Panama Papers revealed how a seemingly insular
regime has harnessed the tools of globalisation to
ensure its survival.
Against the backdrop of recent territorial gains, the
cessation of hostilities and a peace process in
Geneva that is rumbling along, President Bashar al-
Assad seems more secure than ever after five years
of conflict in Syria.
When people ask how he managed to stay in power
despite the country having its economy collapse in
half, hundreds of thousands killed, one in two Syrians
being forced from their homes and the conflict
dragging in four of the five UN P5 members of the
Security Council, you wouldn't necessarily think about
the Seychelles.
Yet as the Panama Papers, the biggest leak in global
history, has shown, the idyllic archipelago of 115
islands in the Indian Ocean off East Africa has played
its part in keeping Assad in the Presidential Palace in
Damascus.
What this demonstrates is that what appears from a
distance to be an insular, authoritarian regime far
more proficient in the tools of medieval warfare than
modern capitalism, has actually used the levers of
globalisation well to protect its interests.
Evasion of sanctions
What the 11.5 million leaked documents reveal is that
three Syrian companies close to the government -
Maxima Middle East Trading, Morgan Additives
Manufacturing and Pangates International - used the
already infamous Panama-based law firm Mossack
Fonseca to create shadow or shell companies in the
Seychelles to avoid the increasing pressure of global
sanctions.
Considering how near the regime was to collapse
before the Russian intervention, this evasion of
sanctions is fairly significant. The Panama Papers
suggest it paid for fuel that kept Syria's Air Force
helicopters and airplanes in the air.
Another way of looking at it is that tax-dodging has
cost lives.
The state and nature of Syria's economy was among
the triggers of the conflict back in 2011. David
Butter's major Chatham House report into the Syrian
economy outlined how "economic grievances were an
important factor underlying the uprising against the
Assad regime".
Aron Lund, from Carnegie, explained that "for
decades, the Syrian regime has been mired in
corruption, benefiting from the exploitation of state
regulations, bribery, and organised crime at every
level of the system".
Bashar al-Assad's presidency saw an opening up of
the Syrian economy with the introduction of private
banking and a stock exchange among a huge raft of
changes.
Yet as the renowned Syria scholar Raymond
Hinnebusch wrote back, in 2012 the pressures of
privatisation led the Syrian leadership to appropriate
public sector assets for themselves, to enrich
presidential families and ministers and private
investors allied with them in "networks of privilege".
Network of privilege
Nowhere is this network of privilege more apparent
than in Assad's maternal cousins Rami and Hafez
Makhlouf. Some estimates put their worth at $5bn
before the war, with control of up to 60 percent of
the Syrian economy.
They have been the target of international sanctions,
including US sanctions, since 2008 and 2007
respectively, and the EU since 2011, suspected of
controlling key gateways to Syria's oil and telecoms
business.
Yet via a firm in Panama, the Makhloufs were able to
continue to operate.
Frederik Obermaier, co-author of the Panama Papers
story and an investigative reporter at the German
newspaper Süddeutsche Zeitung, told Democracy
Now: "they [Mossack Fonseca] realised that he
[Makhlouf] was the cousin, and they realised that he
was sanctioned, and they realised that he's allegedly
one of the financiers of the Syrian regime. And they
said, 'Oh, there is this bank who still does business
with him, so we should still keep with him, as well'."
READ MORE: Panama Papers - Why should we care?
A focus on the traditional attributes of the economy
of the state (ie, its industries, export and imports,
etc) needs to be complemented by an understanding
of the economy of the regime and the networks of
privilege and corruption that comprise its core.
What has happened in Syria is that a corrupt
economy became a corrupt war economy that was
able to take advantage of a system blown open by
the Panama Papers.
It's worth remembering that this is not the first leak
to embarrass the regime. Another set of leaks,
emails from 2011, showed Minister of Presidential
Affairs Mansour Azzam sending Assad potential
options for Russian private jets among rumours of an
exit strategy being put together.
It would appear that Assad is no longer in urgent
need of an exit strategy. However, he could use the
private jet to visit the Seychelles or Panama to thank
those who have helped him to remain in power.
The Panama Papers have shone a light on the
economic activities of the regime that have stayed
for too long in the shadows and, with the amount of
information leaked, we know that there is lots more
to come.
James Denselow is a writer on Middle East politics and
security issues and a research associate at the Foreign
Policy Centre.
The views expressed in this article are the author's
own and do not necessarily reflect Al Jazeera's
editorial policy.
