Syrian President Bashar Assad faces rare dissent from a top financial ally, cousin Rami Makhlouf

BEIRUT —  In the pecking order of figures close to Syria’s government leaders, Rami Makhlouf operated at the top.

Arguably the country’s richest businessman with an estimated fortune worth billions of dollars and first cousin to President Bashar Assad, Makhlouf moved as the ultimate insider.

That may be over.

The normally media-shy Makhlouf last week posted Facebook videos showing him accusing figures close to the president of Mafia-style shakedowns against his many business interests, from oil to telecommunications.

In a 15-minute video, Makhlouf appeared sitting before a stack of logs in what seemed to be a basement and peppered his comments with quotes from the Quran. He plaintively addressed Assad as “Mr. President,” telling him he’s tired of the staff around his cousin “putting me always in the circle of accusations … that I’m the bad guy.”

He objected to millions of dollars in taxes and licensing fees but said he would pay. Then, in another 10-minute video, he complained about government officials arresting some of his employees.

The airing of grievances has cracked open the workings of an opaque government and the inner circle that controls it.

At the heart of the matter, U.S. officials say, is Syria’s dire economic situation: In recent months, the government has staggered under crushing U.S. sanctions. A dollar crunch in neighboring Lebanon trapped an estimated $30 billion deposited there by Syrian merchants who rely on Beirut’s banking system to conduct business abroad; it accelerated the free fall of the Syrian pound to unprecedented levels. The coronavirus outbreak has further paralyzed an economy that is already on life support.

“We put a lot of significance into this,” James Jeffrey, the U.S. special representative for Syria engagement, said in a news briefing Thursday.

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Makhlouf’s behavior comes with Assad acknowledged as the victor of Syria’s nine-year civil war, but with few of its spoils: The Syrian pound has in the last few months tumbled to a rate 27 times less than its value before the conflict, and sanctions and international opprobrium have choked reconstruction efforts. There’s little hope that Russia and Iran — Assad’s top allies, both facing sanctions and now the economic devastation of the coronavirus — can do much to help.

The economic pressure has spurred a widescale anti-corruption drive by the government to bring funds into the country, along with a crackdown on tax evasion. Cellphone operator MTN has said it would comply and pay taxes.

Analysts and former officials say the circumstances appear to have pushed Assad to claw back billions of dollars that loyalist cadres had squirreled away even before the war. Makhlouf would be a prime target.

The 50-year-old Makhlouf has his hand in a dizzying array of industries — telecommunications, banking, airlines, tourism, newspapers, radio and television stations, real estate, oil and gas, agricultural goods, duty-free shops, and elevator equipment. Washington sanctioned him in 2008 for using “intimidation” and his ties to Assad to “obtain improper business advantages,” and described him in U.S. embassy cables as “Syria’s poster boy for corruption.”

Many observers dispute the extent of his control over the economy, but there’s little doubt he exists at the nexus of family loyalties and sectarian considerations that have defined Syria’s patronage networks during the almost five decades of Assad family rule, said several Syrian businessmen and former government officials with ministries as well as the president’s office.

The Makhloufs were connected to then-President Hafez Assad when he married Anisa, aunt to Rami Makhlouf. With Syria’s economy increasingly opening to private enterprise, Hafez Assad, Bashar Assad’s father, offered the family exclusive access to business opportunities, including duty-free shops. That continued — and expanded — after Hafez Assad’s death in 2000, with Makhlouf getting monopolies on hotels, tobacco and Syriatel, the country’s first and now largest cellphone company.

“People like him, they think of Syria as a farm. Nothing was done in Syria without him. It was impossible to get any business done,” said Ribal Assad, a son of Hafez Assad’s brother, Rifaat, who was forced to flee with his family to Europe after a failed coup attempt in 1984.

In his May 1 video, Makhlouf said that Syriatel, the crown jewel of Makhlouf’s businesses, has been ordered to pay taxes and licensing fees exceeding $180 million. Syriatel, according to public records, made 221 billion Syrian pounds, roughly $170 million, in revenue last year, according to its public records. He insists the tax amount isn’t fair and would cut into the company’s charitable works, which he says constitute some 70% of its profits.

“I won’t embarrass you, and I won’t be a burden on you,” he says to Assad. He says he’ll pay the money but pointedly adds that Assad himself should make sure the money is distributed to the country’s poor and not to the pockets of officials.

In the second video he uploaded two days later, his tone is more defiant, after news that authorities had arrested a number of Syriatel managers.

“Security services have started arresting our employees. Did anyone expect security services to come to the companies of Rami Makhlouf, who was their biggest supporter?” he asks, warning Assad of “inevitable divine punishment.”

“Mr. President, security services are starting to encroach on people’s freedoms. These are your people. These are loyalists. They were with you and are with you.”

Authorities were undeterred, and continue to demand Syriatel make payments; the company missed a deadline set for Tuesday to agree on a payment schedule.

The fracas has shaken many Syrians regardless of their political leanings: Many point out Makhlouf had little complaint of what he calls security services’ “inhumane treatment” when he employed them to frighten business rivals unwilling to give him a share. Others deride his begging for tax forgiveness when his sons, who live in the United Arab Emirates, regularly splash their Instagram accounts with pictures of what they call a #bosslife lifestyle with the requisite fleet of luxury cars nearby.

The government has yet to take further action, but the spat appears to confirm a schism within the country’s ruling elite.

“Bashar [Assad], when he wanted to reward someone, give someone a percentage of a deal, get certain goods for the country, he would tell Makhlouf to do it,” said a former Syrian government official who requested his name be withheld for fear of reprisals from authorities. “Everything was done through Rami; he was a corridor through which you had to pass.”

Early in the 2011 anti-government uprisings, demonstrators would cry “Rami harami,” meaning thief, and spoke of him as the Assads’ “piggy bank.” The attention forced his rebranding into a philanthropist. He established a charitable company under Syriatel that would plow profits into sponsoring medical care and even salaries for pro-government fighters. It also doled out money and assistance to thousands of Syrians — a point even his detractors acknowledge.

Though he had ostensibly left business, Makhlouf retained immense clout and amassed more through the various militias he sponsored. But the conflict brought the emergence of new rivals to Makhlouf, many of them businessmen-cum-warlords less tainted by association with the sanctions-ridden Assad government, said Jihad Yazigi, editor of the Syria Report, an economic magazine, in a phone interview Wednesday.

“You now see a lot of other people, none of them close to the size of Rami in terms of business but who filled roles he couldn’t fill, do international transactions he could not do,” he said.

Moves by the Syrian government to cut down Makhlouf’s power had been in play since last year. First his militias were demobilized, reportedly under Russia’s insistence; then came reports his charitable organization would be taken over by organizations linked to Assad’s wife, Asma, and that portions of Syriatel would be given to the Martyrs’ Fund, a financial entity controlled by the Syrian army.

Then in December, Syrian customs officials seized Makhlouf’s assets, accusing him of smuggling in products through outside companies, including Abar Petroleum, a company based in the Lebanese capital, Beirut; they conducted another round of seizures in April. The case is ongoing.

“Rami Makhlouf is no challenge to Assad unless both Russia and Iran got behind him. I do not see that as possible,” Jeffrey said. “Again, it’s very hard to assess where this is going. We’re just watching it carefully.”