[Marxism] The Syrian Regime's Business Backbone

Louis Proyect lnp3 at panix.com
Fri Mar 23 07:56:21 MDT 2012


The Syrian Regime's Business Backbone
by Bassam Haddad

Nearly one year into the Syrian uprising, with more than 7,500 
Syrians dead, the protracted conflict is not very well understood 
or reported despite a deluge of writings. Most track fast-moving 
events without pausing for sober analysis of Syrian politics and 
society. Early on, the dominant argument was that the regime would 
quickly collapse; later, it has been that the regime is durable. 
The long view rarely appears. When it does, alas, it most commonly 
adduces timeless cultural factors, chiefly sectarianism, to 
explain the apparent stalemate.

No single factor is the secret to understanding the causes of the 
uprising or its prospects. There is, however, one basic, stubborn 
truth: The regime has thus far remained unitary and cohesive, 
while the society is heterogeneous and, to some degree, divided. 
Naturally, the regime has worked hard over decades to reproduce 
and exacerbate the divisions, whether of sect and ethnicity, class 
or region. The regime has meanwhile labored to bolster the unity 
at the top, building an army and security services whose fates are 
intertwined with that of the regime. But what is consistently 
missing from analysis of Syria is another such stratagem: 
Beginning in the 1970s, the regime has forged networks of capital 
that bind elite business actors to state officials as the latter, 
and their offspring, venture into the commercial realm. These ties 
have paid dividends in times of crisis, both in the past and in 
the present.

After coming to power in 1970, Hafiz al-Asad reached out to 
conservative big businessmen, who were centered in large cities, 
particularly Damascus and Aleppo, and had been badly weakened by 
the wave of Baathist nationalizations in the 1960s. The links 
originated in conversations at the state-run Chambers of Commerce 
and Industry, and became bilateral, as the regime paired up with 
select businessmen with substantial capital, key expertise or 
relations with foreign companies. These businessmen came from 
diverse backgrounds. Some belonged to the old bourgeoisie, the 
merchant class that had dominated Syria’s politics in the 1950s, 
and others were ascendant figures associated with public-sector 
ventures that had benefited from the oil boom after 1973. Most of 
these businessmen had operated in the shadow of the state, bidding 
for tenders from the public sector, but other new entrepreneurs 
were recruited as the networks mushroomed.

The rapprochement bore political fruit in the late 1970s and early 
1980s, when the regime faced a revolt led by the Muslim Brothers. 
Asad had enacted a series of policies that harmed the interests of 
the Brothers’ cadre and constituents in the traditional suq 
(market) and other small traders and artisans.

In essence, the state had decimated the modest traders’ business 
with the products of large, state-owned enterprises subsidized by 
Arab Gulf countries amid the post-1973 oil boom. These factories 
spread across the country and caused especially profound 
resentment in the conservative Sunni quarters of Syrian cities, 
where the regime was already seen as repressive and (because it 
was headed by ‘Alawis) heretical. Making matters worse was the 
deal offered to a “troika” of men who, under the state’s watchful 
eye, were allowed to launch the first large-scale private business 
ventures in the Baathist era. The troika was composed of Sa‘ib 
Nahhas, Uthman al-‘Aidi and ‘Abd al-Rahman al-‘Attar. Their 
bargain with the regime became the model for state-business 
partnerships, escalating tensions between the state and small 
business owners with Sunni Islamist leanings.

The confrontation with the Muslim Brothers lasted for more than 
six years. Urban Sunni merchants privileged by the state according 
to the troika model fell in with Hafiz al-Asad. Badr al-Din 
al-Shallah, then president of the Union of the Syrian Chambers of 
Commerce, assured Asad in a historic 1982 meeting that the big 
businesses whose loyalty he commanded would stand by the regime. 
The regime proceeded to beat back the uprising in the northwestern 
city of Hama, where at least 15,000 residents were killed. The 
brutal tank and artillery assault on Hama proved to be a lasting 
defeat for the Brothers. It also welded the future of Shallah and 
his peers to the fate of the regime.

After 1982, the informal state-business partnerships continued to 
flourish. Big businessmen got a variety of special privileges, 
including commissions for projects in the public sector, tax 
exemptions and trade protections for certain goods. The 
partnerships matured in the late 1980s and came to exercise 
disproportionate influence on economic policy. The salient 
institution was originally called the Guidance Committee, a body 
made up of state officials and “private” businessmen tasked with 
devising economic policy over and above the committees that 
drafted nominally socialist five-year plans. “Private” had 
acquired a new meaning because many of these businessmen were 
themselves state officials or their relatives or partners. With 
makers and “takers” of policy staffing the same enterprise, or 
sometimes inhabiting the same corporeal frame, corruption in 
economic policymaking hit an all-time high. In the 1990s, the 
nucleus of this scheming was the office of Prime Minister Mahmoud 
al-Zu‘bi. Most state officials who went into business opted for 
quick profit, which guided them in the direction of trade, rather 
than industry, and toward urban, rather than rural, areas. Along 
with many others, the Zu‘bis prospered mightily, as did the 
Khaddams (‘Abd al-Halim was then vice president) and the Tlasses 
(Mustafa was then defense minister), running car dealerships and 
hawking upscale consumer products. The new magnates, notably Rami 
Makhlouf, the nephew of the president’s wife, also got high 
returns from tourism, free trade zones and, later, telecommunications.

By the late 1990s, the business community that the Asads had 
created in their own image had transformed Syria from a 
semi-socialist state into a crony capitalist state par excellence. 
The economic liberalization that started in 1991 had redounded 
heavily to the benefit of tycoons who had ties to the state or 
those who partnered with state officials. The private sector 
outgrew the public sector, but the most affluent members of the 
private sector were state officials, politicians and their 
relatives. The economic growth registered in the mid-1990s was 
mostly a short-lived bump in consumption, as evidenced by the 
slump at the end of the century. Growth rates that had been 5-7 
percent fell to 1-2 percent from 1997 to 2000 and beyond.

After Bashar al-Asad succeeded his father in 2000, the architects 
of Syria’s economic policy sought to reverse the downturn by 
liberalizing the economy further, for instance by reducing state 
subsidies. Private banks were permitted for the first time in 
nearly 40 years and a stock market was on the drawing board. After 
2005, the state-business bonds were strengthened by the 
announcement of the Social Market Economy, a mixture of state and 
market approaches that ultimately privileged the market, but a 
market without robust institutions or accountability. Again, the 
regime had consolidated its alliance with big business at the 
expense of smaller businesses as well as the Syrian majority who 
depended on the state for services, subsidies and welfare. It had 
perpetuated cronyism, but dressed it in new garb. Families 
associated with the regime in one way or another came to dominate 
the private sector, in addition to exercising considerable control 
over public economic assets. These clans include the Asads and 
Makhloufs, but also the Shalish, al-Hassan, Najib, Hamsho, 
Hambouba, Shawkat and al-As‘ad families, to name a few. The 
reconstituted business community, which now included regime 
officials, close supporters and a thick sliver of the traditional 
bourgeoisie, effected a deeper (and, for the regime, more 
dangerous) polarization of Syrian society along lines of income 
and region.

Successive years of scant rainfall and drought after 2003 produced 
massive rural in-migration to the cities -- more than 1 million 
people had moved by 2009 -- widening the social and regional gaps 
still further. Major cities, such as Damascus and Aleppo, absorbed 
that migration more easily than smaller ones, which were 
increasingly starved of infrastructural investment. Provincial 
cities like Dir‘a, Idlib, Homs and Hama, along with their 
hinterlands, are now the main battlegrounds of the rebellion. 
Those living in rural areas have seen their livelihoods gutted by 
reduction of subsidies, disinvestment and the effects of 
urbanization, as well as decades of corrupt authoritarian rule. 
The Tunisian and Egyptian uprisings motivated them to express 
their discontent openly and together.

There have been no significant defections, however, from the ranks 
of big business, at least not in Damascus and Aleppo. It is not 
just presidential blood relatives like Makhlouf who have remained 
loyal. Other major players hailing from the above families have 
stood firm by the regime, financing its orchestrated mass rallies 
and public relations campaigns, as well as helping to float the 
Syrian currency. Most malcontents limit themselves to spiriting 
capital out of the country and expressing private wishes for 
regime change. Those who do back the uprising do it quietly and 
extremely carefully, highlighting the fealty of their counterparts.

The moguls know very well that their fate is bound up with that of 
the regime by virtue of intertwined investments and also their 
years of self-enrichment at regime behest. To switch sides would 
thus be an enormous gamble on the opposition’s forbearance. Big 
business’ support is not solely responsible for the regime’s 
resilience, but it would have been difficult for the regime to 
hold out in Damascus and Aleppo had these monied interests 
explicitly thrown their lot in with the protesters. The 
regime-business alliance took shape over decades, and it is 
unlikely to snap until the very last moment. Public defections by 
big businessmen would be a fair indicator that the regime’s days 
are numbered. Until then, all eyes are on the battlefield.

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