Iraq and Syria: The Local and Regional Impact of Illicit Economies

Iraq and Syria: The Local and Regional Impact of Illicit Economies

In my previous article, I discussed the risk of Iraq and Syria entering a state of perpetual violence brought about by militias, to sustain their presence and maintain their profits. High rates of unemployment and increasing militarisation of governance and the economy have meant that forming, joining and sustaining militias has become one of the few profitable rent-seeking methods. This article examines their illicit economic activities in greater detail showing the impact on a local to regional scale and the wider reverberating consequences.

Local Impacts

Residents regularly suffer from property theft, looting and extortion by these various militias, consequently increasing sectarian tensions. The most conspicuous economic activity of the militias is the multitudes of checkpoints scattered across both countries. Extremely high checkpoint fees and levies on goods has meant that Iraqis and Syrians not only have to wait in long queues at slow moving checkpoints but also pay extortionate rates. 

Checkpoints are also usually used to acquire territory, legitimacy and links with the local population. However, in Sunni Arab neighbourhoods, they have the adverse effect. Remembering the hundreds of young men that went missing at Anbar’s notorious Al Razzaza Checkpoint, residents find Shia militants intimidating.

Sunni residents of Mosul are also distressed by Shi’ite militias in the Popular Mobilisation Units, such as Asaib Ahl al-Haq and Saraya al-Khorasani taking possession of Sunni endowment properties. The City’s ‘Bala’ market, for example, once under Sunni endowment, has now been taken over by the Shia Waqf, with residents forcefully intimidated to pay rent.

In both countries, land repossessed from ISIS has not been returned to the original owners, as displaced persons and refugees are treated with suspicion and marginalised. In Syria, for example, the recapture of the town Morek by the Tiger Forces led to wide scale land theft. In one case, a local had to pay up to $5,000 to a member of the Tiger Forces to reclaim his own land back.

Militias are also building real estate empires. In Iraq, they have taken control of important offices such as the Land Registration Department in order to acquire lucrative properties. Meanwhile, in Syria, property theft and reconstruction efforts are intertwined, as the regime and its affiliated groups exploit the huge demographic shifts for their own enrichment. 

This includes Syria’s largest current reconstruction project, Marota City. In its development so far, economic rewards appear to be channelled to the regime-affiliated businessmen who dominate the Syrian private sector, while residents are forcefully evicted and unable to claim ownership rights.

Finally, locals on both sides of the border are unsettled by the heavy presence of Iran-backed groups, such as Harakat Hezbollah al-Nujaba, Harakat Ansar Allah al-Awfiyah and Liwa Fatemiyoun, which are embroiled in the Syrian conflict. This produces a particularly volatile situation because communities across the Iraq-Syria border area have strong tribal and family ties, as well as pan-Sunni and pan-Arab feelings. Thus, any insensitive and provocative actions by the Iran-backed militias, could give ISIS the chance to exploit the disharmony.

National Impacts

Along the Syria and Iraq border, particularly the border towns Qa’im-Bukamal, cross-border oil and gas trading, weapons, human and goods smuggling are rampant

It is clear that Iraqi militias, particularly those backed by Iran, have a monopoly over significant smuggling routes to and from Iran, Syria, and Turkey. Oil smuggling makes the most money, with records as high as 10,000 b/d crossing through Anbar into Syria. However, the extent of their involvement in cross-border drug smuggling is unclear. In any case, since the rise of ISIS, drug abuse has been rapidly growing. In Syria, Captagon is widely used amongst armed actors to improve concentration, energy, and drug-infused courage.

Worse still, the use of crystal-meth has blown up in Iraq in recent years. Most of it, making up to 60% of Iraq’s drug trade, comes from Iran’s porous border. Smugglers with the connections or ample bribes are able to pass through PMU border controls, with large cargoes unscrutinised.

Drug unit commander Mohammed Alwan calculates his precinct in Baghdad has as high as 10% of the population addicted to drugs, predominantly to crystal-meth. With 60% of Iraq’s population under the age of 25 and youth unemployment as high as 36%, years of war, despair and societal moral decay have seemingly pushed Iraq’s youth towards the drug as an escape mechanism.

Regional Impacts

Cross-border illicit activities resonate across the region. The Shabiha, initially known for its smuggling across the Syria-Lebanon border in the 1980s, is now one of the many regime-affiliated actors operating there since the Syrian civil war began. Making matters worse, the US’s crippling sanctions targeting the Syrian regime in the Caesar Act has seen smuggling activity increase exponentially

Along the border of Lebanon, around the city of Hermal all types of products are smuggled, especially those subsidised by the Lebanese state, such as fuel, bread, milk, sheep and hay. According to the investigation of France 24 reporters, André and Awad, this smuggling activity costs the Lebanese economy a staggering $15 million a day

Cross-border smuggling exacerbates an already dire situation in Lebanon amid a political-economic crisis and capital flight. Throughout 2020, inflation of food costs has averaged by 254% and its GDP growth has contracted by 20.3%The situation is particularly bad in Lebanon’s northern city, Tripoli. Interviews conducted highlight that a food distributor was recently shot there and that fighting over food is increasing. Meanwhile, in Syria, the regime manages to survive under sanctions, while its people are exploited and starvedThe persistence of illicit activities and their consolidation into the economy likely strengthens Iran’s hold over Iraq and Russia’s hold over Syria. 

As illicit trade reverberates internationally, indicated by Italy’s seizure last year of 84 million Captagon pills originating from Syria, efforts to challenge illicit economies and crime on a local level, as part of a concerted effort to tackle regional lawlessness, is becoming increasingly important. 

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