Bribes, graft and the cost of moving cash in Syria’s war economy

AMMAN: International aid organizations can no longer fund more than a dozen hospitals and medical centers in the east Damascus suburbs because of rebel infighting that is paralyzing money transfer operations into the encircled opposition enclave.

Aid money entering the East Ghouta suburbs must first pass through the area’s largest rebel faction, Jaish al-Islam, at the only remaining checkpoint leading into the blockaded, 400,000-person region.

But for nearly six weeks, Jaish al-Islam has prevented the flow of cash into territory controlled by rival militias—arresting traders and seizing their money—in an attempt to starve its enemies of funding, five aid officials and local medical practitioners tell Syria Direct. The result is a near-total economic blockade within half of East Ghouta, already encircled by regime forces since 2012.

“We’ve had the money ready to go for almost a month and a half, but there’s just been no way to transfer it” to the medical facilities, Fouad Abu Hatab, the executive director of the Turkish-based aid organization Alseeraj, which funds seven medical centers in East Ghouta, told Syria Direct. “Jaish al-Islam was stopping everyone who used to move our money across East Ghouta…and so we stopped sending cash.”

Dominant faction Jaish al-Islam is based in Douma, East Ghouta’s largest city. The Saudi-backed Islamist faction controls the majority of territory in the approximately 75 sq. km rebel-held region, ruling the northern and eastern portions of the suburbs in addition to East Ghouta’s last remaining checkpoint in and out of regime territory, the Wafideen crossing.

On the other side of the ongoing power struggle is the Qatari-backed, Free Syrian Army (FSA) faction Failaq a-Rahman. Alongside the Al-Qaeda-linked Islamist coalition Hay’at Tahrir a-Sham (HTS), Failaq holds East Ghouta’s remaining territory, also referred to as the “Central Section.” The two Central Section allies differ vastly in terms of ideology but maintain a tenuous partnership in order to serve as counterweight to Jaish al-Islam.

  A machine at a Damascus bank counts Syrian banknotes. Photo courtesy of Anwar Amro/AFP.    

Following a Christmas Day 2015 airstrike that killed Jaish al-Islam’s leader and the enclave’s authoritarian figurehead, Zahran Alloush, East Ghouta’s rival rebel factions scrambled to create their own private fiefdoms of influence in the ensuing power vacuum.

In late April of this year, tensions between the two rebel blocs—Jaish al-Islam and Failaq-HTS—boiled over into an internecine civil war within the cluster of towns and villages of East Ghouta. The row began when Jaish al-Islam attacked HTS headquarters and then called for a campaign to eliminate Jabhat a-Nusra from East Ghouta, referring to the formerly Al-Qaeda-affiliated group that forms the backbone of HTS.

The months of ongoing infighting since have left scores of combatants dead on both sides and paralyzed movement—commercial, humanitarian and medical—across East Ghouta. Dozens of recently erected checkpoints and berms split the suburbs in half. For residents trapped inside the Central Section, this means a lack of access to the Wafideen crossing and, therefore, to outside resources, including cash.

While the fighting on the ground between the rebels is now calmer than in recent weeks, the economic impacts of the feud persist.

Hospitals, clinics and specialized medical centers in East Ghouta’s Central Section are now largely cut off from their international donors. These medical facilities’ funds are nearly exhausted after burning their limited cash reserves for nearly a month and a half in order to fuel generators needed to perform operations, pay the salaries of doctors and nurses and purchase increasingly expensive black-market drugs.

If Jaish al-Islam continues to prevent international aid money from reaching East Ghouta’s Central Section, healthcare access for tens of thousands of patients, two local doctors tell Syria Direct, is in danger of being completely cut off.

The cost of moving money

Turkish-based aid organizations circumvented the Assad regime’s blockade of East Ghouta and funded local hospitals for more than three years by navigating a complex network of money transfer offices, smugglers and tunnels.

Traditionally, the process went as follows: International aid organizations wired their funding to a money transfer office in Damascus. For a small rate—typically capped around SP3,000 (approx. $5.80)—smugglers physically transported the cash from the capital into East Ghouta via underground tunnels that connected the suburbs to the outside world. In addition to cash, this underground pipeline supplied the rebel-held enclave with everything from bread and baby formula to cigarettes and medicine, and did so since the start of the government-led blockade in 2012.

But this past February, the regime’s grip around East Ghouta tightened. Government forces abandoned their blind-eyed posture towards the smuggling tunnels and began a systematic effort to dismantle the East Ghouta supply lines through a military offensive. By March, the regime shut down the tunnels and closed the last remaining crossing into East Ghouta, sealing off the suburbs from outside money, food and supplies.

 Jaish al-Islam fighters outside of Douma, September 2016. Photo courtesy of Sameer Al-Doumy/AFP.

Prices surged for weeks. The stranglehold siege drained the rebel-held pocket of fuel, medicine and financial liquidity. East Ghouta was running out of cash.

But where there is encirclement in Syria, there is a market for highly lucrative smuggling for regime and rebel war profiteers alike. The circumstances surrounding how that last remaining lifeline, the Wafideen crossing, reopened in May are unclear, but all indicators seem to point to the backroom role of East Ghouta’s smuggling kingpin, Mohedinne al-Manfoush.

Al-Manfoush is an elusive figure who runs both the Wafideen crossing and a well-known dairy and food distribution company. Al-Manfoush’s products are ubiquitous in the Damascus region, where his company distributes cheese, dairy and other food products to both regime and rebel-controlled areas under the “Al-Marai” brand. Plastered across the front of al-Manfoush advertisements is their English slogan: “Is all what I want!”

Al-Manfoush strikes deals with both the regime and rebels to permit smugglers to move their products through the checkpoint in deals that made him rich. His regular bribes to government officials to keep open the Wafideen crossing reportedly total “hundreds of thousands of dollars,” a local council member from the East Ghouta-adjacent district of Barzeh told Syria Direct in March.

Anything that enters East Ghouta must first go through the dairyman’s crossing. By May, with the Wafideen crossing reopened, international aid money was once again entering East Ghouta, but not without multiple parties exacting their pound of flesh.

Wire transfer offices, money-runners, regime border guards at the Wafideen crossing, al-Manfoush and Jaish al-Islam are each reportedly exploiting the bottleneck into East Ghouta by charging higher fees to move money since the crossing reopened. The cost of a money transfer reportedly skyrocketed from a maximum of approximately five dollars per transaction to as high as 20 percent before the cash ultimately reaches its destination.

“The fees have gone up dramatically” after everyone takes their cut, Dr. Ahmed al-Baqai, the director of East Ghouta’s only medical center specializing in infectious diseases and epidemics, told Syria Direct.

“This means that less money ends up in the hands of humanitarian organizations and fewer services can be provided to civilians,” said al-Baqai, whose Save a Soul medical center is located in East Ghouta’s Central Section town of Kafr Batna.

With the palm greasing at the Wafideen crossing, the cost of money transfers went up across all of East Ghouta. But for institutions in the Failaq a-Rahman and HTS-controlled Central Section, the crisis was about to get worse.

‘The accuser, the accountant and the judge’

Once any money transfer enters East Ghouta via the Wafideen crossing, its next destination is Jaish al-Islam’s Economic Office in Douma.

It is here that Jaish al-Islam plays the role of gatekeeper for the entire rebel-held enclave. Only with the rebel group’s blessings can the cash reach its intended recipient, whether that is a hospital, local council office or individual family.

  A damaged building in the Central Section’s Ain Tarma on June 21. Photo courtesy of Msallam Abdalbaset/AFP/Getty Images.    

It didn’t take long for Jaish al-Islam to leverage this position. On June 19, they detained five traders who were moving food and money into East Ghouta’s Central Section and held the men for two weeks.

“They were funding Jabhat a-Nusra,” Jaish al-Islam spokesman Hamzah Beriqdar told Syria Direct, referring to the Al-Qaeda-linked group. Jaish al-Islam is now regularly blocking money transfers from reaching medical facilities in the Central Section on the pretext that it will reach Jabhat a-Nusra.

“But that justification is an absolute disgrace to the truth,” Dr. al-Baqai of the Kafr Batna infectious diseases center told Syria Direct. Jaish al-Islam’s seemingly indiscriminate six-week economic blockade of the Central Section, he said, is affecting medical facilities in addition to the local militias. As a result, al-Baqai’s center, which is in the midst of dealing with a months-long measles epidemic, is “threatened with closure” even as dozens of patients fill its beds.

Syria Direct spoke with representatives from three East Ghouta medical facilities and two Turkish-based international humanitarian aid organizations, each of whom conveyed a near-total inability to transfer money to the Central Section as a result of exceedingly high transaction fees and Jaish al-Islam’s ongoing economic blockade.

In one instance, Jaish al-Islam allegedly seized nearly $200,000 in aid money intended for a Central Section hospital after imprisoning the man responsible for transporting the cash, a medical source at the hospital told Syria Direct on the condition of anonymity.

The arrest “didn’t have anything to do with financing any extremist militia or anything of the sort,” the same source told Syria Direct. “Jaish al-Islam is using extremists as an excuse to confiscate money.”

“They are the accuser, the accountant and the judge,” he added.

Jaish al-Islam confirmed the arrests of multiple individuals attempting to move to the Central Section over the past several weeks but adamantly denied impeding the free flow of cash to humanitarian organizations.

But as doctors and rebels trade accusations, hospitals and clinics are rolling back medical services for tens of thousands of residents in East Ghouta’s Central Section. Medical facilities are increasingly rationing medicine, baby formula and fuel as a result of the debilitating funding shortages, Dr. Ismail al-Khateeb, who is a spokesman for two medical centers in East Ghouta funded by the Istanbul-based organization Social Development International, told Syria Direct.

This is not the first time that East Ghouta is embroiled in an inter-rebel power struggle, the infectious diseases specialist, al-Baqai, observed. Exactly one year to the day before the current outbreak of violence, rebel factions took up arms against one other for two weeks in April and May 2016.

It’s just that in previous years, he said, “medical work and those who do it were always removed from the conflict.”