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Amid Syria protests, businessmen remain loyal to President Assad

The economic reforms of President Assad helped earn the loyalty of businessmen. Without their support, his government would be in far greater danger of collapse due to Syria protests.

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Conflicting attitudes towards the Assad government date back to economic changes that began in 2004, when Syria shifted from a centrally managed economy to a more privatized one. The business elite benefited as the government allowed creation of private banks, insurance companies, and an airline.

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The growth of large corporations in turn spurred creation of small- and medium-sized companies such as the marketing firm owned by Rana Issa. Government policies created economic growth and loyalty among business leaders.

But the new liberalization policy also amplified Syria’s system of crony capitalism, leading to charges of widespread corruption.

Demonstrators have singled out Rami Makhlouf, for example, a cousin of President Assad and owner of the country’s largest cell phone company. Critics say he’s made tens of millions of dollars due to family connections.

Bouthaina Shaaban, a top adviser to the president, admits that corruption remains a serious problem in Syria. “Rami Makhlouf isn’t the only one who made money in the past period,” she says in an interview at the presidential palace. “There are many people, big capitalists, who made a lot of money.”

But, she argues, the government has taken steps to reform. “This crisis has made us 1,000 more times more aware,” Ms. Shaaban says.

Detrimental effect of sanctions

The crisis has been made worse by economic sanctions imposed by the US and Europe, says Shaaban. The US prohibits the export of most American products to Syria and has levied sanctions against some Syrian leaders. In May, the EU imposed an arms embargo on Syria, and a travel ban and assets freeze on selected Syrian leaders. In September the EU severely restricted crude oil imports.

So far, the sanctions haven’t shaken support for the government, according to Nabil Toumeh, CEO of Toumeh Orient Group, a large Syrian conglomerate. Business people are angry at the West because the sanctions are being widely applied, not just against Syrian political leaders.

Mr. Toumeh's long-time Austrian supplier of magazine printing paper recently stopped shipments because of the sanctions. Sanctions are also hurting his construction company because he can no longer import construction material from Switzerland, and buying the same material from another country is quite expensive, he says. He's had to lay off workers.

Although sanctions are likely to make life more difficult for business people by driving up costs, they won't bring down a government that has popular support, according to Toumeh. Instead, businesses will find ways around the sanctions, Toumeh says. “Merchants say if the door is closed, you open another.”

Seventy percent of the Syrian economy is controlled by the private sector, giving the business elite tremendous political clout as well. Economist Sukkar says if big business shifts sides, it could spell an end to the government, but that’s not likely in the short run.

“If there are any strikes or serious opposition on the part of the business community, they could paralyze the economy,” he says. “If that happened here, it would be disastrous. But frankly I don’t see that happening.”

Mr. Erlich received a grant from the Pulitzer Center on Crisis Reporting for his coverage of Syria.

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