Shadow Trade: Smuggling’s Winners, Losers & Enduring Dynamics

Why illegal cross-border commerce is so hard to stop
Editorial Staff

March 8, 2023

Smuggling between Lebanon and Syria is as old as the border, though the business has experienced a renaissance in recent years. International sanctions on Syria following the 2011 uprising-turned-war and Lebanon’s economic collapse since 2019 have reinvigorated the clandestine trade between neighbours.   

The increased trafficking of illicit drugs over the border has been central to the Syrian regime’s efforts to keep revenue coming in despite the sanctions. In Lebanon, subsidies intended to preserve public access to staple goods amid hyperinflation have instead been a boon to smugglers of fuel, medicines, food and other products.  

All this has left consumers on either side of the border exposed to wild swings in the price and availability of everyday products. This dynamic was on full display last month after the Lebanese Ministry of Health stopped its baby formula subsidy, affecting families on both sides of the border.   

Meanwhile, foreign embassies in Lebanon – particularly those of the United States, United Kingdom and the European Union – have been continuing their efforts to bolster Lebanese security forces’ ability to stop cross-border smuggling.  

These ad hoc initiatives, however, lack cohesion and fail to recognize the realities on the ground: powerful players in both Lebanon and Syria reap large profits from the smuggling trade, while impoverished border communities increasingly depend on smuggling activities for income following decades of state neglect.  

In this feature story, The Alternative looks at the winners, the losers, and the dynamics driving illicit cross-border trade between Lebanon and Syria.   

Sanctions, Subsidies, and the Smuggling Renaissance 

The border between Lebanon and Syria runs for almost 400 kilometres, with six official crossings at which travellers can expect to have customs officials inspect their documents.  

Poorly delineated in many parts, however, vast areas of the frontier between the two countries, ranging from rugged mountains to open agricultural fields, are poorly patrolled, if at all. This has led to there being as many as 150 unofficial crossings points that are regularly used by smugglers to evade border controls.    

“If you want to smuggle people or commodities, it’s quite easy and straightforward. This has long been the case, but following the Syrian uprising, it only got worse,” Karam Shaar, a non-resident fellow at the Middle East Institute, told The Alternative.   

International sanctions and general economic collapse have left the Syrian government increasingly strapped for foreign currency since 2011. In response, it began ramping up the industrial production and distribution of captagon, an illicit amphetamine. In 2021, retail trade in the drug was estimated at US$5.7 billion and constituted the government’s largest source of foreign currency. Hezbollah and smuggling routes through Lebanon have played a major role in exporting Syrian captagon internationally.      

Smuggling in legal goods has also flourished in the last decade.   

“The direction of movement had always been a function of subsidy and the price of those commodities on both sides of the border,” noted Shaar. 

For instance, the Lebanese government brought in a wide-ranging subsidy program, covering food, fuel, medicine and other goods, after the country entered economic collapse in 2019. Caretaker Finance Minister Ghazi Wazni estimated in early 2021, when the government began repealing the subsidies, that the program was draining the treasury of US$6 billion annually – caretaker Prime Minister Najib Mikati would later put the subsidy bill at US$10 billion per year.      

The Lebanese subsidy program overlapped, however, with the period in which the Syrian government was repealing its fuel subsidies. The retail price differential this created between the two countries spurred mass smuggling from Lebanon to Syria, contributing to repeated fuel shortages in Lebanon. The Lebanese Syndicate of Petrol Station Owners estimated that more than a billion litres of fuel illegally crossed the border in one year. This would place the value of smuggled fuel well into the hundreds of millions of dollars. When Lebanon ended this subsidy, fuel smuggling dissipated in tandem.  

Fuel is just one example of the subsidy fiasco. In total, Mikati estimated that hoarding and smuggling had led to almost three quarters of the products the government subsidised being withheld from the Lebanese consumer.   

The increasing scale of cross-border smuggling in the past decade has also facilitated the rise of powerful smuggling interests. 

“The main difference than prior to 2011 is that, now, you have two […] big actors which is Hezbollah on the Lebanese side, and the fourth brigade on the Syrian side,” said Joseph Daher, an affiliate professor at the European University Institute, in an interview with The Alternative.  

According to a paper Daher co-authored, Hezbollah and its allies, through their strong presence in the Baalbek-Hermel region, directly control most of the illegal border crossings into Syria. This same research noted that in Lebanon’s northern Akkar region, the smuggling networks are run by an assortment of prominent families, tribes, traders and political leaders.  In Syria, the army’s Fourth Division, headed by Maher al-Assad, brother to the Syrian president, is the dominant smuggling organisation and collects tolls from other smugglers, according to Daher. In collaboration with the Fourth Division, Hezbollah directly participates in smuggling, and uses the illegal crossings it controls to move fighters and weapons back and forth.  

Hezbollah’s media department did not respond to The Alternative’s request for comment.  

Sheikh Sadek Al-Naboulsi, a Lebanese political science professor and Hezbollah affiliate, defended the smuggling of goods from Lebanon to Syria in a 2021 France 24 interview, calling it an “integral part of the resistance.” 

“Today, as a result of the American pressure and sanctions, the Lebanese and Syrians have no choice but to cross the border, to break some laws, in order to secure their basic needs,” he said. 

In a separate France TV documentary this year, Hezbollah’s deputy secretary-general Sheikh Naïm Qassem denied Hezbollah’s involvement in any drug smuggling operations. 

“We consider drugs as haram [sinful]. According to our religion, it is forbidden to buy, sell and trade it. How could we traffic drugs when it is forbidden? It’s not true.” 

Consumers Consequences: Stealing Milk from Babies 

In January, Lebanon’s caretaker Minister of Health, Firas al-Abiad, announced that the government was ending its subsidy of baby formula, among the latest products to face a subsidy repeal. He said that the intent of the subsidy had been to “secure milk for children” but that merchants had instead pocketed the benefit by selling the baby formula onto the black market.  

“The Ministry noticed that the large quantities of subsidised milk that were imported – which exceeded the country’s needs and were almost sufficient for two countries – disappeared from the market a short time after arrival,” said Al-Abiad. 

Indeed, while the subsidy was in effect, parents in Lebanon who spoke to The Alternative said it had been difficult to find infant formula in pharmacies.  

“Before the subsidy was lifted, I would have to ask a lot of different people in other areas to find baby milk – it was very hard and we only found small quantities,” a mother from Bar Elias, in the Bekaa Valley, told the Alternative.  

After lifting the subsidy last month, baby formula was more readily available, but the price had more than doubled. Under the subsidy the Ministry of Health had, for instance, priced a 400 gram container of imported Similac baby milk at the equivalent of US$7.50, which jumped to almost US$17.25 once the subsidy was repealed.  

“Now it’s available,” said the mother, “but I can’t afford the higher price, so I have to give my daughter normal milk.”  

Across the border in Syria, where some 90% of the population currently lives under the poverty line, the cheap, subsidised baby milk smuggled across the border from Lebanon had been a lifeline for many parents. Lebanon’s subsidy repeal, together with the Syrian government’s limited importing licenses, high taxes and price controls, have spurred shortages of baby formula for Syrians. 

“The high prices for baby milk are putting a lot of pressure on families,” said a man from rural Damascus, who preferred not to be named, adding that his own family has struggled to find affordable baby formula. “It has become our main priority because, without milk, the child will die.”  

Border Communities: Smuggling to Survive 

The shifting ebb and flow of the smuggling trade also has a direct impact on some of the most marginalised communities in Lebanon – those along the border in Akkar, Baalbek-Hermel and Bekaa. The enduring lack of state investment in these governorates and scant employment prospects have long made smuggling a way of life in border communities. Close community ties across the border – with some villages split between the two countries, such as Qasr in the Hermel region – also helps facilitate the illicit movement of goods.  

In Wadi Khaled, a village in Akkar at the Syrian border, locals “rely on illegal cross-border traffic to meet basic needs, including the purchase of foodstuffs, building materials, medicine and fuel,” according to a 2011 article in the journal of Conflict, Security and Development. The same study recommended that “any effort to combat smuggling entail improving social support for the community and facilitating access to Lebanese markets and infrastructure.”  

Following the 2011 Syrian uprising, sectarian divisions in the Akkar region began to influence the smuggling trade in north Lebanon. Residents of Wadi Khaled, a Sunni-majority village, generally supported the Syrian opposition, which prompted the Syria regime and the Lebanese army to crack down on smuggling through the area, according to a 2021 study by the International Centre for Migration Policy Development (ICMPD). This had dire economic impacts locally, according to the centre, though it noted that in more recent years these restrictions have relaxed only slightly.       

The former president of the Fard Municipality in Wadi Khaled, Aref Al-Khaf, told The Alternative that smuggling was now forbidden in the area.  

“I wish there was smuggling, we would have cash,” he told The Alternative, tongue in cheek. 

In Baalbek-Hermel, the ICMPD report noted that the smuggling boom post-2011 created a new class of locally powerful “kingpins” in the trade. The smuggling organisations they run can openly move goods from one country to the other along large stretches of the border where Lebanese security services are absent and the Syrian army, where present, does not intervene.   

Lebanon’s economic collapse since 2019 hit border communities particularly hard. That year some 69.6% of Akkar residents were experiencing multidimensionally poverty, according to a study by Lebanon’s Central Administration of Statistics and the World Bank. A UN report covering the following two-year period found the number of households in the area experiencing multidimensional poverty had risen to 92%. The same report found that roughly half of all households in Akkar, Baalbek-Hermel and Bekaa were living in “extreme poverty.”     

The Lebanese government’s implementation and subsequent repeal of its subsidy program, and the boom this created for smuggling, thus had outsized impacts in these border areas.   

“This affects the local communities’ income,” Zaki Mehchi, a policy fellow at the London School of Economics and Political Science who has studied this issue, told the Alternative. He adds that while only a portion of the population in these communities directly benefit from smuggling, this portion has been increasing in the last decade.  

Long-term policy that seeks to address illicit trade through border communities should, according to Mehchi, aim to “improve their living conditions and to generate legal job opportunities for them to reallocate human resources from serving in illegal smuggling activities to legal productive economic activities.” 

 Foreign Security Assistance “Bonanza”  

In the past two decades, countries around the world, led by the West, have invested significantly into training and equipping the Lebanese military and security services. Much of the emphasis has been on border management and has aligned with American and European concerns about countering threats from terrorism, narcotics trafficking, illegal migration, among others.  

Simone Tholens, an international relations scholar, has gone so far as to call it a “security assistance bonanza”, constituting a form of “statebuilding lite.”   

By far the largest donor has been the United States, which since 2006 has provided the Lebanese army with more than US$3 billion in various forms of military assistance, including aircraft, vehicles, weapons, ammunition and training.  

Other western donors have included the UK, France, Germany, Italy, Poland, while non-western assistance has come from Saudi Arabia, the United Arab Emirates, Qatar, China and Russia.   

London, for instance, donated 100 armored patrol vehicles in 2021, having previously built some 75 border towers, sent hundreds of other vehicles and trained more than 10,000 Lebanese on border security measures. Meanwhile, a decade-long, nearly €20 million EU program to help Lebanese security institutions “fight against terrorism and serious cross-border crimes” is set to wrap up this November. 

As Tholens notes in a 2017 article, security assistance to Lebanese military and security bodies also “reflects a strategic policy choice to counter Hezbollah and ultimately Iranian influence” without directly challenging them in Lebanon. She adds, however, that the ad hoc nature of the security assistance and a lack of an overarching policy to guide it has undermined, rather than reinforced, the cohesion of the security bodies responsible for protecting Lebanon’s border.    

“In terms of western funding for Lebanon’s border guards, I think it’s absolutely ineffective,” said Shaar, of the Middle East Institute.  

As research published in the journal of Conflict, Security and Development indicated, putting an end to smuggling depends more on the willingness of border personnel – whether in command or on patrol – to do their job than a border force’s staffing or technological capabilities.  

The collapsing value of salaries in the security services since 2019, however, has undermined their viability, forcing many members to take on second jobs, leave the corps entirely, and dramatically raised the susceptibility to corruption. For example, a major-general’s monthly salary of LL8,455,000, once equivalent to just over US$5,600, now amounts to $106 (at the parallel market exchange rate of LL80,000 per US$1 at the time of writing), while a private now earns roughly US$17 per month. 

Neither the Lebanese Armed Forces’ land border unit, nor the Internal Security Forces, replied to The Alternative’s requests for comment.  

Looking Ahead 

Illicit cross-border trade is among the key issues that needs to be addressed for Lebanon to recover. Indeed, it is also one of the conditions the International Monetary Fund has imposed on Lebanon to receive expanded financial assistance. However, attempts to curb smuggling solely through security means are unlikely to show meaningful success, though they may bring short-term suffering to border communities. 

“You won’t have any serious improvements regarding tackling smuggling without tackling socioeconomic inequalities,” said Daher, from the European University Institute. 

With Lebanon’s general economic collapse, which is disproportionately felt in marginalized border communities in Akkar, Baalbeck-Hermel and Bekaa, the need for new livelihood opportunities beyond smuggling is acute. Obvious potential avenues for intervention would involve investments in productive sectors such as agriculture and industry. 

Given the powerful actors at the top of the smuggling hierarchy, however, working with local communities to disincentivize smuggling should be seen as means to gradually reduce the currently massive scale of illicit cross-border trade, rather than a grand remedy for dramatic and immediate results.