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Tags: Middle East | Russia | Syria | makhlouf | sanctions

Is Syria's Assad Desperate for Cash?

syria mideast

(Woravit Vijitpanya/Dreamstime)

By Wednesday, 29 July 2020 07:06 AM Current | Bio | Archive

Rami Makhlouf is not a man accustomed to hardship. The Syrian businessman and first cousin of the country’s ruler, Bashar al-Assad, has made a fortune in Syria, owning until recently one of Syria’s two mobile phone networks.

But all of that began to change this spring.

In May, Syrian authorities arrested some of Makhlouf’s associates and began collecting on back taxes of more than $180 million. In that same month, Makhlouf took to social media to make his case that his former patron is now his persecutor.

On Sunday, Makhlouf went even further.

On Facebook, he acknowledged an open secret: He had helped establish a web of front companies with the purpose of evading Western sanctions.

The Syrian regime has charged that Makhlouf was embezzling funds from Cham Holding, which he set up about 15 years ago to help finance Assad, and was funneling the money to a new portfolio of companies. Makhlouf said the charges were unjust and countered that "these companies’ role and aim is to circumvent (Western) sanctions on Cham Holding."

This is no surprise to Western counterterrorism officials. 

Makhlouf has been sanctioned since 2008 by the U.S. Treasury Department, which describes him as "a powerful Syrian businessman and regime insider whom improperly benefits from and aids the public corruption of Syrian regime officials" and notes that he controlled access to Syria’s telecommunications, commercial, oil, gas and banking sectors.

In 2016 the so-called Panama Papers, the legal documents for a host of offshore accounts and corporations, leaked to the public, disclosing that Makhlouf and his brother controlled several front companies that had avoided Western sanctions.

What is surprising is that Assad would turn on one of his closest allies and a childhood friend. That he did so is a sign of Assad’s desperation, says David Adesnik, a senior fellow at the Foundation for Defense of Democracies.

Because the inner workings of his regime are shrouded from the public, it’s hard to know exactly why Assad has turned on Makhlouf. One theory is that Syria’s most important patron, Russia, wants to recoup some of the money it has invested in helping Assad largely win the civil war.

This spring, Russian media outlets close to President Vladimir Putin began running stories criticizing the corruption of Assad’s regime. Makhlouf would be an attractive scapegoat for Assad in this respect. Another theory is that Assad’s wife is asserting herself inside the regime and pushing out some of Assad’s family in the process.

Regardless of the reasons, Makhlouf’s misfortune presents a great opportunity. A spurned insider is a potential intelligence gold mine. In the hands of a competent spy service, Makhlouf could provide a detailed roadmap on how the Assad family and Syrian regime shield their wealth from Western sanctions.

Even if Makhlouf doesn’t turn against his family and country, this public rift between him and the dictator is a valuable political victory. America and the West may have failed to stop Assad from immolating his country, but even in victory, Assad’s allies cannot find security.

Eli Lake is a Bloomberg View columnist. He was the senior national security correspondent for the Daily Beast and covered national security and intelligence for the Washington Times, the New York Sun, and UPI. Read Eli Lake's Reports More Here.

© Copyright 2020 Bloomberg News. All rights reserved.


America and the West may have failed to stop Assad from immolating his country, but even in victory, Assad’s allies cannot find security.
makhlouf, sanctions
Wednesday, 29 July 2020 07:06 AM
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