Privatization of Syrian tobacco raises questions about feasibility

Tobacco crop in the village of al-Daliyah in the countryside of Jableh in Latakia, northwest Syria - July 2023 (Enab Baladi/Linda Ali)

Tobacco crop in the village of al-Daliyah in the countryside of Jableh in Latakia, northwest Syria - July 2023 (Enab Baladi/Linda Ali)


Enab Baladi – Jana al-Issa

The president of the Syrian regime, Bashar al-Assad, authorized the private sector to invest in the tobacco industry and purchase it for manufacturing and marketing purposes.

The decree, numbered “16” for the year 2024, aims to open the door for the private sector to enter tobacco investment in a regulated, studied, and planned manner, given the flexibility and experience this sector possesses, which helps overcome some obstacles affecting the investment in this industry through the public economic sector, according to the decree.

A source of income for the treasury, Farmers eager for the crop

Tobacco is grown in most Syrian provinces, notably the countryside of Hama, Latakia, Daraa, Quneitra, and Homs. Its economic importance comes from enriching the state treasury through taxes and profits, in addition to increasing national income, securing foreign currency, and meeting the needs of the local market, alongside providing job opportunities.

According to an article published by the General Organization of Tobacco in Syria in 2017, tobacco is considered one of the most important economic crops in the country, being the third agricultural crop.

At the time the article was published, around 60 thousand farmers were working in tobacco cultivation, with about 90 thousand people living off its cultivation, manufacturing, and trade.

In recent years, there has been a clear trend within the Syrian regime government to support tobacco cultivation and farmers by offering attractive purchase prices from farmers and supporting fertilizers, fuel, medicines, and other needs, at the expense of other agricultural crops that do not hold the same importance, such as wheat.

In a previous report prepared by Enab Baladi at the end of July 2021, several farmers said that tobacco cultivation had become more desirable compared to other crops, despite requiring more effort, as it goes through many stages of work. However, due to government support like providing fuel at subsidized prices, along with fertilizers, medicines, and seedlings, its cultivation has become more attractive.

Economic collapse forces the regime

Given the aforementioned, questions arise about the regime government’s objectives in offering the tobacco sector for investment to the private sector, especially in the absence of a governmental explanation for the decree.

Associate Professor in the Business Administration Department at the Arab East Colleges and economist, Imad al-Din al-Mosabbeh, told Enab Baladi that the tobacco sector in Syria had been suffering from several issues before 2011, in terms of industrial sector facilities, high costs, and low productivity, in addition to the pricing issue of crop purchases from farmers.

During current conditions and the decline in the industrial sector on various levels, the raw tobacco supply problem seems to have appeared amid the regime’s inability to maintain the equipment and machinery related to this sector, according to al-Mosabbeh.

Al-Mosabbeh added that all these factors led to the regime’s inability to supply or purchase the tobacco crop from farmers, forcing it to open the door for private sector investment in the crop.

Al-Mosabbeh pointed out that there have been old demands since 2004 for allowing private companies to invest in this sector, considering that the enormous economic pressures faced by the regime imposed privatization at this time.

Pulling the rug from under Makhlouf

Agricultural engineer and former Director-General of the Union of Syrian Agricultural Chambers, Samer Kakareli, told Enab Baladi that the tobacco sector has old issues related to its management. The Ministry of Agriculture oversees its planting and production, while the General Organization of Tobacco (Regie) under the Ministry of Economy is responsible for marketing the crop.

Kakareli explained that the state had previously been keen on controlling this crop tightly and preventing private investment due to its high financial returns.

According to Kakareli, the tobacco trade and marketing were restricted to the Duty Free Shops and Ramak companies, owned by Rami Makhlouf, the cousin of the Syrian regime’s president, which prevented opening the door to the private sector due to the state’s approval of its monopoly by him and fear of its harm.

Allowing private sector investment currently indicates pulling the rug from under Rami Makhlouf, according to agricultural engineer Samer Kakareli.

The tobacco sector is considered one of the most prominent industries monopolized in Syria for the benefit of Muhammad Makhlouf, the uncle of the Syrian regime’s president, Bashar al-Assad, for several reasons, foremost among them the state’s manufacturing policy and the high financial returns it achieves.

The kinship connection of Muhammad Makhlouf, the uncle of President Bashar al-Assad and father of Rami Makhlouf, and his position as the Director of the General Organization of Tobacco allowed him to use the institution for widespread corruption, according to Firas Tlass, the son of the former Syrian defense minister, Mustafa Tlass, who described Makhlouf as the “patriarch of the family.”

In February 2022, banking leaks published under the name “Suisse Secrets” for one of the largest banks in Switzerland, “Credit Suisse”, mentioned that Makhlouf was used as a front for his brother-in-law, former president Hafez al-Assad, for years, while benefiting from his political relations in a commercial empire that includes tobacco, real estate, banks, and oil.

The data of Muhammad Makhlouf’s account in the Credit Suisse bank shows that his wealth deposited in the bank is estimated at 8,278,851 Swiss francs (about nine million dollars), which is much less than the expected value of his wealth outside this bank.

The Anti-Crime and Money Laundering organization describes Muhammad Makhlouf on its official website as “Mr. 10%” because of his “alleged corruption”.

The Makhlouf family played a pivotal role in shaping Syria’s economic map over more than five decades of the Assad family’s control of the helm of power.

Kinship played the most prominent role in the family’s rise to the top of the money pyramid, as the family started its economic activities under Muhammad Makhlouf, and later his sons and grandsons took on the task of swallowing up economic sectors bit by bit.

Positive impact on farmers

Regarding the impact of private sector investment in the tobacco crop, Samer Kakareli, the former director-general of the Union of Syrian Agricultural Chambers, believes that farmers may benefit materially from this decree. However, it is worth noting that the private sector is not obligated to purchase the tobacco crop from farmers, unlike the state.

The tobacco industry may also improve as private sector factories are likely to be better in production than public sector factories.

Tobacco cultivation is not as easy as other agricultural crops. The process requires several steps until reaching the production stage, along with expertise in cultivating this crop and the supervision of specialized technicians.

In the last season of 2022-2023, licensed areas for tobacco cultivation in regime-controlled areas reached approximately 103 thousand dunams, while the total expected production volume was 4,561,260 kilograms.


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