Syria’s civil war and the business community

Nearly three years into Syria’s deep civil war and the country’s deep divisions have now also arrived in the country’s business community. The position of Syria’s businessmen towards the uprising is based on a number of factors including their closeness to, or dependence for the conduct of their business on, the circles of power; the size of their business outside Syria and the autonomy this gives them towards the regime; the impact on their business of government economic policy in the last decade; as well as their sectarian, geographic or ethnic affiliations.

This variety of situations means that the Syrian business community has not acted collectively in defence of its interests or in taking a common position with regards to the events unfolding in the country.

Despite the firm links that initially tied many of the country’s leading businesses to the regime, dissent has been clear from the vey outset. In July 2011, just months into the uprising, the Chamber of Commerce and Industry of Deir-ez-Zor, the capital of Syria’s oil-rich province, publicly came out in support of the opposition after regime forces ransacked shops and threatened business owners who had closed down in support of a general strike in the city.

This reaction by the chamber of commerce testifies to the fact that Syria’s business community has not provided unfettered support to the regime of Bashar Al-Assad as many assume. The general strikes that occurred that same summer of 2011 in the central cities of Hama and Homs highlight as much.

It should not come as a surprise that these expressions of discontent occurred in cities that have seen their wealth and importance decline in recent decades and whose elites remain physically and politically remote from the capital. On the contrary, Damascus and Aleppo, the country’s two largest cities, benefitted most from the economic liberalisation and from the development of the service industry that followed the accession of Bashar Al-Assad to the presidency.  The business community in Damascus and Aleppo therefore initially remained more supportive of the regime.

Two other important factors that emerged in the course of the uprising have had a notable impact on the behaviour of the business community.

One of these is the set of sanctions imposed by the European Union and, to a lesser extent by the US, on prominent businessmen suspected of providing support to the regime. Many of these investors contested the sanctions, often taking the EU to court, and some were forced to resign from the boards of listed companies and of local banks – all of which are subsidiaries of regional institutions afraid of being associated with individuals sanctioned by western countries. However, the fact that these businessmen were often so closely tied to the regime has made it difficult for them to distance themselves even under the threat of sanctions.

Another major factor has been the military and political developments on the ground, in particular the expansion of violence in the summer of 2012 to the cities of Damascus and Aleppo, which led to a massive destruction of economic wealth and to the belief among many in the business community that there would be no end to the fighting in the short term. The consequence has been the departure of large numbers of businessmen. this led to their relative marginalisation in Syria. Many will never return.

In this context, the Syrian economy has now morphed into a war economy.

Looting, kidnapping and smuggling are increasingly part of new business patterns and sources of enrichment; new trade networks are being created; and new warlords are amassing wealth. At the same time, the international sanctions imposed against major state-owned entities, together with the measures targeting businesses, have forced the government to rely on new intermediaries for its international transactions, giving new individuals the opportunity to generate revenues and amass wealth. Other businessmen are also benefitting from the demand for products and services that were little in demand before the onset of the uprising, such as power generators, window protection films or private security services.

It is difficult to identify clearly who these new individuals are. However, there is little doubt that the war has enabled a new class of entrepreneurs to emerge at the forefront of a new economy. These figures, many of whom are warlords are marginalising old economic elites and will play a major role both over course of the conflict and once the war ends.

Note: This article appeared first in November 2013 in the blog of the European Council on Foreign Relations