Special report

The new masters of the Syrian economy

A special investigative report into the rise and fall of Syrian tycoons and their links to the regime.

An illustration by Ivan debs

September 28, 2019, Damascus. A group of business tycoons gather for a meticulously choreographed evening meeting in a plush conference room at the Sheraton Hotel. Gathered around Central Bank governor Hazem Karfoul, they swear, with their hands on their hearts in front of the camera, to support Syria’s economy and the national currency, the Syrian pound, which has recently slipped to its lowest value since the beginning of the war. Five of these men are new money and were virtually unknown prior to 2011: Houssam and Baraa Katerji, Wassim Qattan, Mohammad Hamcho and Samer Foz. Five tycoons who made their fortune from the war. Together they represent the top echelons of the country’s new economic elite.

Today, a handful of businessmen control the most important sectors of the economy in war-ravaged Syria, a place where six out of ten inhabitants live in "extreme poverty", according to the World Bank. "They control everything, it's a mafia", is a common refrain in interviews conducted by the OLJ with a number of Syrian and Lebanese sources. "This is a new class of profiteers who emerged during the war," says an Arab diplomat who spoke on condition of anonymity, like the majority of people interviewed for this article.

At present, eight men have carved up the Syrian pie among themselves. To the five names mentioned above, we should add Tarif Akhrass (1), Nader Qalei and, of course, the "King of Syria", Rami Makhlouf, the infamous cousin of Bashar al-Assad, the only Alawite among this new Sunni oligarchy.

They all have direct links to the regime, a prerequisite for navigating the troubled waters of trade and industry. "In Syria we are used to saying that it is not the regime that depends on the economy, but the economy that depends on the regime," says Ziad *, an opposition activist living as a refugee in Turkey. "Everything is under the control of the Assad family. The others are fronts," adds Rami Abdel Rahman, director of the Syrian Observatory for Human Rights (SOHR), via WhatsApp. Politics is pervasive in the economic sphere, but nobody talks about it. "In Syria, there is a code of silence. I never heard politics mentioned when signing contracts," says Samer *, a Lebanese businessman who, prior to the civil war in Syria, did business with companies owned by Rami Makhlouf. "When I asked Syrian businessmen what their business plan was, they laughed and said 'we know so-and-so'," says a former Western diplomat.

A fall from grace

When Bashar al-Assad came to power after his father's death in 2000, a new class of businessmen emerged along with the country's economic liberalization. This "Nouveau -riche” class competed with the bourgeois businessmen of the Damascus and Aleppo, Syria’s economic capital. Eleven years later, the war created a new reality. In the photo taken at the Sheraton, four of the five people previously mentioned were not even part of this class before 2011. Today, veteran businessmen make up only a small minority of the board of the Aleppo Chamber of Commerce.

Many of Syria’s business tycoons have fled the country along with their capital, while others have seen their property seized by the state. "Among the old class of Damascus businessmen, quite a few have been put under sanctions and have gradually lost their role as links or intermediaries for the benefit of the regime. There are also people who are no longer held in favor by Damascus like Imad Ghreiwatri, who now lives in Dubai," said Jihad Yazigi, economist and editor of The Syria Report. In 2013, the state seized the property of the businessman, then president of the Federation of Syrian Chambers of Commerce, given his reported reluctance to support the brutal repression of protesters. A few years later, his cable factory was bought by Samer Foz at a price well below its value.

Imad Ghreiwati declined to comment on the affair to OLJ.

Another example of these ‘fallen’ oligarchs is the textiles tycoon, Sabbagh Charabati, once one of Aleppo’s most successful businessmen. At the beginning of the war, he was forced to finance the notorious chabihas, or pro-regime militiamen, managed by Rami Makhlouf. "In 2016, he refused to continue paying, left the country and opened the largest textile factory in Africa, in Egypt," said Jihad Yazigi. Since then, wealthy families who chose to remain in Syria, or moved to neighboring countries without burning bridges with Damascus, have kept a low profile. "We do not like these newcomers like Foz or the Katerji, but we have to live with them, in order to preserve our assets," says Malek *, a wealthy man from Aleppo.

"They robbed our country, took the bread out of the mouths of children, it's a gang of bandits scattered across the land ... Samer Foz, the transporter of Moz (bananas in Arabic), Rami Makhlouf, the massrouf (money) pump, the brothers Katerji, one a deputy, the other a trader ...” those are just some of the lyrics of a parody song sang to the tune of Bella Ciao that has been circulated online by pro-regime activists for a week now, where they accuse those who have profited from the war, of having "destroyed the Syrian Pound" and "emptied the pockets of the people".

"We beg you, Doctor (Bashar), to do everything to return the money to the people, "the clip concludes.

"This reminds us of a saying we heard a lot at the beginning of the Syrian revolution: Bashar is good, those around him are bad," says Joseph Daher, an opponent to the regime, a teacher-researcher at the University of Lausanne and an affiliate professor at the European University Institute of Florence

Although it is lying in ruins today, the state is seeking to regain control of the economy which has been left in the hands of private businessmen for too long. In the past month, there were rumors about targeting several big names, including Rami Makhlouf, as part of the fight against corruption. "The regime is orchestrating a montage worthy of a cinema production to make it seem that it is punishing these people, while in reality they are its allies", says the Aleppo businessman.

Indeed, despite reports in Damascus claiming that large sums are being returned to the state, it is unlikely that Bashar al-Assad would turn against his main financial backers. Yet the cousin seems to have caved to pressure, with the management of Syriatel, one of Syria’s two mobile phone companies and a real money maker, being transferred to people handpicked by the presidential palace rather than Rami Makhlouf. "In [the] state owned newspapers, it's the same story. The state claims to tackle corruption by going after financiers who are not 'nationalistic' enough, i.e. those who do not participate enough in the war effort. But the real corruption is in official contracts given to Rami Makhlouf " says Joseph Daher.

The King of Syria

Despite being suffocated by Western sanctions, the Syrian economy is being plundered by two of the regime’s main benefactors, who have invested heavily in the war effort and now want repayment by getting a share of the pie. And indeed, both Iran and Russia are tapping into some of Syria’s vital economic sectors such as oil, gas, phosphate, airports and ports. "The current standoff is between Russians and Iranians rather than between Assad and Makhlouf," says the director of the SOHR. The state’s coffers are empty and reconstruction will cost several hundred billion dollars. The regime has to get the money from the pockets of its people. "It has been several months since Syrian businessmen confided in me that the regime has been pressuring them in an astonishing manner. There have been raids on companies, computers were checked, new taxes and customs duties were imposed, they came up with new regulations, and resorted to various means to get money," says the former Western diplomat.

Syria’s financial giants have less to worry about, much of their fortune is already safely stashed in the Emirates or St Kitts. Today, the ultimate symbol of belonging to this new state nobility is to be a partner in the latest big project, Marota city. "This is without a doubt the club of war profiteers", explains Jihad Yazigi. In 2012, a presidential decree expelled the inhabitants of poor neighborhoods of the suburbs of Damascus without warning to pave the way for a high-end real estate and commercial project. The plans for this mini Dubai clash with the image of devastated cities, however this does not seem to deter the likes of Samer Foz, the Katerjis, but also Nader Qalei, a former employee of Rami Makhlouf, from investing in the project. "That was the moment we understood that they have seized power," said Ziad *, an opposition activist.

June 2002. A film crew is busy working in Aleppo despite the scorching sun. In front of incredulous onlookers, a scene from a TV commercial for Syriatel was about to be filmed in the old souk of the city. Sitting on a folding chair, Rami Makhlouf was following the continuous movements of Spanish and Lebanese filmmakers, technicians, make-up artists and extras. Two years earlier, the first cousin of Bashar al-Assad had launched the first mobile network that catered to the huge local market. "Syriatel is the cash cow of the Makhlouf business empire and, if he loses control once and for all, his position as the country's leading businessman would be over," writes The Syria Report. "Syriatel and its boss symbolize corruption with a ‘big C’. In 2011, people were receiving text messages on their cell phone telling them not to participate in the protests," recalls Ziad. The offices of the company were set on fire, while the people chanted "Makhlouf is a thief".

On June 16, 2011, he announced his withdrawal from business to focus on ... philanthropy. This maneuver did not deceive anyone. With an army of lawyers at his side, he set up numerous front companies that he entrusted to his lieutenants. The charity al-Boustan, created to help widows and orphans, was one of the many fronts he used to finance chabihhas. "Makhlouf is the bank of al-Assad," says Ziad. Everything is done with the approval of Assad and for Assad. In opposition newspapers, a caricature shows a Syrian leafing through the advertising inserts of a phone book: Makhlouf's Pizza, Makhlouf travel agency, Makhlouf taxis, Makhlouf hotel and so on. "Rami Makhlouf had his hands everywhere well before 2011, and had a part in all major contracts signed in Syria," says Joseph Daher.

In 2008 there were attempts to reach some kind of reconciliation between Paris and Damascus. At the time, French companies were discreetly advised not to get into bed with this notorious character. But during a dinner in Damascus in the presence of Luc Chatel, the then State Secretary for Industry and a government spokesperson, the Syrian oligarch said that no commercial agreement between the French companies and the state would be reached without him.

With a fortune estimated at 5 billion dollars, "Mr 5%" as he is sometimes nicknamed in reference to the commission he collects on every major contract signed in Syria, continues to maneuver skillfully despite international sanctions, and at the expense of the Syrian people. He is a true shark, under a polite appearance. "Rami is not that good, he is not impressive at all, his father was so much better. He was the man of the clan, "says the former Western diplomat. Mohammad Makhlouf, brother of Anissa, the mother of Bachar, was entrusted by Hafez with the management of the family fortune and the education of his children. "Makhlouf is untouchable because of his blood ties", stresses Malek, the Aleppo businessman.

The challenger

If Makhlouf was the "poster boy of corruption" in the 1990s/2000s, now Samer Foz holds the title. With graying hair combed to the back, a light complexion and light colored eyes, he looks elegant in an expensive outfit. However, this 46-year-old son of the small Sunni bourgeoisie of Latakia has the making of a James Bond movie villain. At the Sheraton on Saturday night, he announced that he would be donating $ 10 million to the state. It is a drop in the ocean when compared to the fortune of a man who has navigated the Syrian business world like no other. "It is often said that Samer Foz is a more important figure in the political nomenklatura than Rami Makhlouf himself. He has become a very influential person, while the second is less visible," says an Arab diplomat. In June, the US Treasury placed Foz on its sanctions blacklist, accusing him of "converting the atrocities of the Syrian conflict into lucrative profits."

Before 2011, Samer Foz headed a small cement company inherited from his father. But he dreamt of an empire. Today, he is involved in cable television, hotel management, the pharmaceutical sector, car assembly and distribution, real estate, and the import and trade of grains and building materials. "Samer Foz played an important intermediary role, especially in buying and selling wheat with Russia. The opposition accuses him of being Iran’s man, but in reality, he is close to all those who serve his interests, "says Joseph Daher.

Meanwhile, Nader Qalei has made a comeback. A former official at Syriatel, the Damascus native was exiled in Canada for a few years after a quarrel with his powerful boss, before later reconciling with him. He has not yet been put under international sanctions and could therefore serve as front-man for new investments. However, his close relations with the regime and its circle have caught up with him. In 2018, the Canadian judiciary accused him of tax evasion, especially after having invested in Syria in 2013 in spite Canada’s economic sanctions against the country. The Canadian Embassy in Beirut declined to comment to OLJ on the matter. In 2019, the European Union placed Nader Qalei, along with several of his compatriots, like Samer Foz and the Katerji brothers, under sanctions.

This was not enough to deter Houssam Katerji. "The man climbed the social ladder at breakneck speed. He has become one of the most powerful men in the country, "says a Lebanese businessman. A grandson of shepherds from ar-Raqqa, the Katerji brothers, Houssam and Baraa, were small time traders living in Aleppo who worked as smugglers between regime territory and areas under the opposition control. "This is the main characteristic of these newcomers, they are intermediaries," says Joseph Daher. With ebony hair and a small mustache, the 37-year-old Houssam Katerji wears ill-fitting, colorful outfits making him appear like a character from a bad Turkish sitcom from the ’90s.

With his extensive network in northeastern Syria and his ability to bribe armed militias, Houssam Katerji leads the largest smuggling network hauling crude oil, fuel oil and gasoline from areas controlled by the Syrian Democratic Forces (SDF, predominantly Kurdish) to the regime’s territory. Katerji has created a private security company to purportedly protect his cargo. “Many businessmen do that, and that's what many people did in Lebanon after the civil war," says Joseph Daher. Houssam Katerji fills his pockets by rendering a "service" to the regime and was rewarded with a seat in Parliament in the 2016 elections. A year later, Reuters confirmed an open secret, that the Syrian regime did business with the ISIS jihadist group, including buying wheat from areas under their control, through the Katerji brothers.

Heinous crimes

What the Assads cannot do themselves, they delegate to others. Mohammad Hamcho was sent by Maher el-Assad, the president's brother, to sign oil contracts with Iraq while Saddam Hussein was in power; the contracts were intended to bypass international sanctions. But how did this man, a son of an ordinary civil servant, and a Sunni to boot, get close to the circles of power and build his fortune? The answer remains a mystery. Beyond their shared passion for purebred Arabian horses, Hamcho had probably met and worked with the right people at the right time, from there he gained the confidence of Bashar al-Assad's younger brother; he would later also become his brother-in-law. "I met Hamcho one day at a mosque in Damascus and he was introduced to me. He seemed pretty dull, not so brilliant, "says the former Western diplomat. But the activities of the well-connected businessman did not remain secret very long, he was placed on the US Treasury blacklist in 2009, one year after Rami Makhlouf, then on the EU’s blacklist in 2011.

The Hamcho Group has interests in metallurgy, construction equipment, electrical and chemical machinery, water, oil and gas, petrochemicals, real estate projects and infrastructure. The businessman holds as many titles as he has illicit activities, being a deputy and the secretary of the Damascus Chamber of Commerce to name but one role. In the factories he owns in China, he melts and transforms scrap metal scavenged from the rubble of buildings destroyed by the bombing in Syria.

The activities of Maher el-Assad, who is said to be close to the Iranians, did not fail to attract other opportunists. Enter Wassim Qattan. In 2018, Qattan posed in a black Ralph Lauren polo shirt for a Syrian magazine, sitting behind a fancy desk made from lacquered brown wood. Curiously, to his left in a frame, there was a photo of Maher in military clothes. Like the others, this graduate of the Faculty of Fine Arts at the University of Damascus suddenly developed a particular appetite for business and somehow managed to amass a fortune. Despite only owning a bakery and a furniture gallery, he won major contracts for the development of the Qassioun Mall in Barzeh, a district of Damascus. "As a former Syriatel employee, it is very likely that he is a front-man for Rami Makhlouf in this investment in shopping centers, which seems like money laundering," says Elias *, a Lebanese businessman.

For his part, Tarif el-Akhrass does not like shows of wealth. "He's extremely friendly and funny. His problem is that he is very stingy," laments Elias. A strange flaw for a businessman in the kingdom of Bakhchich (kickbacks). But the man is not just anyone. "Akhrass has direct access to Bachar, he does not go through others," says Jihad Yazigi. The 68-year-old businessman is the cousin of Fawaz el-Akhras, father of Asma al-Assad. He is the largest importer of raw materials including sugar and wheat from Ukraine and Russia, and he chairs the Chamber of Commerce of Homs. When his factories in Aleppo burned down in 2012, he was not reimbursed by his insurer, Lloyd's of London, because he had been placed under international sanctions a few months earlier.

"Unlike the others, Akhrass does not directly fund the regime," Elias said. On September 27, a vehicle belonging to his son, Merhef, was found in Brital, in Lebanon’s Bekaa, "the haven of stolen cars," under suspicious circumstances. Merhef, aged about 40, who had lived in Lebanon for three years, was missing. A few hours later, he reappeared. Local authorities spoke of kidnapping while remaining evasive. "Tarif el-Akhrass is someone so powerful and connected, that it's very possible that the regime was behind the kidnapping of his son. Which militia or mafia would dare to attack a man of this importance, especially in Lebanon?” asks the Lebanese businessman. Others believe it was a simple abduction. "If the regime really wanted to kidnap him, why not do it in Syria?" counters Jihad Yazigi.

The regime has made each of these men and can undo them at any time. "We will have new names that will emerge, former militia leaders, who have accumulated large sums during the war and who will increasingly invest formally in real estate, banking, tourism," Joseph Daher says. This has been the reality of Syria for several decades: the elites change, but the Assads remain.

(1) : On the 8th of September, The Syria Report wrote that the Central Bank of Syria had ordered a freeze on the bank accounts of Tarif Akhrass as well as on those of several other prominent businessmen. The freeze came in a circular distributed by the Central Bank to local banks on October 7 and of which The Syria Report has seen a copy. It instructs banks to freeze the accounts of several businessmen named in the decision and stop all credit facilities to them.

*Names have been changed to main the safety of our sources

(This article was originally published in French in L'Orient-Le Jour on the 5th of October)

September 28, 2019, Damascus. A group of business tycoons gather for a meticulously choreographed evening meeting in a plush conference room at the Sheraton Hotel. Gathered around Central Bank governor Hazem Karfoul, they swear, with their hands on their hearts in front of the camera, to support Syria’s economy and the national currency, the Syrian pound, which has recently slipped to its...