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Rami Makhlouf (Free Article) Help . About Us . Contact Us . Site Map . Advertise with Syria Report . Terms & Conditions Page 1 of 7 Factsheet: Rami Makhlouf (free article) 11-05-2020 The rise of Rami Makhlouf as Syria’s most prominent businessman coincided with the ascent to power of Bashar Al-Assad in 2000. Given his long history of influence within the ruling elite, Mr Makhlouf’s recent side-lining raises many questions about the potential implications of his fall from grace. While Mr Makhlouf is in no position to contest Mr Assad’s decisions and hold on to the level of power he once enjoyed, his public airing of grievances has highlighted tensions at the heart of the regime and shown the influence of fierce competitors who have risen to challenge his grip on Syria’s business scene. In this 3,500-word factsheet we provide a profile of Rami Makhlouf’s emergence in the first decade of Bashar Al-Assad’s presidency, his adaptation to the challenges brought by the 2011 popular uprising, and his gradual side-lining. We start with a review of the influence wielded by his father, Mohammad Makhlouf. Caricature by Syrian artist Saad Hajo of Rami Makhlouf. Mr Makhlouf is saying "where are you, auntie?" in reference to Anisa Makhlouf, the late mother of Bashar Al-Assad. Her death is believed to have weakened Mr Makhlouf's ties to Mr Assad. (Source: creativememory.org) Abou Rami’s mentorship The story of Rami Makhlouf’s rise as Syria’s most influential businessman is, above all, the story of his father: Bashar Al-Assad’s maternal uncle, Mohammad Makhlouf—also known as Abou Rami, or “father of Rami,” under the Arabic tradition of nicknaming parents based on their eldest son’s first name. In the early 1970s, Mohammad Makhlouf was appointed head of the General Organisation of Tobacco (GOT), his first senior position within the Syrian state administration. His appointment came a short time after the ascent of his brother-in-law, Hafez Al-Assad, to the Syrian presidency. The GOT held a monopoly on Syria’s tobacco sector. It was the only institution allowed to purchase the tobacco harvest from farmers, produce cigarettes and other tobacco products, distribute them in the local market, export them, and, later, import foreign brands. This monopoly, which it preserves to this day, gave Mohammad Makhlouf a key role across the sector, which was particularly important in the coastal area, where most of the crop was grown. In addition, because cigarette imports were at the time formally banned, extensive smuggling occurred across the country’s land borders. Mr Makhlouf was believed to be heavily involved in that business and to reap significant wealth from it. In the mid-1980s, Mohammad Makhlouf’s influence and wealth increased. He was transferred to head the Real Estate Bank, one of six state-owned banks in Syria, but, more importantly, he became a primary middleman for government contracts. For instance, according to several government insiders, Mr Makhlouf earned significant commissions from oil export contracts awarded by the Help . About Us . Contact Us . Site Map . Advertise with Syria Report . Terms & Conditions Page 2 of 7 secretive Oil Marketing Bureau. Besides his business activities—all conducted while he was formally working as a civil servant—Mohammad Makhlouf played an important role as a mentor for Bashar Al-Assad, who was known to be close to his maternal family. Bashar befriended Rami and the two shared many experiences in their younger years, including their first experiences dating, as a reliable source told The Syria Report in 2008. Rami’s decade Bashar’s accession to the presidency in July 2000 marked the gradual emergence of Rami Makhlouf as Syria’s preeminent business figure. The arrival of Rami in the business scene was remarkable in its timing. Only weeks after Bashar’s election, he was awarded a contract to run a one-year trial of a mobile phone network. In 2001, this led to a 15-year build-operate-transfer (BOT) contract for his company, Syriatel. Rami’s rise was also remarkable for how it symbolised the changes affecting Syria’s economy. While Mohammad Makhlouf officially remained a civil servant throughout his life, Rami was associated with the changes that Bashar wanted to bring to Syria—namely, economic liberalisation and modernisation. His most successful venture was Syriatel, a dynamic private sector company operating in the technology sector. Many of the businesses in which he later invested were related to the service sector: duty-free trade, banking, insurance, real estate, hospitality, and so on. In other words, Rami’s rise coincided with Bashar’s and with the new economic model the latter promised to bring to the country. Gradually, Rami expanded his activities across a variety of business sectors. In addition to enjoying political cover from his father and his cousin, he capitalised on the gradual liberalisation of the Syrian economy and the inflow of Gulf money, which was relocating away from the West after the 9/11 attacks. When the banking sector liberalised, he bought shares in the Syrian affiliate of Lebanon’s Byblos Bank. After private insurance companies were allowed in, he invested in the National Insurance Company. When a stock exchange opened in Damascus, he invested in a brokerage firm, Cham Capital. By the end of the decade, he had established dozens of companies, registered under his name or those of his investment arm, Al-Mashrek Investment Fund. However, this façade of a modern businessman capitalising on his business acumen and risk-taking skills could not hide the fact that Rami largely owed his success to his personal connections and to the capital, both financial and social, that his father provided him, as well as to the political patronage and protection granted by Bashar. Syriatel was a case in point. The BOT contract it signed in 2001 came after a bidding process that was only nominally opened to all interested global operators; in practice it was held in the middle of the summer with a two-week bidding deadline—short enough to make sure no serious company had the time and means to make a competitive bid. Riad Seif, a former Syrian MP, reportedly paid with his freedom for exposing the trick, and was jailed for several years. Also, many of Rami Makhlouf’s most profitable business activities have been in traditional sectors, many of which relied on strong personal connections with the government. His Lama Group of companies was awarded various construction and road-building contracts by government entities; international engineering companies he represented won contracts to build power plants; and he invested in the oil sector through a partnership with Devon Energy from the United States. At the end of 2006, as the government prepared to open new sectors to private investment, particularly cement and electricity production, and as ever larger and more luxurious real estate Help . About Us . Contact Us . Site Map . Advertise with Syria Report . Terms & Conditions Page 3 of 7 and hospitality projects were being planned across the country, Rami Makhlouf sought to attract capital by calling on local businessmen to join him in a large holding company, Cham Holding. Some 70 Syrian businessmen responded to his call, attracted by Mr Makhlouf’s promises and threats: “’Join me and you will get a piece of the cake. Do not, and you will receive nothing’,” was how a businessman characterised it to The Syria Report at the time. Some of the more traditional businessmen resisted, such as Rateb Al-Shallah, the former chairman of the Damascus Chamber of Commerce. So too did Saeb Nahas, an influential investor close to Iran, and Firas Tlass, the son of former Defence Minister Mustafa Tlass. But many did not, lured by the potential profits and by the fear that they could be side-lined should they resist Mr Makhlouf. By this point, Mr Makhlouf controlled Syria’s largest private sector company by revenues – Syriatel – and its largest company by capital – Cham Holding. Threats were not only directed at local businessmen. A diplomat from a major European country told The Syria Report in 2009 that Mr Makhlouf sent what he called “managers” from his company to her office as he sought to pressure the diplomat to let him represent a major infrastructure company from that diplomat’s country. “They were rather very athletic bodyguards meant to frighten me,” she recalled. Little seemed to stand in Mr Makhlouf’s way. In 2008, the United States sanctioned him and banned U.S. nationals and entities from dealing with him. Despite this, Gulfsands, a Texas-based company that had bought Devon Energy’s share in its joint investment with Mr Makhlouf, preferred to switch its headquarters to London and push out two of its American executives, including its CEO, rather than give up on the lucrative investment in Syria. In January 2011, on the eve of the Syrian uprising, Mr Makhlouf was granted Cypriot citizenship — which is to say, a European passport — although that was later revoked. Unsurprisingly, Mr Makhlouf was associated with the worse aspects of Syria’s corruption and made many enemies. Because he was granted so much leeway, it was believed that he acted as Bashar’s business arm and made money on behalf of his cousin. He was also said to control up to 60 percent of the economy, a claim that continues to be widely shared, despite being wide off the mark. But while Mr Makhlouf benefitted heavily from his father’s influence and his cousin’s protection, he was not Syria’s only powerful business player. Maher Al-Assad, the president’s brother, was another.
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