Makhlouf scandal: Bashar gets his money back … in a temporary deal?

The public appearance of Rami Makhlouf, a businessman and cousin of the Syrian President, raised several questions. In two public recordings on social media, he addressed the Syrian president, in one of which he accused the security services within the system of targeting their institutions and businesses, as well as his request from the Ministry of Finance to pay about 234 1 billion Syrian pounds (approximately $ 180 million) of accumulated tax benefits. Makhlouf’s steps exposed this dispute, which has been present for several months, within the narrow circle of the Syrian regime. Makhlouf’s last significant appearance in the media was nine years ago, when he interviewed the New York Times, at the beginning of the protest movement, during which he warned about the repercussions of the fall of the Syrian regime, especially on the security of Israel, and then announced his dedication to charity. Between the appearances of 2011 and 2020, Makhlouf’s position changed significantly within the ruling elite, and the accompanying political and economic contexts changed. This article reviews the roles that Makhlouf has played since the beginning of the protest movement to support the regime and finance its security and military machinery, and analyzes the context and the reasons that led to the erosion of its influence, until the proof of the supposed of climbing or settlement between him and the regime that was once considered one of its pillars.

First: activity created during the crisis

Rami Makhlouf is considered a symbol of the category of “young wolves” that emerged within the system, benefiting from economic liberalization in the Bashar al-Assad phase, and his companies are a model for how the Syrian economy is managed. and the capitalism-style privatization of accounting and relatives, so that economic resources remain within the system’s sources of economic-political security, with Enriching the confidant. This pattern has ensured that economic liberalization does not weaken the authoritarian regime, but rather reinforces it by overlapping between political loyalty and offers, the direct proportionality between the proximity of the ruler’s circles and the margin of capital movement in the market, as well as by overlapping the circles surrounding the president (1.The family, the relatives and the sect, 2. The leaders of the security services, 3. The business leaders). Previously, the party was considered within these circles, but was sidelined in the Bashar al-Assad era.

From the first day, Rami Makhlouf’s name was repeated in the songs of the protest movement, and the headquarters of his companies were the target of the anger of the protesters, who accused him of corruption and exploitation of influence. In response, Makhlouf gave an interview to the New York Times in May 2011, which included direct messages abroad, ensuring that the regime would fight to the end, and also warned about the repercussions of the chaos in Syria on Israel’s security and stability. .

Makhlouf appeared in the media once again in June 2011, announcing his dedication to “charity work”, explaining his move not to be a burden on Syria or its people or its president, as he put it, but this step failed save him and his companies. A number of US and European sanctions have been added to which he has been subject since February 2008.

Makhlouf’s announcement of full-time “charitable work” through the “Al-Bustan Association” was a cover for camouflaging his new activity within a complex coalition consisting of sectarian and military security forces centers to defend the regime. Consequently, as of 2012, the Al-Bustan Association assumed the formation of militias affiliated with it with multiple names, including the Kumite Forces, the Special Task Forces, the Homs Command Regiment, the Black Bustan, the Forces of Popular Defense and the Jabalawi Brigades. Most of these militia members came from the Latakia and Tartous governorates. The Al-Bustan Association shared the responsibility of these groups in cooperation with the Air Force Intelligence and the Fourth Division. The Al-Bustan Association was in charge of recruiting and paying the salaries to the combatants and the care of their families, while the Air Force Intelligence was responsible for the training and weapons that Hezbollah sometimes assumed, so the The role of the fourth division is to coordinate this coalition and lead it in the field.

The Al-Bustan Association also financed combat groups belonging to the security services, since they committed since 2013 to finance the Tiger Air Force Intelligence forces led by Colonel Suhail Al-Hassan. Other combat groups funded by figures close to the al-Assad family, such as the “Ghadq Brigade Push Battalion” led by Ghaidg Deeb, son of Major General Marwan Dib and Bahija al-Assad, funded the late President Hafez al- Assad.

The Al-Bustan Association took over the incubator loyal to the regime and supported it to take revenge and maintain its support, after the great human losses in which it incurred in defense of the regime. Starting in 2013, the association opened a network of centers and headquarters aimed at caring for loyalists and supporters of the regime in various provinces (Damascus, its camp, Tartous, Homs, Aleppo, Quneitra, Daraa and As-Suwayda, for example) . In the field of Latakia and Tartous, and in the rest of the provinces, in the areas to which the members of the Al-Bustan combat groups belong, as is the case of Salkhad in Sweida.

Despite the damage that American and European sanctions inflicted on his activities and actions, the war economy gave Makhlouf the opportunity to grow his business and invest profits to expand his activity in the formal economy. He has been active in the oil transport trade from the eastern region to the Homs refinery, through various intermediaries, especially the Al-Qatirji (brothers). Hossam, Baraa, and Muhammad), by protecting the Al-Bustan, Fourth Division, and Desert Falcons Combat Groups, Makhlouf also acquired several exclusive contracts to supply oil to the Syrian regime through offshore companies based abroad to bypass the sanctions imposed on him and the regime, for example, A Well Petroleum C Vest u. M. M. Registered in Lebanon.

Makhlouf invested part of the revenues he obtained from the war economy to expand his economic and commercial businesses in Syria, establishing more than eight companies during the period 2011-2020, some of which are owned by him (such as the “Noor Microfinance Foundation “), while others are shared by others (such as the Rawafed Damascus Company is a private, anonymous company that invests a significant stake in the Marota City project.

Second: balance changes and disintegration of the alliance.

Makhlouf’s alliance with the centers of the military and security forces within the regime began to come under pressure when Russian military intervention in Syria reached its climax in 2016, and the balances changed within the Republican Palace after the death of President Bashar al -Assad, Anisa Makhlouf, Rami’s aunt, and the illness of Muhammad Makhlouf, “the godfather of the family”. As described, and the increasing influence of personalities of the ruling family who disagree with the Makhlouf family, until Bashar al-Assad’s decision to marginalize the Makhlouf, weaken them and eliminate them completely from the front, with the military operations reaching its end on the ground in the summer of 2019, and Bashar’s efforts to refocus the sources. Strength, including financial resources. Automatic, within the system in your hands.

1. Russian intervention

Russian military intervention had a decisive impact on the establishment of the Syrian regime and allowed it to increase its geographic control from around 22 percent in 2015 to approximately 63 percent in early 2020, and this intervention also had the effect of dismantling the Makhlouf’s alliance with Air Force Intelligence and the Fourth Division. The Russian Operations Command in Syria (Hmeimim base) has invested in the Tiger Forces and made them its local hand by attacking within the centers of the regime’s forces, until its organization in the summer of 2019 and turning them into the “25th Special Task Force”, led by Brigadier Suhail Al Hassan. As for the fourth division, Russian military intervention gave them an opportunity to catch their breath and reorganize their ranks. It has also begun to focus increasingly on the activities of the war economy. This has contributed to fueling the rivalry between yesterday’s allies, as the fourth division overcrowded the Al-Bustan Combat Society militia in the exercise of company duties and demarcation, leading to their exclusion from work in this area by official decisions, and the growing Russian interest in the Tiger forces led to the flight of elements of the Al-Bustan Association militia to work with Suhail Al-Hassan, seeking protection and seeking material privileges, so that mentioned above is negatively reflected in the field presence of the Al-Bustan combat militia.

2. Change of balances within the system

The balances within the centers of influence in the regime have witnessed important changes since the beginning of the protest movement. The Tlas family left Syria, and the husband of the President’s sister and the strong man in the military security establishment, Major General Asif Shawkat, were killed in the bombing of the crisis cell. These changes had no noticeable impact on the influence of the Makhlouf family at the Republican Palace, but the situation clearly changed with the death of the President’s mother, Anisa Makhlouf, in February 2016, and the illness of her brother Muhammad Makhlouf, and thus the family lost its most prominent supporters within the Republican Palace. Makhlouf’s troubles increased with the growing influence of his rivals within the Republican Palace, that is, the wife of President Asma and his brother, Major General Maher. During the recent period, Asma al-Assad’s growing role within the Republican Palace, and his efforts to redistribute wealth within the ruling family, has become evident, and this was indicated by Rami Makhlouf in his second opinions on the networks. social, in the context of accusing some of the Presidents of the responsibility of inciting against him.

The changes within the palace also reflected the growing influence of Major General Maher Al-Assad, the leader of the Fourth Division, and his competition with Makhlouf in the activities of the war economy, as well as in the businesses he undertakes, which was evident with the exclusion of the Makhlouf militias from the comrades sector and the demarcation at the beginning for the benefit of the company of the security castle. Owned by a businessman accredited by the Fourth Division’s security office, Khadr Tahir, who entered the telecommunications sector through the establishment of the Imatel company, in addition to its use by Maher Al-Assad to dominate some of the investments. that belong to the Makhlouf.

3. Concentration of sources of force.

Bashar al-Assad’s decision was the deciding factor in weakening Rami Makhlouf’s influence until his termination. Al-Assad’s decision came in the context of his efforts to dismantle the centers of power that reinforce his role during the crisis, especially those at the sectarian level, and refocus the sources of political, financial and security power at the Republican Palace and under his supervision. This trend was reflected in the pressure campaign that started on Rami Makhlouf from the summer of 2019, which aimed to dismantle his “charitable” and security networks and seize his companies and money. The first signs of this campaign arose by subjecting the Al-Bustan Association to oversight of the Republican Palace, by appointing Maan Ibrahim, the general supervisor of the tomb of Hafez Al-Assad, to lead the association in place of Samer Darwish, in addition to dismantling the Al-Bustan combat groups and joining them to the system’s military and security apparatus. For example, the Al-Bustan Association forces led by Firas Issa joined the Al-Bustan Society with the Al-Ghaith / Fourth Division forces. In October 2019 a court decision was issued on the dissolution of the Syrian National Social Party – General Secretariat, affiliated with Rami Makhlouf. Finally, a series of preventive detention orders were presented against Makhlouf, with the green light from the president himself.

Third: the economic crisis.

There is no doubt that tension in relations is one of the manifestations of the scarcity of resources, with the war economy stopping without returning to the peace economy, due to sanctions, numerous international reservations on reconstruction and other forms. where Russia thought it might lead to a revival of the economy again.

With the end of military operations on the ground and the departure of the war economy, the fragile economic situation of the regime began to unfold. This was clearly reflected in the decline in public revenue, the deterioration of the exchange rate of the Syrian pound, the decrease in public spending and the problems of the economic system due to the demands of its allies to pay the fees due. This led the regime to pressure businessmen, especially those who influenced during the war, and forced them to pay in cash to finance their internal and external benefits. Initially, Makhlouf responded to this trend, but began to complain when he realized that the matter went beyond supporting the system to the regime’s desire to control its financial assets and companies.

During the crisis, the Syrian economy collapsed almost completely, and some cumulative losses from 2011 to 2019 are estimated to be $ 428 billion, or approximately six times the Syrian GDP in 2010, and the GDP fell by approximately 65 percent from what it was Before the crisis. The serious economic crisis that the regime is suffering can be found through three main indicators.

The first of these indicators is the decrease in public revenue, which decreased from more than $ 17 billion in 2011 to approximately $ 9 billion in 2019, according to the budgets for the years 2011-2019, and this decrease can be explained For several factors, the most prominent are: 1. The sectors that generate foreign currencies are affected (such as tourism and oil), 2. Restrict exports by Western and US sanctions, and the producing sectors (such as industry and agriculture) hurt, 3. Tax revenue fell from a level equivalent to $ 7 billion in 2011 to less than $ 942 million in 2018.

As for the second indicators, it is related to the collapse of the exchange rate of the Syrian pound, such as the economic collapse and the crisis of the Lebanese banks, in addition to the policy of the central bank to avoid direct intervention to support the lira, and the high import cost, especially oil derivatives estimated at around $ 200 million per month, further pressure on the Syrian pound. Its exchange rate decreased from 46 Syrian pounds to one US dollar in 2010, to more than 1,300 Syrian pounds on the black market in the spring of 2020, which negatively affected the purchasing power of the population and the prices of goods. The local newspaper Qasioun noted that the cost of living for a family of five increased by 13 percent from early 2020, to become 430,000 Syrian pounds per month during the spring of 2020 (equivalent to $ 320) after living in the range of 380 thousand Syrian pounds in January 2020.

The third indicator is related to the decrease in public spending and the decrease in government social support, as the figures from the analysis of the public budget data in Syria in the period 2010-2020 indicate a sharp decrease in the value of the budget in dollars, from $ 16.5 billion in 2011 to $ 9.2 billion in 2020, calculating the exchange rate of the central bank.

The decrease in public spending was reflected in government social support policies, according to the comparison between the 2018-2019-2020 budgets, since the amount of cash allocated to support oil derivatives was reduced, which is a indication of the liberalization of the price regime for these products. It is also noted that the flour subsidy has decreased in the budget in 2020 compared to what it was in the 2019 budget, in light of the difficulties faced by the regime to guarantee the needs of flour flour and its need. to rationalize the consumption of bread by the Syrian family through the smart card mechanism. On the other hand, no change is observed with respect to support for the electricity sector, which exceeded $ 1.6 billion, without a significant improvement in the reality of electricity nutrition. In addition to the above, there is also no significant change in the volume of subsidies allocated to agricultural production and the National Social Assistance Fund, which are considered small, since their combined value does not exceed the $ 50 million barrier.

Under pressure from the need for financial liquidity, in the face of its economic rights and the demands of its allies, the regime extracted money from businessmen in the name of the “fight against corruption”, and the precautionary decision regarding funds Rami Makhlouf and his partners came in this context. Makhlouf initially responded to this matter and concluded a financial agreement with the Customs Directorate regarding the Aabar Petroleum issue, but then protested against the decision of the Telecommunications and Post Regulatory Authority that Syriatel and MTN should pay an amount of approximately 234 A billion Syrian pounds to the State Treasury. Their protest is an acknowledgment that the case goes beyond the regime’s need for cash to finance its rights to a decision made regarding its size and the extraction of its movable and immovable funds, especially those outside Syria. What strengthened this reading was the continuation of the precautionary decision, despite having made a financial agreement with the Customs Directorate previously, which seems to have led him to transmit the dispute to the public, by launching two records on social networks.

Fourth: settlement and escalation potential

The general position between the Assad and Makhlouf families is directed towards one of the following two scenarios: either reaching some kind of agreement or escalation, and if the regime has previous experiences in getting rid of its competitors, the settlement option appears to be the option. more likely, especially in light of the balance of forces that tend entirely to the interests of the regime. .

Furthermore, the regime has a proven track record of getting rid of its competitors and rebels, as happened with former Interior Minister Ghazi Kanaan in 2005, Assad controls all joints of the authority and its institutions, and uses them against its competitors, similar to This appeared in the preventive decisions issued by the Ministry of Finance and the General Customs Directorate against businessmen, including Rami Makhlouf. In addition, Assad made new appointments to military and security institutions during the previous period, with the aim of guaranteeing his loyalty and containing any emerging center of power loyal to Russia or Iran. In addition to the above, Assad managed to dismantle and control most of Makhlouf’s networks. On the other hand, Makhlouf lost much of his influence within Syria due to the measures taken against him during the previous period, but Makhlouf remains a power letter that strengthens his negotiating position towards Assad, since Makhlouf has influence within the Alawite sect, in view of the great financial assistance that it provided during the crisis, and is still presenting it, given the risks that many may incur if their financial assets are acquired. Makhlouf is also considered one of the stockists of the royal family’s secrets, and managed to some extent to pressure Assad by transferring the hidden disagreement to the public. In addition, Makhlouf demanded that al-Assad spend the money required of him on the “poor,” in an attempt to indicate that the regime’s objective of confiscating his money was to transfer it to the family’s accounts, and Makhlouf blamed the regime if his life was in danger. The most important thing is that a large part of the funds, furniture and property, especially those from abroad, is in the name of Makhlouf, and he only has the authority to move it.

And at a time when the atmosphere is still charged between the two sides, and despite the fact that the decision maker within the Syrian regime is the position of the President, even in the case of the weakness of the regime, its dependency and its Loss of external sovereign decision, the option of a deal remains likely, at least at this stage, as the regime may fear its image was damaged by the Alawite sect, which paid most of the cost of its defense. The regime may fear the repercussions of the declared dispute with Makhlouf on the economic situation, as well as its urgent need for financial liquidity to satisfy its economic benefits, which are expected to increase with the entry into force of the “Caesar Law” in the next period. Furthermore, aware of his weak position, Makhlouf expressed his willingness to compromise, showing the initial characteristics of his form in the two records he published. There are reports of mediation to reach an agreement of some kind that allows for the weakening of Makhlouf without necessarily leading to its elimination. ولكن التجربة تثبت أن النظام السوري لا يسامح حتى في حالة التسوية المؤقتة, وأنه سيحفظ في ذاكرته محاولة مخاطبة الرأي العام من فوق رأسه, أو مخاطبة الرئيس علنا.