Why did Assad family sideline Syrian billionaire?

On April 30, Syrian billionaire business tycoon Rami Makhlouf posted a video on his Facebook page, making a rare public appearance and confirming the rumors about the major rift among the inner circle of Syrian dictator Bashar Assad.

In the video, Makhlouf said that a “cadre of officials” in Damascus pressured him to hand over $130 billion due to tax evasion and that they were seeking to seize his assets. He said he would only “pay the president himself but not the state.”

A day after his post, Syrian security forces reportedly arrested some of his senior employees who are working in the telecommunications giant Syriatel, which dominates the country’s mobile phone market. Makhlouf responded with a second video and complained about the “inhumane way” in which the arrests had been carried out.

Makhlouf, the maternal cousin of Assad, is the wealthiest man and one of the most powerful people in Syria. He owns a business empire ranging from telecom to oil trading. Many Syrians allege that no foreign company could do business in Syria without his consent and partnership. Despite previously having been viewed as a permanent member of Assad’s inner circle, he has now broken ranks by his latest move.

Makhlouf vs. Assad

When he appeared in public with the videos he posted, he looked as if he was pleading for help from Assad. But, no one can openly challenge a dictator if they are a part of his regime. His Facebook appearance was actually a bold step, and in fact, he was implicitly accusing his cousin, Assad, of ordering the arrest of his staff and taking over his businesses.

This is a shocking development, but also a humiliating scandal for the Assad family, which has ruled the war-torn country for 50 years. There have been many intriguing events in Syria for years, but Makhlouf’s fall into disfavor may be the most unprecedented one.

The Makhlouf family has had a big role in financing Assad’s fight against his own people for almost nine years. Makhlouf, who reportedly controls 60% of the country’s economy, is a symbol of corruption for opponents of the Syrian regime. When demonstrations started in Daraa in 2011, Makhlouf’s company Syriatel also faced protests. In those days, Damascus questioned whether he was a liability for the regime. He has been the most visible family figure of the clan around Assad with his power, privilege and wealth. His sons, Mohammed and Ali, are known for their lavish lifestyles associated with the family.

In September 2019, rumors circulated that Makhlouf had been put under house arrest by the regime and his substantial holdings had been seized. In December 2019, Syrian customs had frozen Beirut-registered Abar Petroleum Servis SAL’s assets, alleging that it violated import regulations and smuggled 1.9 billion pounds ($2.3 billion) worth of goods. In April, tons of hashish hidden in cargo related to a company of Makhlouf’s were seized in Port Said by Egyptian authorities. Last month, 45 million amphetamine pills that were smuggled into Saudi Arabia from Syria in a container bearing the logo of a company of Makhlouf’s. Apparently, he was increasingly isolated for a year, and the anti-corruption wave targeting his empire is part of the crackdown on him.

Is Asma Assad taking him down?

While his videos on Facebook caused a sensation among Syrians, other rumors have also been circulated related to him, such as his dispute with Bashar Assad’s wife, Asma Assad. According to reports, Assad’s wife is planning a rival telecommunications company. Moreover, it is said that she is the one who is supervising the regime’s storm over Makhlouf’s influence. It is also alleged that she has prepared her cousin to replace him. Some sources added that Bashar’s uncle, Rifaat, who fought his brother Hafez Assad in the 1980s after the illness of the latter had opened the battle of succession, is allowed to return to start business projects in Syria. Rifaat is known to be hostile to the Makhlouf family.

Obviously, Asma Assad is going for Makhlouf’s assets and using every trick in the book. The Syrian economy is the Assad family business, and she wants more shares for her wing of the family.

These events signal that a radical reshuffling of the regime’s power structure might be in the works, but such an attack on Makhlouf and his assets also has its limits. Going all out against Makhlouf might be costly to Bashar Assad, and he is not ready to pay it right now. Makhlouf showed that he would resist these decisions with his posts.

Russia’s role in Assad’s inner circle conflict

While Bashar’s action against Makhlouf is said to have been the result of his dispute with Assad’s wife over who controls the country’s economy, others say that it might have been ordered by Russia, which has backed the regime during the country’s civil war. Was the move against Makhlouf really done due to Russia’s reported $3 billion demand from the Assad regime, which then turned its face to Mahklouf? If so, this is the most important part of the story. According to some figures both for and against the regime, as well as several websites, Syria’s ruling family has already been torn apart by a rift between Assad and his cousin over his refusal to pay off the nation’s war debts with his fortune. That is why Assad put him under house arrest.

Since their entry into Syria to prop up the Assad regime, Russia and Iran have spent billions of dollars and gave credits to Assad. And now, they are asking for returns on their investments. They did not pour money into a Syrian civil war just because they love Assad; both saw a potential for strategic geopolitical gains. Russia and Iran have worked together to reach the same goal, however, their post-war aims are different. In the last couple of years, this fact has brought them into a covert conflict with one another.

To recap, Iran wants to strengthen its paramilitary forces in Syria just like it did in Lebanon and Iraq. It is establishing bases that threaten Israel and bringing quite a number of Shiites to towns and cities to enlarge its sectarian expansionism. That is why the Assad family is important to Tehran, as a weakened Assad would be more controllable and dependent on Iran. On the other hand, Russia is investing in the Baath regime, which has historical ties to Moscow. It wants to stabilize Syria, save its economy, start reconstruction soon and restore its armed forces, which would be more pro-Russia than before. At the end of the day, Moscow is not interested in saving the ruling family and the current power structure. Russia, which is now more dominant than Iran in Damascus, has been pushing Assad to replace its bureaucrats and army officers that not serve its interests. Makhlouf, who is seen as the regime’s banker, might be seen as one of them as he is unwilling to pay the war bill that Damascus owes to Moscow.

With the coronavirus pandemic and the collapse of oil prices, Moscow might think that the time has come to wrap up its work in Syria. For this, Assad has to be more eager to talk to the Syrian opposition on a political settlement, but he refuses to accept a new constitution, and he is annoyed with Russia’s deal with Turkey that could bring an end to the decadelong conflict. U.N.-led talks in Geneva on writing the new Syrian constitution started late last year, but the negotiations have deliberately been sabotaged by the regime.

Besides, Iran and Assad’s unwillingness are not the only forces complicating Russia’s plans. The United Arab Emirates, which wants to be the region’s most powerful state, has become more visible in the game to stop Turkey’s influence in Syria. As is known, until Assad’s mother’s death, Dubai was Anisa Makholuf’s home. Rami Makhlouf and his family are also believed to have escaped to Dubai. Abu Dhabi has been the safe-deposit box of the Assad regime for years, even though the UAE looked like as if it was standing on the anti-Assad front with Saudi Arabia. It reopened its embassies in Damascus at the end of 2018 and became more visible in Syria.

It is clear that Assad is not disposed to Moscow’s agenda. He wants to regain control over the opposition-held areas and declare victory. For this, he needs Russia’s support. If Moscow refuses, he thinks he has other cards to play in his hand, but this also puts his regime at greater risk as he becomes a bigger headache for Russian President Vladimir Putin every day.

Is Moscow tired of Assad’s adventures?

As Assad shows doggedness against Russia’s end game and brings new friends to the table, Moscow’s problem with him and his entourage is growing. If this is the case, then Russia is now at the stage where it says enough is enough and decides that it is time to push the Assad regime to pay its debts as its leader is not proving that he is grateful for being kept in power by Russia. Maybe that is why Assad’s refusal to come to a settlement has recently sparked a rare public outburst against him in Russian media linked to Putin.

When asked, Kremlin spokesmen Dmitry Peskov denied that Putin is unhappy with Assad. Recently, however, we came across criticism of Assad in media close to the Russian president. For instance, this month, RIA-FAN published a series of articles harshly criticizing Assad. RIA-FAN is linked to Yevgeny Prigozhin, who is very close to Putin. The London-based New Arab website compiled all of those RIA-FAN reports, and in one article it is said that the Syrian dictator is weak and powerless and that he was unable to control corruption in the government. The article argued that Russian companies that are trying to help Syria restore its economy cannot operate due to the corruption in question.

This is important as Russian media outlets have white-washed Assad’s crimes so far, and we have never seen such crystal-clear critics of the Assad regime in Russian media since the start of the civil war.

In another article, RIA-FAN argued that an independent survey in Syria indicated that Assad was viewed negatively in Syria and at least 54% of Syrians wanted to see him gone in the 2021 presidential elections.

And in a third article, entitled “Corruption is worse than terrorism,” it said: “We are investing big sums of money in the Syrian economy, but we are not seeing any results. It seems that all the investments Russia is making in Syria are going into someone else’s pocket.” The report went further to add: “Syria is not a cohesive society. There are different clans in power and the Assad clan isn’t the only one. There is the Makhlouf clan, a rich and very influential family. Its opinion is always taken into account when political and economic decisions are taken in Damascus.”

All the articles on RIA-FAN were later deleted, according to the New Arab, and the agency said that its site was hacked.

Moreover, a think tank founded by the Kremlin, the Russian International Affairs Council, published a commentary criticizing Damascus saying that it lacks “a far-sighted and flexible approach” to end the conflict.

According to Bloomberg, in another article, former Ambassador Aleksandr Aksenenok wrote in the Russian daily Kommersant that Damascus needed to agree to a plan that involves Assad sharing power in order to gain international recognition and access to reconstruction funds.

So, we can say that Assad’s Russian backers have lost their patience and are pressuring him to straighten up and do as he is supposed to. Pushing him to find a way to compensate them for the cost of their support in the war is Russia’s way of bringing him to reason. This may explain why Assad decided to go after the Makhlouf family. In my opinion, Assad wants to take Makhlouf out of the game because he is holding out on giving money when asked. By eliminating Makhlouf, Assad will get more leverage in the country’s economy. Thus, he might think that he could oppose Moscow’s plans.