indicates that government spending on per citizen is just a third of the 2010 figure, even though the country’s population has fallen by 50 percent due to the civil war, from 21.4 million people to about 11.5 million.

It is hard to see where the government will get the money to cover the budget deficit. Its sources of loans are shrinking rapidly. Iran no longer transfers the amounts of money it did at the beginning of the civil war, and international financial institutions won’t touch Syria – the oil fields under government control produce only some 22,000 barrels a day – compared to about 368,000 barrels a day before the war; and the U.S. sanctions do not allow foreign companies and banks from doing business with the Assad regime.

The result is that Syrians are living in a parallel universe to that of the Assad regime. About 90 percent of them are classified as living under the poverty line. The average salary of a person working in the public service is about $24 a month, while the monthly expenses for a family are estimated to be $304. Media reports from Syria tell of six and seven year old children who are doing heavy physical labor in businesses such as construction, metalworking and carpentry – or in dangerous jobs, such smuggling across the borders, or in dismantling bombs and mines, and selling them to metal dealers. Thousands of children have dropped out of school at the request of their parents so they can support their families, who have been forced to deal with the meteoric inflation and rises in prices. They can’t even dream about new clothes – when a winter coat costs some $15 and a shirt costs $7 or $8.

Syrian children on their way to school in Homs.Credit: Yamam al Shaar/Reuters

Even in regions not under the government’s control, such as the Kurdish regions in the north and Idlib province, where most of the rebel forces are now concentrated – living conditions have become much worse, mostly as a result of the plunge in value of the Turkish lira – which has become the de facto currency in these areas due to their proximity to Turkey and the fact that most of the imports come from the Turks. Wages are paid in Syrian pounds – but the goods are sold in Turkish liras.

While the Kurds can rely on the money for oil sales, in Idlib province there are no revenue sources other than the very limited aid from international organizations, along with meager agriculture that is facing severe drought.

A Syrian child poses atop a stack of neutralized shells at a metal scrapyard in Idlib province, Mar. 10, 2021.Credit: Aaref Watad/AFP

Conferences, seminars and unofficial meetings are being held to address Syria's reconstruction, but at the moment, no Western entity – or Arab, or Russian or even an Iranian one – is seriously examining such a possibility, the price tag for which is estimated at $250 billion. Russia has taken control of Syria’s energy sources and Iranian companies are buying up real estate cheaply, but any comprehensive plan will have to wait for a diplomatic solution. And until then, the Assad family doesn’t have to worry.

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