Syrian government seizes assets of Assad’s cousin highlighting rift within ruling elite

New step in face-off with Rami Makhlouf, who has vowed not to step down.
Tuesday 19/05/2020
A woman watches the Facebook video of Syrian businessman Rami Makhlouf on her mobile in Syria’s capital Damascus. (AFP)
Unprecedented. A woman watches the Facebook video of Syrian businessman Rami Makhlouf on her mobile in Syria’s capital Damascus. (AFP)

LONDON--The Syrian government froze the assets of Rami Makhlouf, a cousin of President Bashar Assad and one of Syria’s richest men, and his wife and children, according to a government document, highlighting a rift at the heart of the ruling elite.

The document, stamped May 19 and signed by the Syrian finance minister, said the “precautionary seizure” aimed to guarantee payment of sums owned to the Syrian telecom regulatory authority.

Makhlouf said in a video statement on Sunday that officials had set a deadline for him to resign from top mobile operator Syriatel or have his licence revoked, but that he would not step down. He warned authorities that their actions are “destroying the economy of Syria.”

In the video, the third Makhlouf has issued since his rift with the Assad regime came to the open, he said the collapse of Syriatel, a main revenue earner for the government, would deal a “catastrophic” blow to the economy.

Makhlouf, once widely considered part of the president’s inner circle and the country’s leading businessman, has a business empire that ranges from telecoms and real estate to construction and oil trading.

Makhlouf has also played a major role in financing Assad’s war effort, Western officials have said.

Costumers queue outside Syria’s largest mobile operator Syriatel, owned by businessman Rami Makhlouf, in the Syrian capital Damascus. (AFP)
Rift. Costumers queue outside Syria’s largest mobile operator Syriatel, owned by businessman Rami Makhlouf, in the Syrian capital Damascus. (AFP)

The Syrian regime’s efforts to stamp out corruption by cracking down on businessmen allegedly profiting from the war, including Makhlouf, have been accused of adding to Syria’s hardship by causing ripple effects that are devastating on day-to-day transactions for Syrians.

With their savings long gone, Syrians mostly rely on monthly income that is already razor-thin after years of war.

Corruption remains rife in Syria as bureaucrats devour the state treasury from within. US and European sanctions have been biting hard at the cash-strapped economy, making it impossible for reconstruction to begin.

By taking aim at Makhlouf early this month, the Syrian regime prompted fears within the business community about financial security and led many to convert their money to foreign currency before it could be seized by the state.

With billions of Syrian pounds abandoned and converted in a matter of weeks, the country’s currency started to rapidly plummet.

The Syrian regime accuses Makhlouf, who is thought to control between 60-70% of the economy, of being noncompliant with Syria’s tax laws. Tax penalties of some 200 billion Syrian pounds the state says the firm owes could cause the company to go bankrupt.

But Makhlouf still has significant influence even after being targeted by Assad, who must maintain a delicate balance between competing interests in the country.

The crackdown is yet another example of instability wreaking havoc on the country’s economy, which is also hard hit by US sanctions and a national lockdown imposed to control the coronavirus pandemic.

Having emerged from Syria’s war undefeated, the Assad regime has so far resisted participation in peace talks or working towards serious reform measures, delaying any reconstruction funds from abroad.

Meanwhile, the economy of the regime’s main military ally, Russia, is struggling under the coronavirus pandemic and the ensuing collapse in oil prices. Iran, another sponsor of Assad, is suffering from the impact of US sanctions, falling oil prices and the spread of the pandemic.

There are also reports of Moscow distancing itself from the Syrian regime. Russian officials recently expressed disappointment with Assad, with two former diplomats suggesting he had made few moves towards a political solution – a prerequisite for the disbursement of reconstruction funds.

As Moscow’s patience wears thin, power struggles are likely to continue for the foreseeable future in Syria, at least until the next constitutional deadline in 2021, when presidential elections are scheduled.