An officer empties a bag of tablets of Captagon seized during a special operation in Jeddah, Saudi Arabia. Syria has been identified as the main centre of the drug's production. AFP
An officer empties a bag of tablets of Captagon seized during a special operation in Jeddah, Saudi Arabia. Syria has been identified as the main centre of the drug's production. AFP
An officer empties a bag of tablets of Captagon seized during a special operation in Jeddah, Saudi Arabia. Syria has been identified as the main centre of the drug's production. AFP
An officer empties a bag of tablets of Captagon seized during a special operation in Jeddah, Saudi Arabia. Syria has been identified as the main centre of the drug's production. AFP

Illegal trade of Captagon reached $5bn last year in Middle East


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Trade in the amphetamine-type stimulant Captagon in the Middle East grew exponentially in 2021 to top $5 billion, posing an increasing health and security risk to the region, a report said.

Research by the New Lines Institute, to be released on Tuesday and seen by AFP, paints an alarming picture of the impact booming Captagon production is having on the region.

"The Captagon trade is a rapidly growing illicit economy in the Middle East and Mediterranean," said the report, written by analysts Caroline Rose and Alexander Soderholm.

"Based on large-scale seizures alone, the potential value of the retail trade in 2021 is estimated at over $5.7 billion," it said.

The figure is a jump from an estimate of about $3.5 billion in 2020 and only reflects the retail value of the pills seized last year, which the think tank tabulated at more than 420 million.

Many countries have not divulged aggregated seizure figures for the drug, of which Syria is the main producer and Saudi Arabia the main consumer.

The real amount of seized pills is likely higher and still only a fraction of the total amount of Captagon produced.

An AFP tally shows seizures continuing at a slightly slower rate than last year, mostly because a record shipment of 94 million pills was intercepted in Malaysia in March 2021.

Captagon was the trade name of a drug initially patented in Germany in the early 1960s that contained an amphetamine-type stimulant called fenethylline used to treat attention deficit and narcolepsy among other conditions.

It was later banned and became an illicit drug almost exclusively produced and consumed in the Middle East.

Captagon is now a brand name, with its trademark logo sporting two interlocked "Cs", or crescents, embossed on each tablet, for a drug that often contains little or no fenethylline and is close to what is known in other countries as "speed".

New Lines said its changing formula made attempts at cracking down on the booming trade harder.

"One of the most challenging aspects in tracking the patterns of Captagon production, smuggling and use is assessing its precursors and constantly shifting chemical formula," it said.

The market value of the Captagon produced in Syria now far outstrips legal exports and has resulted in the country being branded a "narco-state".

The New Lines report further documents how members of President Bashar Al Assad's family and high-ranking members of his regime are involved in Captagon manufacturing and smuggling.

Stifled by international sanctions slapped on the regime in the course of Syria's 11-year-old war, the government is "using the trade as a means for political and economic survival", the report said.

Some Captagon production centres, albeit smaller ones, are located in Lebanon, already the world's third-largest hashish exporter after Morocco and Afghanistan.

"Lebanon has served as an extension of the Syrian Captagon trade, a key transit point for Captagon flows," the report said.

Syrian state figures are benefiting from various allied militias and proxies in organising the trade, including Lebanon's Hezbollah movement, it said.

Some of the Shiite group's main areas of influence include a significant stretch of the Syrian-Lebanese border, giving it a key role in regional trafficking.

"With its history of controlling Lebanese cannabis production and smuggling out of the southern Bekaa Valley, Hezbollah has seemingly served an important supporting role in the Captagon trade," New Lines said.

Captagon has so far only been consumed on a very small scale in Europe but what has become Syria's biggest export has the potential to spread beyond the Middle East.

"Its spectrum of effects and reasons for use give it a very broad appeal," Caroline Rose told AFP.

Sold for less than one dollar in parts of Syria to consumers who primarily use it to stay awake and work several jobs, a tablet can fetch more than $20 in Saudi Arabia where is it prized as a recreational drug.

"It could ultimately penetrate the European market and carve out its own niche," Ms Rose said.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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1954 - Clinical trials of birth control pill

1979 - MRI, or magnetic resonance imaging, scanned used to diagnose illness and injury.

1998 - The first adult live-donor liver transplant is carried out

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Updated: April 05, 2022, 9:42 AM