The Syrian Regime’s Funding of the Islamic State

By Kyle Orton (@KyleWOrton) on 28 October 2017

Bashar al-Assad, Hussam al-Katerji, Abu Bakr al-Baghdadi

Reuters reported on 11 October that Hussam al-Katerji, a member of Bashar al-Asad’s Syrian regime, has been engaged in trading wheat with the Islamic State (IS), helping supply the terrorists with resources to run their statelet and threaten the security of Syria’s neighbours and the wider world. This pattern of behaviour from the Asad regime—holding itself out as a counterterrorism partner, while it bolsters terrorist organizations—is well-established, and has its origins in the regime’s survival strategy: to destroy all acceptable opposition forces and make the Syrian war a binary contest between the dictatorship and terrorists.

REUTERS REPORT

Reuters spoke to five local farmers and two administrators from the “Syrian Democratic Forces” (SDF), the political outfit through which the Kurdistan Workers’ Party (PKK) operates in Syria, which is displacing IS in northeastern Syria with the assistance of the U.S.-led Coalition. In addition, the manager of al-Katerji’s own office, Mohammed Kassab, confirmed that the Katerji Group had moved wheat from the IS-held areas to regime-held areas. Kassab insisted that this trade had involved no collusion with IS, though, beyond saying it was “not easy”, offered no explanation as to how that could possibly be true. Asad’s Internal Trade and Consumer Protection Minister, Abdullah al-Gharbi, claims that the regime imports its wheat from the Russians.

From Reuters’ report:

Five farmers in Raqqa described how they sold wheat to Katerji’s traders during Islamic State rule in interviews at the building housing the [SDF/PKK] Raqqa Civil Council, formed to take over once the city is retaken.

“The operation was organized,” said Mahmoud al-Hadi, who owns agricultural land near Raqqa and who, like the other farmers, had come to the council’s cement offices to seek help.

“I would sell to small traders who sent the wheat to big traders who sent it on to Katerji and the regime through two or three traders,” he said.

He and the other farmers said they all had to pay Islamic State a 10 percent tax, or zakat, and sold all of their season’s supplies to Katerji’s traders under the multi-layered scheme.

Local officials said Katerji’s traders bought up wheat from Raqqa and Deir Ezzor and gave Islamic State 20 percent.

[An official from the SDF/PKK leadership council in Tabqa, Awas] Ali said he learned of the details of the arrangement with Katerji by speaking with Islamic State prisoners and others who worked in the group’s tax collection and road tolling systems. …

The truck drivers were even allowed to smoke cigarettes as they passed through the checkpoints, something Islamic State enforcers punished with whippings elsewhere, Ali and several other sources said.

“I would sell an entire season’s supplies to Katerji’s traders,” said farmer Ali Shanaan.

“They are known traders. The checkpoints stopped the trucks and Daesh would take a cut and let them pass,” he said …

The wheat was transported via the “New bridge” over the Euphrates River to a road leading out of Raqqa, the farmers and local officials said.

As IS falls back, the control of the bridge, and these resources more generally, has been lost, but it lasted through most of the May to August trading season this year. In addition to Asad transferring tranches of cash to the IS jihadists in exchange for the wheat, the regime trucks brought supplies like food and medicine that helped the caliphate maintain its grip.

The trade between Asad and IS will sometimes be explained in “war economy” terms, and in this case that is superficially plausible. The Asad regime needs 1.5 million tonnes of wheat to create staple products that allow it to exert control of the population in western Syria, and Hasaka, Raqqa, and Deir Ezzor contain seventy-percent of the wheat-producing areas. What this neglects is the role the regime had in shaping who controls those zones. Asad imprisoned and massacred unarmed demonstrators and blitzed any zone that fell into rebel hands—while turning loose jihadist prisoners and holding fire for an entire year as IS constructed its caliphate. The regime chose who it would need to pay for access to these resources.

THE ASAD REGIME HAS FUNDED ISLAMIC STATE FOR A LONG TIME

While Hussam al-Katerji is not a household name in the West, in the Arab world and especially in Syria he is very well-known as Asad’s middle-man for trade with the terrorist groups the regime has enabled to seize areas of the country, namely IS and the PKK. For instance, local reporters at Deir Ezzor 24 and Watan FM exposed the essentials of the above Reuters story in March. Al-Katerji is far from the sole intermediary between Asad and IS—another notable case is Suhayl al-Hassan—but al-Katerji’s role has been especially salient since George Haswani was sidelined.

In late 2015, Haswani was sanctioned by the U.S. Treasury, as was his HESCO Engineering and Construction Company, for acting as “a middleman for oil purchases” between Asad and IS. Haswani had already been sanctioned by the European Union in March 2015 for the same reason. In Haswani’s telling, his running of Syria’s energy sector as a joint enterprise with IS was a patriotic endeavor to provide “electricity to all the spectrum of Syrian people”. It was broad-minded indeed to include jihadists in that spectrum. A different view was expressed by British Foreign Secretary Phillip Hammond. “This listing”, said Hammond, “gives yet another indication that Asad’s ‘war’ on ISIL is a sham and that he supports them financially”. Among the interesting things about Haswani was that he was a Christian by religion, and a dual national of Syria and Russia. Haswani had significant business interests linked to the Russian government, and it was Moscow that provided much of the connective tissue for a long while between the Asad and IS statelets. There was therefore a great deal of projection in the accusation by the pro-Asad coalition that Turkey was funding IS via oil and other trade.

By January 2017, after a disastrous start to the U.S.-led campaign with IS’s takeover of Ramadi and Palmyra, the Coalition and its “partner forces” were pushing IS back and had taken something approaching half of its territory. The cities of Tikrit, Tel Abyad, Hasaka, al-Hawl, Ramadi, Shadadi, Falluja, Minbij, Qayyara, and Shirqat had fallen out of IS’s hands, and the offensive against Mosul was underway. At this moment, the Asad regime was the largest individual source of funds for IS. European counterterrorism officials assessed that Asad was using power in Damascus generated in IS-held plants around Palmyra like Al-Akram natural-gas facility. In turn the Asad regime was providing cash to IS. The increased trade between Asad and IS was apparently driven in part by a temporary reduction in the provision of cheap energy to Asad by Iran and Russia in late 2016, though it went on for at least a few more months.

The money from the Asad regime helped IS counter the concerted U.S. campaign against the jihadists’ finance networks, a program that began no later than the May 2015 U.S. Special Operations Forces raid into Deir Ezzor that killed the head of the “Antiquities Division”, Fathi al-Tunisi (Abu Sayyaf al-Iraqi), and forced the reassignment of the provincial emir, Ali al-Jiburi (Abu Ayman al-Iraqi).

Local outlets named al-Katerji as the facilitator for these arrangements between the Asad regime and IS. It appears that at least one route for the oil took it from IS hands in eastern Homs to Qamishli, where the Asad regime is permitted to run key security infrastructure in the area otherwise run by the SDF/PKK, and then into Aleppo. Syrian rebels intercepted some of these shipments between the regime and jihadi terror groups.

In the spring of 2017, the Asad regime, sensing it had defeated the mainstream opposition, began—with Coalition support—a consistent campaign into IS-held areas. Before that, the pro-Asad forces would use political incidents like the Palmyra offensive and their various clashes with IS as evidence that they have fought the holy warriors all along. But the reality is that it was exactly at these points of closest collaboration that some of the most violent episodes between Asad and IS occurred during the long years in which they observed a de facto non-aggression pact. The 8 January 2017 blowing up of a regime gas plant by IS, for example, was a message to the regime because it had fallen behind on payments. As a Syrian oil official once explained, “You kill and fight to influence the deal, but the deal doesn’t end.”

GOING FORWARD

With IS driven from overt control of its twin capitals and the Asad regime secured for the foreseeable future by Iran and Russia, there has been a sense that Syria’s war is winding down. There is talk of “reconstruction” funds being sent into Syria, particularly by the European Union. Sometimes presented as a means to exert political leverage to force Asad out, this fantasy must be dispensed with: the regime survived this war by destroying the country and half-a-million of its people; it will not now surrender in exchange for several million dollars. The reality is that the E.U. wants to turn off the refugee flow, which has destabilized politics on the Continent and gave IS an opportunity to smuggle terrorists into Europe, and some E.U. states are prepared to pay Asad to do it. It should be obvious that neither Asad nor his allies can do this. Most Syrian refugees fled Asad and cannot return while he is in power. Beyond that, the focus on IS misses the point. The regime’s survival, propped up by Iran, provides a reservoir of political legitimacy to IS and other radical actors, ensuring instability in Syria and well outside. There is nothing to be gained by paying the pro-Asad coalition to defend us from a terrorist menace it is substantially responsible for, and there is something obscene in retrospectively subsidizing mass-murder on this scale.

 

Originally published at The Henry Jackson Society

4 thoughts on “The Syrian Regime’s Funding of the Islamic State

  1. Pingback: Islamic State Admits to Colluding with Syrian Regime | The Syrian Intifada

  2. Pingback: Islamic State Admits to Colluding with the Syrian Regime | The Syrian Intifada

  3. Pingback: A “Syrian Democratic Forces” Defector Speaks About the Role of the PKK and America in Syria | Kyle Orton's Blog

  4. Pingback: America’s Kurdish Allies in Syria Drift Toward the Regime, Russia, and Iran | Kyle Orton's Blog

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