Risky Business in Syria: Damascus and Aleppo Hedge Their Bets

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Syrians wait to fill their jerry cans with diesel at a petrol station in Damascus on 13 March 2012. Syrian manufacturers, particularly in Aleppo, are currently trying to reap a larger amount of profit by hiding whether or not goods are imported or locally manufactured, which has made prices rise artificially. (Photo: AFP - Louai Beshara)

By: Ernest Khoury

Published Friday, March 16, 2012

Syria’s biggest cities are feeling the squeeze of sanctions and prolonged instability in the country. Many in the business community are choosing to quietly support both the regime and the opposition, assuring their survival no matter who prevails.

Damascus – Since it all began in Daraa in the middle of last March, speculation and analysis surrounding the fate of President Bashar Assad’s regime in Syria consistently arrives at one conclusion: Assad will not fall so long as Aleppo and Damascus are with him. More precisely, he will not fall so long as the Damascus and Aleppo Chambers of Commerce are with him.

This means that the regime can hold out if the businessmen and investors in the two economic and political capitals of the country continue to support and fund the state’s activities.

Perhaps this is why the anti-regime Arab and Western camp have realized that they must hit the regime where it counts, i.e. its money supply.

The many rounds of sanctions have targeted Syrian banks as well as specific companies, especially prominent business and financial figures. The logic behind this is that the state structure will not hold up if business in Syria comes to a halt, particularly when Syrian businesses decide to stop funding the security forces with “tribute” and “protection money” and funnel support to the opposition instead.

One year after the outbreak of the uprising, the opposition are still waiting for Aleppo to join in. This delay is partially due to the reluctance of its businessmen, their Chamber of Commerce, and Hassan Zaido, the chamber’s president.

Their refusal to give up on the regime has to do with the fact that it has been responsive to their interest, particularly after issuing hasty decisions that threaten their profit margins.

For example, last September the regime banned the importation of goods whose customs duties exceed 5 percent. The decision only lasted for a few days before being overturned, due to warnings from the “Loyal Traders of Aleppo,” as they refer to themselves.

The fact that the Aleppo Chamber of Commerce’s website was hacked by the Union of Free Syrian Pirates for Supporting the Syrian Revolution last August shows the extent of the chamber’s importance to the regime’s survival.

But in the end, “capital is a coward,” as they say, and Syria is no exception. So, with the escalation of the crisis and the expansion of its geographical scope, many financiers, traders, and investors have begun to reduce their investments, which have become less profitable in some of the main economic sectors, such as tourism and travel agencies, banks, car dealerships, and import/export companies.

The decline in investment can be explained by the golden rule of the world of capital: security and stability are the two basic conditions for attracting and maintaining investment.

Today, being that there is no security or stability in many parts of the country, dozens of companies have chosen to either close their operations or limit their activities.

Prominent business moguls who have done so include the Ghreiwati family (owners of Kia and Ford car dealerships), Omar Karkour (also an owner of car dealerships like Opel, Volkswagon, and Porsche), Mahmoud Samha (Benetton and Chanel agent), and Issam al-Attar (owner of electronics import companies for brands such as Sony).

Today, the Syrian business community is divided into several factions. Among them are those who are ready to stick with the regime until the end, but purely for reasons of self-interest. This is because the period of economic liberalization over the past two decades has worked in their favor.

These loyalist financiers think that regime change would hurt their interests. Given the likelihood that their monopolies would be broken up along with the regime, such an outcome would render them no more than ordinary unprivileged competitors in a “natural” liberal economic order.

A second group is comprised of those whose support for the regime is based on sectarian affiliation, particularly in the Alawi coastal region. They are also willing to follow the regime until end, leading them to effectively shoulder a portion of the state’s financial burdens and in particular the cost of its security forces in cities such as Damascus and Aleppo, in addition to Tartus, Lattakia, and Banyas along the coast.

Here it is necessary to mention the affair of prominent trader Ayman Jaber, a native of Lattakia and owner of large investments in sectors such as the steel industry. His name and companies appeared on a list of international sanctions under the accusation of funding regime militias. Many of his colleagues in the Syrian business world now fear the same fate.

The largest segment of businessmen in Syria is represented by those who have “one foot in each camp” – i.e., hedging their bets on the survival of the regime – according to a source in a major dairy company operating near Damascus.

This behavior translates into paying protection money and bribes to both official and unofficial regime forces on one hand, and to the opposition and its militias in the regions where they are active, on the other.

All of this is “subject to liability” so to speak, meaning that those who pay money to one side are exposed to danger from the other. They may be subject to acts of arson, theft, or kidnapping of their personnel. Even the safety of their families cannot be guaranteed.

There is also a constant threat to post a blacklist of “traitor” businessmen who support the regime on websites and Facebook pages, which sometimes results in commercial boycotts of the companies and stores of these individuals.

In this regard, the death of Aleppine financier Bassam al-Olabi last December is still fresh in the minds of many. He was the owner of the largest textile factory in the Middle East, which was burned down “in revenge for his financial support for the regime and its militias.” The trauma of the event caused him to have a fatal heart attack.

Such offenses have affected dozens of establishments throughout Syria, and both sides accuse the other of committing these acts in retaliation for the targeted party’s choice to support the regime or the opposition or as punishment for paying protection money to a certain side in the conflict.

In Aleppo, business is also hurt by deteriorating relations with Turkey, since the interests of traders in Aleppo are heavily tied to the other side of the border. Trade between the two countries has nearly trickled to a halt with after Damascus imposed exorbitant taxes on cheap Turkish goods that have flooded the Syrian market for years, dealing a heavy blow to local industry.

Some note that traders affected by the economic disaster with Turkey have found new trading partners, such as Iraq, Iran, Russia, and China. However, many indicate that the problem is that trade with Syria is not currently a priority for Iranian, Russian, or Chinese companies. To a lesser extent, this is also true for Iraqis, who are still hesitant to open up to their Syrian colleagues.

Here it is necessary to mention an important detail about Syrian manufacturers, who are currently trying to recoup their previous losses by reviving local production and recapturing a piece of the market for their goods.

Syria’s rapprochement with Turkey throughout the past years and in particular the free trade agreements that have opened up the Syrian market to Turkish products have rendered Syrian manufacturers unable to compete.

Syrian manufacturers, particularly in Aleppo, are currently trying to reap a larger amount of profit by hiding whether or not goods are imported or locally manufactured, which has made prices rise artificially. According to observers, the extent to which these small, medium, and large traders choose to support the opposition or the regime will have a critical impact on the course of events.

In the end, it appears that the opposition is comfortable with the direction the business community is taking. Some traders are warming up to the opposition, not only because they believe the regime will inevitably fall, but also because of the regime’s failure to provide the stability necessary for businesses to grow.

This article is an edited translation from the Arabic Edition.


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