Tarfeeq – delegated taxation in civil war Syria

A growing body of research on armed conflicts and rebel governance have highlighted the prevalence and potential long-term significance of “informal taxation” in war zones. If contemporary wars appear to undermine state capacity rather than bolstering it, could war-time taxation by non-state armed groups nonetheless represent an alternative pathway between war-making and state-making? In this paper, uncovering the development, functioning, and contestation surrounding the Syrian war-time system of ad-hoc toll taxes – tarfeeq – I temper the optimism. Manifesting an apparent initial success, the tarfeeq system is a prime example of how war can give rise to innovative, hybrid forms of tax policy. However, as I show throughout the analysis, the very attributes contributing to its success – its simplicity and delegated nature – came with serious costs. The paper first reconstructs the evolution of the inherently opaque tarfeeq system, from its original appropriation by coastal militias in 2015, its subsequent spread throughout the Syrian territory, and its ultimate monopolization by a partnership between the Castle security company and the government-affiliated 4th Division. Relying on a variety of news media and legislative sources, the analysis highlights how the practice developed organically from a mix of pre-war practices, international pressures and war-time material conditions into a recognized yet continuously contested institution. While delegation helped deflect responsibility, the system also discouraged the government from exercising effective control over its territory, locking it into a low-capacity equilibrium. Matching qualitative data on the (uneven) spread of tarfeeq with time-series data on local market prices, the analysis further seeks to uncover its financial significance and economic impact. Spatial analysis of selected governorates indicates that the imposition of tarfeeq fees could increase prices of staple goods with as much as two standard deviations, or 15 %, excluding cascading effects. The results indicate that tarfeeq was as effective as it was controversial, injecting significant revenue into the militia system, thus indirectly sustaining the regime while circumventing official state institutions. The costs for the population, however, was high and iniquitous: the price effect was comparable with that of large-scale outbreaks of local violence, and distributed in a geographically uneven and regressive manner. On the one hand, the tarfeeq provides an excellent example of how the exigencies of war can foster fiscal innovation from below, developing into a seemingly self-sustaining and officially sanctioned protection racket that would help finance the sprawling militia system. On the other hand, it shows the risk of delegated taxation: it worsened the deteriorating living standards of the population, exacerbated regional inequalities, and further undermined the legitimacy of the regime and its official institutions. In the case of war-time Syria, delegating fiscal powers to non-state actors was a state-building dead-end-street. The paper concludes by discussing implications for research on informal taxation in- and outside of war zones.