Developing Economies

Crony Capitalism, Syria Style

Syrian President Bashar Assad's cousin Rami Makhlouf, Syria's most influential businessman, looks on during the laying the foundation stone of a hotel project, in Damascus, Syria.

hide captionSyrian President Bashar Assad's cousin Rami Makhlouf, Syria's most influential businessman, looks on during the laying the foundation stone of a hotel project, in Damascus, Syria.

STR/Associated Press

This week in the New York Times Magazine, Adam Davidson writes about the surprising diversity of Syria's economy. There are pockets of affluence in the cities, a budding private sector, and even a few American franchises.

There is also a government official who embodies everything that's wrong with Syria's economy. His name is Rami Makhlouf, the cousin of Syria's president Bashar al-Assad. His nickname is "Mr. Ten Percent," because he knows how to get a cut of any business deal in Syria.

Joshua Landis, a Syria expert at the University of Oklahoma, explained how it works. In 2000, Bashar al-Assad passed a series of economic reforms which allowed entrepreneurs without government connections to open their own businesses. But there was a catch. If the business didn't pay a cut to corrupt officials, "they could punch you in a hundred different ways," said Landis. "They could force you to sell, tax you, or revoke your permission to change the sewage or electric lines."

Ultimately, Landis says, the reforms created a class of crony capitalists, angering the independent merchants who hoped that they might mark a turning point in Syria's economy. So why hasn't Syria's business class turned against the regime? Read the full column to find out.

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