Why you should care
Syria’s leader has counted on the business elite for support throughout the war. Now, he’s pressuring them for taxes — and risking a critical alliance.
Tarek’s bustling factory had escaped the worst ravages of Syria’s eight-year civil war. He was hiring workers again, hoping the company would secure decent contracts as the country’s reconstruction got underway. But soon his manufacturing business found itself facing a new opponent — Syria’s finance ministry.
“They descended on our offices, maybe 20 people, searching every document for something they could fine us for,” says Tarek, who claims that the government’s accountants also overestimated the company’s profitability to increase his tax bill. “They’re not professional. It’s like a mafia.”
President Bashar Assad’s authoritarian regime is seeking to replenish its depleted coffers, having recaptured the parts of Syria that were held by opposition forces, thanks in part to Russian and Iranian help. But Syrian industrialists say they have now become the prey for predatory state bodies seeking funds.
[Assad] still needs the support of the Sunnis and the elite, and I’m not seeing them getting the incentive.
Sami Nader, Levant Institute for Strategic Affairs
Analysts warn that the grab for money is impeding economic recovery, deterring investment needed for reconstruction and could ultimately undermine business support for the regime itself. “Yes, this will block the reconstruction, but I think it will [also] put the regime in jeopardy,” says Sami Nader, research director at the Levant Institute for Strategic Affairs.
The Assads have traditionally drawn support from the minority Alawite sect to which they belong. But when Assad followed his father into power in 2000, he increased his appeal among predominantly Sunni industrialists — members of Syria’s majority sect — by promising to open Syria’s economy to outside investment. Loss of their support, whether tacit or vocal, would further erode Assad’s power base. “[Assad] still needs the support of the Sunnis and the elite, and I’m not seeing them getting the incentive,” says Nader.
The civil strife, which has seen an estimated half a million people killed, has devastated Syria’s infrastructure. While the regime has encouraged investment in reconstruction by its military allies Russia and Iran, and welcomed business delegations from its political ally China, there has been scant sign of foreign investment, and it is unclear how reconstruction will be funded on any grand scale.
The regime is also under huge financial pressure. Renewed American sanctions on Iran have intensified pressure on the regime’s finances by disrupting Assad’s credit line and oil supplies from Tehran. The loans had allowed Syria to purchase $5 billion worth of fuel and other goods from Iran since 2013, Syrian officials say. British marines this month impounded an Iranian supertanker the U.K. said was headed to Syria; Iran retaliated by seizing a U.K.-flagged tanker.
Assad has funded his war effort in part by tapping rich loyalists for cash, including metals magnates and businesspeople facilitating oil and gas trade with Syria. But many of them have now been hit by U.S., EU and U.N. sanctions for bolstering the regime.
The government’s annual budget has been halved since war broke out, dropping from $18 billion in 2011 to $9 billion in 2018. Actual expenditure is probably lower — experts estimate only half of budget requirements have been met. Rampant corruption among government employees seeking to boost meager salaries is widely reported. As the squeezed government puts pressure on local businesses, heavy industry and wholesalers are in its sights.
“It’s a methodical system; the government is chasing back every penny,” says another Syrian business owner, who reports one friend received demands to settle a fine incurred by his dead father’s company more than 15 years ago. Against this backdrop, as well as continuing instability, lack of capital and international sanctions, “it’s unlikely that anyone of any serious weight would consider investing in Syria,” he adds.
“The state is trying to raise money for itself,” says a Syrian businessman. “The customs patrols are shaking us down all the time.”
Abdulnasser Sheikh al Fotouh, chair of Homs’ chamber of commerce, says businesses are slowly recovering thanks to improving security in many places, but calls on the government to do more. “We need a package of brave laws that attract investments and help businesses grow rapidly.”
Hopes that the reopening of a key border crossing between Syria and Jordan in late 2018 would boost trade and customs revenues have been dashed. One Syrian importer says fees levied on trucks entering Syria through Nassib had rocketed from $100 to $800.
Careful not to criticize the regime, Fotouh says business leaders recently met with the prime minister’s office to demand new laws regulating investment. He argues that business groups need a bigger say in how the economy is managed and help in shouldering the cost of loans taken out before the war. “Those who never left the country deserve to be prioritized,” he says. “After all, Syria can only be rebuilt by Syrians.”
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