Century Foundation Fellow, Aron Lund, writes:

After the October 2017 fall of Raqqa to U.S.-backed Kurdish and Arab guerrillas, the extremist group known as the Islamic State is finally crumbling. But victory came a cost: Raqqa lies in ruins, and so does much of northern Syria.

At least one of the tools for reconstruction is within reach. An hour and a half’s drive from Raqqa lies one of the largest and most modern cement plants in the entire Middle East, opened less than a year before the war by the multinational construction giant LafargeHolcim. If production were to be resumed, the factory would be perfectly positioned to help rebuild bombed-out cities like Raqqa and Aleppo.

However, although the factory may well hold one of the keys to Syria’s future, it also has an unseemly past.

In December 2017, French prosecutors charged LafargeHolcim’s former CEO with terrorism financing, having learned that its forerunner Lafarge was reported to have paid millions of dollars to Syrian armed groups, including the terrorist-designated Islamic State.

The strange story of how the world’s most hated extremist group allegedly ended up receiving payments from the world’s largest cement company is worth a closer look, not just for what it tells us about the way money fuels conflict, but also for what it can teach us about Syria’s war economy—a vast ecosystem of illicit profiteering, where the worst of enemies are also partners in business.

This work was supported, in part, by a research grant from The Harry Frank Guggenheim Foundation, and by the Carnegie Corporation of New York. It draws on interviews with Syrian and international experts, diplomats, fighters, and people involved with Lafarge’s operations in Syria, as well as on a wide range of written sources in English, Arabic, French, and Norwegian, including press coverage, company reports, memoirs, and social media.

Lafarge’s behavior, which is now under investigation in France and could result in criminal convictions, was far from exceptional for companies operating in civil-war Syria—or perhaps in any similar war zone. The need to consider opportunistic compromises, dubious deals, and under-the-table payoffs to criminal and violent actors to keep Lafarge’s factory in operation will therefore also be difficult to avoid for others hoping to operate in Syria’s fragmented politico-economic landscape.

The fact that President Bashar al-Assad’s government is now clearly dominant and the Syrian war seem to be moving toward a reconstruction stage will only exacerbate the problem.5 The fighting is far from over and the country remains divided, with rival armed actors ruling several peripheral areas. The most important one is the northern, Kurdish-controlled region propped up by the United States.

As long as these divisions remain in place, many humanitarian and commercial actors will be forced to work under two or more rival regimes, negotiating a path among militant actors who routinely prey on industry, trade, and relief operations. During the war, a new class of conflict traders has emerged to facilitate cross-line connections of this type. Though they hail from different backgrounds and areas, most retain strong links to Assad’s government. As reconstruction money starts pouring in, it will be near-impossible to avoid some level of dependence on these regime-connected fixers and war profiteers—the new kings of Syria’s economy, whose power grows as the Syrian army advances. [Continue reading…]