A hard lesson for Rami Makhlouf: In Syria, no one can challenge the state

Syria’s most famous businessman, Rami Makhlouf, has just had a lockdown breakdown. Albeit in jest, his two videos can best be described as "losing the plot" amid the coronavirus pandemic that has engulfed the region.

There has been much speculation and analysis on what this means for Syria and on a potential rift within the ruling establishment. Yet, a careful reading of the latest state of play in Syria, coupled with a rereading of history, suggests that despite the undeniable significance of these videos, we are witnessing what could be described as President Bashar al-Assad retaking control of the country.

Syria’s economy is on the brink of collapse after a decade of war and crippling sanctions that threaten to undo the regime’s military gains.

It is no coincidence that Makhlouf has fallen foul of the law as Syria looks to the next stage of the war: economic stabilisation in the face of regional acceptance of Assad and pressure from Russia to weed out the endemic corruption of a war economy.

Makhlouf's influence in prewar Syria

Makhlouf was the most public face of Syria’s corruption prior to the war, and in the early days of the uprising, protesters were calling for his head.

While prominent because of his surname, Makhlouf was among a handful of Syrian billionaires who were opening up the Syrian economy in the early years of Assad’s presidency. Others who made a tonne of money through government connections largely shied away from the limelight.

A careful reading of the semi-official biography of Assad’s first years in power, The New Lion of Damascus by David Lesch, reveals no mention of Makhlouf by an author who was given more access than any other Western academic in contemporary times.

When it comes to the economy and who matters, Lesch talks about Abdullah Dardari and Mohammad al-Hussein, two economists brought in to usher in reforms. Similarly, in biographies of Assad by Eyal Zisser and Flynt Leverett, there is some discussion of Hussein linking the economy to Gulf countries, while Dardari focused on Western markets.

Discussion of Makhlouf is limited to the corruption angle - and now, it seems, protesters’ demands have come full circle. As Makhlouf looks for sympathy, there is none to be had. Furthermore, these developments are in line with the anti-corruption drive in Damascus.

Exaggerated talk of a threat

Makhlouf’s suggestion that he bankrolled the war is hugely exaggerated. The Syrian economy had withstood the ravages of war until the Lebanese economy collapsed in 2018 and sanctions against Damascus worsened as it continued to gain military ground.

In reality, the Syrian economy and banking sector were resilient during this war. As the physical war wound down and the economic war intensified, the Russians and Assad turned their attention to those who profited from the war. Still, despite the government’s drive against the corrupt business elite, no one thought the regime would come for Makhlouf.

Any talk of Makhlouf posing a threat to Assad is overstated, missing the key pillar of who and what won the war. The army and intelligence services, with the full backing of Russia, won the war - and Makhlouf, by criticising these services, shot himself in the foot.

There has been talk in the media about the stability of the government. But Assad already survived the real test, when in 2012 he lost four top trusted security officials. He also survived the defection of General Manaf Tlas, which at the time was highlighted as a reflection of divisions within the ruling elite. Similarly, the alleged defection of General Ali Habib did not impact the establishment.

To be clear, Makhlouf had no political or military power, and there are other businessmen of lower profile who can assist and take his place. This is more about the economy, which has been in freefall, with rampant corruption.

Assad still calls the shots

Russia’s frustration with financial corruption among Assad’s inner circle has also now been dealt with swiftly, as Damascus cracking down on Makhlouf shows that Syria will act on Moscow’s serious concerns. Upon Russia’s urging, Assad acted decisively to counter growing graft, including targeting his own cousin and former regime bankroller.

  

In a cash-strapped, war-torn Syria, there is no margin for error as Assad cleans house to make room for new alliances, while cementing the Russian deterrent against Damascus’s enemies. Makhlouf was openly aligned with Iranian business interests, while the Russians want their companies and Saudi Arabia and the UAE to step in.

In a recent article, Syrian journalist Ibrahim Hamidi explained that another factor was "an economic conflict raging in Syria between Russian companies and others backed by Iran".

"Russian companies and organisations, some of which belong to the Wagner Group, complained of the lack of financial returns compared to Russia’s military intervention spending," he wrote.

In 2018, at a conference at Damascus University organised by the British Syrian Society, Syria’s prime minister and finance minister were grilled over state corruption and how it posed the biggest danger to stability going forward. No names were spared.

This week, former Clinton and Obama official Steven Simon stated that this was the Syrian state taking control - and too often this point is neglected. Assad still calls the shots. In the end, Makhlouf defied the state, and he is paying for it.