Syria Weekly: Rami Makhlouf's fall from grace confirmed following video plea to Assad

The power and influence wielded by the business tycoon and cousin of Bashar Al-Assad is perhaps only eclipsed by the president himself, although Makhlouf's wealth is said to be considerably more. 

His monopoly of key industries, such as telecommunications, led to him allegedly amassing a personal fortune of $5 billion and contributed to the corruption, cronyism and nepotism that has helped keep the Assad regime afloat.

But over the past year his star has dimmed, with the businessman a target of the regime's supporters over alleged corruption and immense profit making, something that would have been unimaginable a year ago.

Late last year, Makhlouf - along with family members and associates - were reported to have been the target of a shakedown by the cash-strapped Assad regime.

The owner of Syria's most profitable companies, including Syriatel, was placed under house arrest over a financial dispute between the Makhloufs (Bashar's maternal family) and Assads over the country's dwindling resources, according to reports.

Video appeal

This week, Makhlouf published two videos on Facebook that appear to confirm the rumours of his fall from grace and mark his first public appearances since the start of the Syria war.

In the first video on Wednesday, dressed in a smart grey suit and with neatly cropped hair and beard, Makhlouf appealed to the president to stop his businesses from going under due to the financial demands of the state. 

He pleaded innocence of charges of illegal financial activities, the most recent – and not first - linking him to smuggling and drugs rings. Makhlouf entreated that the multi-million-dollar penalties placed on his businesses by the state had put him on the brink of financial ruin.

Makhlouf has been reportedly been ordered to pay 234 billion Syrian pounds to the treasury in fines over the activities of his businesses.

In the video, he said the regime's inner cabal - likely referring to the intelligence agencies - were demanding he handover more than $100 billion.

Striking a humble and conciliatory note, Makhlouf said he would only give the money to Assad directly and not the "cadres" who "who always frame me as the suspect… the bad guy".

"I'm a small and simple part in this whole thing. Mr. President, I implore you this is the truth," he said in the first video, with a backdrop of cut wood slices and a stone wall interior.

He also appealed to the people, claiming he had donated regularly to his charities during the war and the most recent trouble came when he planned to distribute money during the holy month of Ramadan.

"After reports about a donation we planned to make during the holy month of Ramadan, to assist the people, things went out of control," he said.

"We received threats to stop our work simply because we dared to publicly offer assistance to the needy and because we announced financing to the Al-Bustan Association," referring to his charity, which is also alleged to finance his own regime militias.

In his second video posted on Sunday, Makhlouf said that he is unable to pay the amount demanded of him and complained that his employees were now being detained by intelligence.

This is the first time Bashar Al-Assad's regime has been challenged from his inner-circle - Bachar Al-Halabi, AUB

"Who would have thought these intelligence agencies would come to Rami Makhlouf's companies and arrest our workers when I have been the biggest supporter of these agencies," he said.

Rami Makhlouf's attempts at modesty have not been lost on Syrian activists who mocked his appeals for sympathy, given the immense wealth he has accumulated while much of the population goes hungry or have been expelled from their homes.

Tycoon

Makhlouf was one of the names mentioned in the Panama Papers and has been the target of US and European sanctions due to his key role in financing the Syrian regime and links with pro-government militias.

Such is Makhlouf's immense wealth that he was said to control 60 percent of the Syrian economy, with stakes in everything from oil and gas to schools and shops, according to The Financial Times.

This appears to have put him in conflict with Bashar al-Assad's inner-circle, who have their own significant, but less lucrative, business interests.

This includes the president's wife, Asma Al-Assad, who has been heavily involved in charity work during the war, viewed as a way of boosting her popularity and prestige in the country. It is also claimed she is establishing a phone company that could rival Makhlouf's SyriaTel.

"Through Asma Al-Assad the regime is spreading its control in income-generating assets it still has in Syria. In order to do that, Rami Makhlouf is definitely a major target with his SyriaTel business and others," said Bachar Al-Halabi, a researcher at the American University of Beirut (AUB).

"The videos show that first of all there hasn't been any communication between him and his cousin for a very long time," Halabi said, referring to Makhlouf's appeals in the videos directly to the president.

"Makhlouf is also trying to buy an insurance policy by publishing these videos online and challenging Bashar Al-Assad, Asma, and their new entourage… right now he sees that his time is coming up, they are moving in on his assets and wealth, and he needs to fight back."

In pro and anti-Assad circles, Makhlouf's video appeared to confirm a major rift inside the regime between the Makhloufs and Assads (and Asma's Akhras' family) that could lead to a major reconfiguration of power and politics in Syria.

"I think what we are seeing is the final stage of the Syrian regime and what is happening now is decisive to the regime's future," Halabi said.

"Fissures are starting to appear, the videos tell you that the regime's inner-circle hasn't been really challenged since day one of the revolution."

"This circle has solidified its power over the regime and the army - and different mafias and militias - since the [2012] assassination of the emergency committee. This is the first time we see such fissures."

Bankrupt state

It also reflects deep economic uncertainties in Syria and a scrap for the country's meagre resources, after the economy was recently battered by the coronavirus epidemic adding to nine-years of stagnation during the war.

"The Makhloufs took a step back in 2011, they were financing the regime, in a way, but took a step back from power in order not to taint themselves during the war," he said.

"The regime has a cash-crunch, Russia needs money and nobody is able to provide this except the Makhloufs."

Syria's lira has plunged to historic lows wiping out the savings of much of the country's middle class, while inflation has put basic goods out of the reach of ordinary citizens. Meanwhile, the Makhloufs and Assads continue to control the economy.

Foreign allies such as Iran and Russia are also busy carving out business stakes in the last of the country's profitable industries, such as logistics, oil and mining.

It is with this backdrop that Makhlouf is said to have been targeted by Moscow, who have bolstered Assad's regime with military power and money, and now want something in return.

Moscow is believed to be leaning on Assad to take action against Makhlouf to make room for Russian businesses and squeeze what is left out of the Syrian economy - or reshape it, analysts believe.

Yet the recent attacks on Assad in Russian media have also led some to believe that Moscow might view Makhlouf as a possible replacement to the president.

"We know that the Russians are keen to find substitutes for Bashar," said Halabi.

"They don't have any at the moment but they need one and Makhlouf challenging Assad is a sign that 'hey, I'm here, I have the cash, and I am still a Alawite personality and I can save you too'."

What is clear is that the continued video diaries - including threats to sue the state - from the businessman will be viewed as a challenge to Assad's rule and likely lead to a harsh response.

Seeing the downfall of Makhlouf - well-known for his immense wealth and back-hand business dealings - would be a popular move among some pro-regime circles, particularly as supporters of Assad continue to suffer financial hardships.

It will still be no easy task taking down a man with immense wealth, a small army of militia fighters, and the tacit support of powerful foreign backers, as well as the historical significance of the Assad-Makhlouf dynasty to Baath Party rule.

"This is the first time Bashar Al-Assad's regime has been challenged from his inner-circle... Assad's biggest challenges is cash and how to remain an asset for the Russians and not a liability," Halabi said.

"Makhlouf is the cash cow he can milk to maintain his regime for a little longer."

Syria Weekly is a regular feature from The New Arab. To get Syria Weekly in your inbox each week, sign up here

Paul McLoughlin is a news editor at The New Arab. 

Follow him on Twitter: @PaullMcLoughlin