A small business in Syria. Photo: http://www.kfw-entwicklungsbank.de
In searching for an end to the bloody stalemate in Syria, many have identified the Syrian “business community” as one of the last pillars of support propping up Bashar al-Assad’s presidency.
In June, The Financial Times ran a story headlined “Business reluctant to cut loose from Assad.” In October, when The Christian Science Monitor attempted to answer the question “Who backs Syria’s Assad?” it pointed the finger first at “businessmen.” Most recently, Elliot Abrams identified “turning the business community” as one of the four tactics US policymakers can use to knock Assad from his perch and stanch the bloodshed.
The idea that the business community is complicit in the repression of Assad’s security forces stems from the idea that moral concerns of Syrian businesspeople are trumped by those of dollars and cents. As the idea goes, the Syrian business community, or at least sizeable pockets of it in Aleppo and Damascus, believes that the policies of the Assad government have allowed it to prosper, and that future prosperity relies on the guiding hand of Assad.
Recently, Radwan Ziadeh, Syrian activist and member of the Syrian National Council (SNC), spoke at Johns Hopkins School of Advanced International Studies and exposed this idea as myth. “There is no business community support for the Assad regime,” Ziadeh stated. On the contrary, he argued that many in the business community form a pillar of support for the opposition, funding many of its operations.
Indeed, The Guardian reported in May that one of the earliest opposition conferences was funded by prominent Syrian businessmen, such as Ali and Wassim Sanqar, sibling luxury car dealers, and Ammar Qurabi, chairman of Orient TV. Exploring their motives, the article reported that all three had been burned directly by the government’s preferential treatment of Syria’s most notorious crony capitalist Rami Makhlouf. These three businesspeople do not stand alone in their support for the protest movement. According to Ausama Monajed, a member of the SNC, “Millions of Syrian pounds are coming from these people. If a protesting community needs something, the money gets to them very quickly.”
In comparison, the segment of the business community supporting Assad seems to be small. At an event at USIP on October 13, Murhaf Jouejati, a member of the SNC, estimated that Assad’s support in the business community is limited to perhaps 10 to 15 elites who have long benefitted from his favor and now stand to lose much from his ouster. In a recent article in Foreign Policy, Randa Slim estimated that Assad’s nouveau riche “do not exceed 200.”
Of course, as my colleague Abdulwahab Alkebsi argued recently, the idea of a monolithic business community unanimously supporting or opposing anything is a myth. The term business community, even more than the term private sector, encompasses a range of firms of various sizes, operating in a range of different sectors. This diverse part of society comprises a dizzying array of conflicting agendas. Thus, it’s not surprising that some support Assad and some oppose him. Yet, the question remains whether the average businessperson has a stake in supporting the continued rule of Assad.
Recent Syrian economic history does not seem to merit significant support among businesspeople. Indeed, under Assad, the Syrian economy has underperformed for many. Between 2006 and 2010, due to some limited economic reform, Syria’s per capita GDP rose from just over $1700 to just under $2900. That rise put the average Syrian on par with the average citizen of Guatemala or Egypt. While Syria’s 6 percent growth in 2009 was relatively impressive, its 3.2 percent growth in 2010 lagged behind the world average. This growth has benefitted very few, many of whom selected by Assad rather than the markets.
The story of Rami Makhlouf is telling. While Bashar inherited the political power of his father Hafez, Makhlouf inherited the economic power that had been granted to his family when Makhlouf’s aunt married Hafez. Initially operating in the telecommunications industry, Makhlouf scooped up businesses throughout the economy during Assad’s period of “reform.” With his connections in the halls of power and in the security forces, Makhlouf’s participation in a business deal was thought to be crucial to its success. An oft cited figure characterizes Makhlouf as controlling 60 percent of the Syrian economy. Some, like Makhlouf, have prospered due to their connections. Others have prospered because they have operated in a sector that Assad and Makhlouf chose to support. For the majority, however, business has been difficult.
Even before the uprising, Syria’s economy offered extremely barren soil for business. The recently released Arab World Competitiveness Report sheds light on this troubled business climate. The report ranks the Syrian economy 98th in the world in competitiveness, putting it ahead of only Yemen in the Arab world. Beyond the ranking, the report describes a Syrian economy in which it was difficult to secure capital, difficult to compete with the country’s few mega-firms, difficult to hire and fire workers, and difficult to participate in trade or attract foreign investment. If the average businessperson supported Assad heading into the uprising, it was not because Assad had made conducting business easy.
Assad’s effect on business since then has only made things more difficult. His brutal crackdown on unrest has disrupted commerce, crushed the country’s growing tourism industry, and attracted economic sanctions that have put the country’s annual $2.5 billion in oil revenue in serious jeopardy. While the IMF recently forecast that the Syrian economy would shrink by 2 percent this year, some economists estimate that the damage is actually far worse. The governor of the country’s central bank recently admitted that the government has spent $3 billion to stave off the collapse of its currency. With access to Euros limited by international sanctions, government officials recently “threatened” to conduct transactions in rubles.
With the country’s economy in disarray, Assad’s hand has been anything but firm. Last month, Assad’s government announced an import ban. After days of spiraling prices, the government quickly retracted the ban. With its economy collapsing, Assad’s government announced that rather than tightening the belt during tough times, it would increase next year’s budget by 59 percent to provide social support, a decision that would make even Keynes stir in his grave. In August, a Syrian businessperson told The Financial Times, “The regime has sacrificed the economy for its own survival.” Indeed, if Assad’s years of economic mismanagement had failed to alienate the Syrian private sector, the past few months may have done the trick.
The remaining justification for Syrian businesspeople to stand behind Assad would be a combination of confidence that the current government can right the ship, and fear that in the absence of Assad, there will be no stability in Syria. In a country in which sectarian identity seems to matter, it is concerning to some that the opposition has been slow to unite and present a positive vision of a better future for all Syrians. The increasing militarization of the Syrian uprising has blurred moral lines to some. The difficult transition in Egypt is also affecting the attitudes.
At the same time, Assad’s supporters sing a bizarrely confident tune. A Syrian official recently predicted, “In a few months the protests will stop and the situation will be getting back to normal. This is a problem we will overcome.” One Syrian analyst stated, “Economic reforms will continue and if waste is cut and corruption cut back, the economy will emerge from this period stronger than it was at the start.”
These rosy predictions, like much of the administration’s message, seem largely divorced from reality. The Syrian economy has far greater problems now than waste and corruption. Even if Assad is to gain the upper hand in this conflict, life in Syria is unlikely to return to its previous normal. The sanctions will likely remain. The tourists will be slow to return. The economic dislocation is likely to persist. Resentment will fester. Another uprising will likely always lurk around the corner. While the opposition’s road is difficult, Assad’s road seems more so.
In February, when Hosni Mubarak clung to power despite the widespread calls for his resignation, I attended an event at the Carnegie Endowment titled “Egypt on the Brink.” At the event, Neil Hicks, advisor for Human Rights First, observed that Mubarak had a choice: he could hand over power or he could remain as the Robert Mugabe of North Africa. Today, Bashar al-Assad is presented with a similar choice: he can leave, or he can preside over a collapsed economy and perhaps a civil war. While he may be able to choose the second option, I doubt there will be many in the business community excited to stand behind him.