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The bankers cannot believe their luck

The disgrace of the political class has been the salvation of the bankers. And lax regulation has le

Until the drama over MPs’ expenses, workers in the financial services had been reeling from a succession of blows: collapsing banks, nationalisations, frozen bonuses, job losses and contemptuous, withering condemnation by the public and by opinion-formers in the media, church pulpits and parliament. An optimistic scenario was one of slow rehabilitation under a less permissive regime involving tougher regulation, partial public ownership of banks and a diminished, chastened City.

Now the bankers can’t believe their luck. A couple of days after the first revelations in the Daily Telegraph, the headline in the City’s free newspaper City AM was a shout of orgasmic release: “Now THEY can’t lecture US.” It said it all. Collapse of moral authority and politicians’ will. Back to business as usual.

The dangers of drift were highlighted in the speech given at Mansion House on 17 June by Mervyn King, governor of the Bank of England. He publicly expressed discomfort at the idea of banks that are “too big to fail”: he has concluded that such banks are simply too big. But the government is reluctant to tackle these banks, as the conduct of Lord Myners and the institutionalised passivity of UK Financial Investments Ltd (UKFI) – the Treasury-backed bank shareholder body – indicates. Instead, there seems to be a yearning to disengage government from the financial sector as quickly as possible. Political developments have made that disengagement easier to achieve, now that parliamentarians, including members of the Treasury select committee, have been collectively discredited, and power within the Labour government has shifted from a wounded Prime Minister to a revitalised Chancellor articulating the Treasury line.

It is deeply worrying that some of the most important policy questions for a generation are now being decided by default and in a political vacuum. How can a semi-nationalised banking system best serve the different but overlapping interests of UK bank borrowers, depositors and taxpayers, as well as private shareholders and bank executives? How should the systemic risks of banking – and the City generally – be managed through regulation, in order to safeguard the wider UK economy? Most important, is it actually possible for the UK to play host to a major financial service sector?

The response to all these questions is a lazy, uncritical, self-serving one: that, bar a few regulatory tweaks that will need to be made, the previous regime was essentially fine. The bankers’ view is that UK politicians need to get off their backs as quickly as possible and get the banks back into the private sector; to reverse “penal” (ie, 50 per cent) marginal tax rates; and to stop the European Commission, or more self-confident UK regulators, from “undermining the City’s competitiveness”. These arguments are winning.

Indeed, there is a danger that the counter-revolution could soon become a rout.

Yet it is only a matter of months since half of the British banking system collapsed and had to be rescued by the state through total or partial nationalisation. Thanks to that intervention, the banks have stabilised (if nothing more). Several small banks are now fully nationalised; RBS and the Lloyds Banking Group are partly nationalised; the two remaining global banks (HSBC and Barclays), along with the remainder of the sector, depend on a variety of implicit or explicit guarantees.

How we got to that point has been discussed elsewhere (including in my book The Storm): I am now concerned with the future. There is a bifurcation of paths opening up. One route builds on the experience of recent bank crises in Scan­dinavia, Israel, Korea and elsewhere, including the US, whose so-called Resolution Trust model helped to limit the savings and loans crisis of the late 1980s and early 1990s. Following this route, the state leads and manages a clean-up and restructuring of banks, usually within a decade or so. Approaches have varied, but there are some common elements: the wiping clean of the slate, in respect of losses incurred by existing private shareholders and the removal of failed management; fresh, taxpayer equity capital; structures to ensure that lending can continue unhindered to good, solvent borrowers; the valuation and active management of “bad” assets, in order to retrieve whatever value is left; then, in due course, the selling off of some or all publicly owned banks to achieve maximum return to the taxpayer and leave a varied ecology of properly regulated national banking institutions.

Some of us thought that was where the government was originally heading. After the October rescue, there were some tough-sounding conditions on new lending and curbing bonuses and, for a while, as it basked in the glow of in­ternational approval, the government seemed to be on the right track.

But it has gradually become apparent that we are being taken down a different route, where government money and guarantees are used to facilitate a quick return to “business as usual”. UKFI has been populated by financiers rather than business people with experience as bank customers. The public-sector shareholders seem to have had no quarrel with bank management’s efforts to build profitability and deleverage as quickly as possible.

The Asset Protection Scheme introduced in January also provides insurance cover for “toxic assets”, which means the government has taken on an open-ended risk without a corresponding “upside” for the taxpayer. This route was chosen in preference to fresh government equity capital precisely because it makes a quick return to private-sector ownership easier. There is now a danger of premature reprivatisation, which would leave the taxpayer with a vast toxic dump of losses and a poor price for the share sale. There are already rumours that Northern Rock is being lined up for a rapid sale.

If banks are to return to “normal” commercial operation under private ownership, the issue arises of how they should be regulated. The Cruickshank report on banking, commissioned by Gordon Brown a decade ago, posed the central question: why should banks be allowed to pursue the maximisation of shareholder value – and management bonuses – when they are underwritten by the taxpayer? This question has never been answered properly. Banks should either surrender their protection and compete like other firms, or be protected and have their profit regulated like utilities. In the wake of a banking crisis, the logic is even starker. In the past few weeks we have seen leading executives at Barclays awarding themselves millions while the bank ultimately remains dependent on government guarantees, despite its precarious independence. It is not surprising that executives of the semi-nationalised banks want to follow suit.

What has brought the issue to a head is the judgement that the major UK-based banks are “too big to fail” and have to be rescued in a financial emergency. This concept is an economic and democratic outrage. Either they must be subject to tight state control or they should be broken up so that they are not “too big to fail”. The point has been grasped, improbably, by ministers in banker-friendly countries such as Switzerland, and by our own central bank’s governor. Yet ministers today seem no less terrified of confronting the banks than when Brown initially fled the battlefield a decade ago.

One solution would be to restrict protection, including deposit protection, to “narrow banks”, confined to lending out no more than they receive in deposits. Other banks would operate competitively but be stripped of any protection. I, for one, am attracted to the concept; but it would involve a revolutionary change, a discontinuation of fractional banking altogether, and in the short run it is unlikely to be adopted.

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­Who said what about
the banking crisis

The financial services sector in Britain, and the City of London at the centre of it, is a great example of a highly skilled, high-value-added, talent-driven industry that shows how we can win in a world of global competition.
Gordon Brown, June 2007

When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance.
Chuck Prince, Citigroup CEO, July 2007

We cannot have a situation where the banks are able to privatise their profits and nationalise their losses.
Vince Cable, April 2008

We can’t tell every bank what to do.
Alistair Darling, April 2008

Where there is excessive and irresponsible risk-taking, that has got to be punished. The day of big bonuses is over.
Gordon Brown, October 2008

We had ten years of record growth when I was prime minister. I have, unfortunately, come to the conclusion that it was luck.
Tony Blair, January 2009

The government is clearly playing for time in order to avoid doing anything to upset the bankers.
Vince Cable, February 2009

Royal Bank of Scotland has the largest balance sheet in world banking so it is critical that Stephen succeeds.
Sir Philip Hampton, RBS chairman, defends the pay deal for the new RBS CEO, Stephen Hester, worth up to £9.6m, June 2009

A less drastic way of dealing with overgrown banks would be to split off the investment banking arms of the main global banks – what Mervyn King calls the “casinos” – and to confine government protection to the remaining “traditional” banking wings. These would then operate as regulated utilities: the model that broadly prevailed in the United States before the repeal of the Glass-Steagall Act a decade ago. The urgent need to change our system is highlighted by the ambition of Barclays Capital to become “the premier global investment bank”: it is madness for the British taxpayer to be a last-resort guarantor for this kind of business. To be sure, the demarcation is not clear-cut: there is high-risk “traditional” banking and low-risk investment banking, and the separation of roles would not be straightforward. The big banks – HSBC and Barclays – argue that they would be stopped from tapping into the securitisation markets (which may, after recent disasters, not be quite the loss they believe it to be). There is also the implied threat that global banking operations will be withdrawn from the UK.

The government must face down this kind of blackmail. The British taxpayer simply should not be made responsible for the risks that global banks take outside our regulatory jurisdiction. There are undoubtedly technical difficulties in separating out those aspects of global banks that the government can guarantee and those it cannot, but these problems cannot be an excuse for bottling out completely.

One lesson of the financial crisis is that the “light-touch” regulatory approach was a failure. It may have failed in part because of the poor quality of bank supervision rather than the absence of regulation. And the rapid innovation of capital markets undoubtedly ran ahead of regulators’ capacity to monitor activity effectively. But the vast cost to the British taxpayer – and the wider economy – of the banks’ failure and the consequent bailout make it imperative that regulation be strengthened.

We are now at a crunch point. The need to strengthen and update the regulatory regime has collided with the financial institutions’ growing confidence that they can keep the state off their backs. Self-serving arguments are being employed, notably that regulation will suppress “innovation”. It will. It should. We need more financial “innovation” like a hole in the head.

The other argument is that regulation (and 50 per cent tax rates) will undermine the City’s “competitiveness” and “drive away” banking and non-bank financial institutions. This argument has to be met head-on; the idea of a regulatory race to the bottom does not square with political and economic reality. Co-operation rather than regulatory arbitrage between the main jurisdictions will always be best, but if that co-operation does not materialise, the UK should not chase business by offering low standards that create wider risks for the UK economy. The arguments about City “competitiveness” are bogus, self-serving and dangerous. It is profoundly to be hoped that Brown, Alistair Darling, Ed Balls and others who fell for them so haplessly in the past have now learned their lesson.

The new regulatory agenda espoused by Lord Turner, chairman of the Financial Services Authority, is sensible and not especially controversial. Indeed, many in the City see it as a minor irritation, followed by a green light to get back to business as “normal”. It contains sensible elements – such as “macro prudential regulation” that would focus on systemic risks, rather than regulation of individual banks – and more controversial but basically prudent ideas, such as limiting loan-to-value ratios and/or multiples of income for mortgage lending.

Lord Turner has also supported the argument that the most dangerous forms of risk-taking in banking institutions can be limited by paying bonuses not in cash but in stock, redeemable after a period of years. As stock prices are depressed and the capital gains tax payable is only 18 per cent, any half-sober City trader will have worked out he should be doing this in any event. But it is not a silver bullet – the bosses at both Lehman Brothers and Bear Stearns had huge equity-related incentives, and look where they are today. These issues require pause for thought: there are bigger regulatory battles shaping up.

One concerns the proposal to establish a clearing house for complex financial derivatives so that they can be traded, netted and regulated. Properly regulated, these activities can spread risk and, in a general sense, add to stability. What is much more dangerous, as the recent financial crisis has illustrated, is to have a vast pyramid of paper claims – as in the CDS/CDO (credit default swap/collateralised debt obligation) “markets” – which cannot be settled in an orderly way through a clearing house. Important lessons can be learned from the recent collapse of General Motors. CDS contracts with a value in excess of $35bn were netted down to $2.2bn, causing little more than a ripple in the overall CDS market. The danger is that nothing will be done, setting up a huge systemic risk – and the next big crash.

One practical remedy would be to establish a clearing-house system as soon as possible. Big banks that make a lot of money from OTC (“over-the-counter”) trading are not happy: if they were forced to use a regulated exchange they would lose this business. In practice, complex, structured derivatives would therefore be prevented. A second issue is whether the London Stock Exchange – and the Bank of England as the lender of last resort – are big and strong enough to support a clearing house dealing with transactions valued at many times the size of the world economy. Co-operation with the US is potentially important. And perhaps a European approach is required, in order to draw on the bigger firepower of the European Central Bank, but that may unleash some dangerous political demons.

Meanwhile, the European Union has precipitated another major regulatory battle by putting forward proposals, both for strengthening European co-operation over bank supervision – reluctantly conceded to by the UK – and for toughening the regulation of hedge funds and private equity. Britain’s financial community has a collective paranoia about Europe, and there is envy of London’s currently predominant role and a distaste for the freewheeling “Anglo-Saxon” model (not that German, Dutch or even French banks behaved very differently in the crisis).

However, it is surely eminently sensible to ask, as the European Commission is doing, whether these new forms of financial intermediation are healthy and adequately regulated. There are some critics who question the value of hedge funds altogether and would be happy to see them regulated out of existence. But a more relaxed view is that there is a role for specialist financiers who pursue high yield via high risk – provided they do not depend on taxpayers’ guarantees or indirectly contribute to the systemic risk that taxpayers underwrite. The former has not been a problem in the recent crisis (no hedge fund has asked for government help), but the latter undoubtedly is. There is a proper debate to be had as to how hedge funds should be regulated: to treat the tentative proposals of the European Commis­sion as akin to a Napoleonic invasion threat is simply idiotic.

There is a more fundamental argument about the scale of Britain’s financial services industry in relation to the UK economy. I wouldn’t expect the City to vote for contraction, or for curbs on its freedom to operate, any more than I would expect turkeys to vote for Christmas. But the poultry farmer – the Labour government – cannot just ask the turkeys what they want. He has to be willing to wield a knife and cut some throats. A combination of national, European and global regulation is necessary to ensure that the vast negative externalities associated with the City do not exceed the (genuine) benefits that the UK economy derives from a successful, internationally traded, financial services sector. In addition, there will have to be a major structural adjustment out of traded financial services into other services and manufacturing.

Unfortunately a weak, demoralised, delegitimised Labour government is in no shape to face this challenge, and a Tory government pumped up by City donations would have no need or inclination to take it on. The opportunity for reform and renewal is passing us by and, if it does, financial crises will return with even greater ferocity in years to come.

Vince Cable, economic spokesman for the Liberal Democrats, is the author of “The Storm: the World Economic Crisis and What It Means”, published by Atlantic Books (£14.99)

This article first appeared in the 29 June 2009 issue of the New Statesman, The Great Escape

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Brothers in blood: how Putin has helped Assad tear Syria apart

The Syrian catastrophe has created the worst humanitarian crisis since the end of the Second World War. And the world watches helplessly as Putin and Assad commit war crimes.

Sometimes we know the names. We know Omran Daqneesh, the five-year-old boy who, covered in mud and dust, was pictured on the back seat of an ambulance in the aftermath of an air attack. We know his name because pictures and a video of him were released on social media and travelled around the world. The outrage that followed was widespread and sincere, the image of the dazed little boy seeming to symbolise the greater plight of the beleaguered residents of Aleppo. But then the moment passed. Few will know that a few days later doctors announced that Omran’s elder brother Ali, who was injured in the same air strike, had died from his injuries. He was ten.

Sometimes we know the names of the babies pulled from the rubble of collapsed buildings – occasionally alive, but often dead; or the names of the children weeping over lost parents; or the women grieving over lost husbands and children; or the elderly simply waiting (and sometimes wanting) to die.

We know Bana Alabed, the seven-year-old girl trapped inside Aleppo whose Twitter account has gone viral in recent weeks. “Hi I’m Bana I’m 7 years old girl in Aleppo [sic],” reads the on-page description. “I & my mom want to tell about the bombing here. Thank you.”

A series of pictures depicts Alabed and her mother, Fatemah, struggling to live as normal a life as possible, one showing the little girl sitting at an MDF desk with a book. Behind her, in the corner, is a doll. “Good afternoon from #Aleppo,” says the caption in English. “I’m reading to forget the war.”

The conflict, however, is never far away. Alabed, whose mother taught her English, has repeatedly tweeted her own fears about dying, followed by stoic messages of defiance whenever the immediate threat of an impending air strike passes. On the morning of 3 October, her words were simply: “Hello world we are still alive.” On 17 October, Fatemah tweeted: “The airstrikes ended in the morning, all the last night was raining bombs.”

But in most cases we never know the names of the victims of air assaults led by Presidents Bashar al-Assad and Vladimir Putin. One of the most haunting images to emerge in recent weeks was that of a mother and child, killed while sleeping in the same bed. The scene had an eerily preserved-in-amber feel to it: a snapshot of snatched lives, frozen in the act of dying. Pictures of ruined buildings and distraught civilians have become routine now, holding our attention briefly – if at all.

As many as 500,000 people are believed to have been killed since the beginning of the Syrian uprising in early 2011. According to a report released in February this year by the Syrian Centre for Policy Research, a further 1.9 million have been wounded. Taken together, those figures alone account for 11.5 per cent of Syria’s pre-revolutionary population. Combine that with the number of Syrians who have been displaced – more than ten million (almost 50 per cent of the population) – and the sheer scale of the disaster becomes apparent.

The conflict has become the worst humanitarian crisis since the Second World War. Today it centres on Aleppo, in north-west Syria, one of the oldest continuously inhabited cities in the world, and a cradle of human civilisation. Various conquerors from the Mongols to the French have fought battles there but none, so it would seem, has been quite as ruthless or committed to the city’s annihilation as Bashar al-Assad.

Aleppo remains the most significant urban centre to have been captured by the anti-Assad rebels, most of whom will (by now) be strongly influenced by an Islamist world-view. Indeed, the most prominent fighting groups on the rebel side are overwhelmingly Islamist in their troop composition and beliefs, a sad marker of Western failures to support secular forces that led the anti-regime resistance in the incipient phases of the uprising.

Yet Aleppo remains too important to fail. Although rebel forces succeeded in capturing only half of the city – the western side remained firmly in the control of the regime – the symbolism of anti-Assad forces holding ground in Syria’s second city (which also served as the country’s economic hub) has buoyed the rebel movement.

Assad is more brazen and bullish than at any other point since eastern Aleppo fell into rebel hands in July 2012. That optimism is born of a strategy that has already worked in other parts of the country where the regime’s troops have slowly encircled rebel-held areas and then sealed them off. Nothing can leave, and nothing can enter. Once the ground forces seal off an area, an aerial campaign of barrel bombs and missile attacks from both Syrian and Russian fighter jets inevitably follows.

To get a sense of just how terrible the aerial campaign has been, consider that the United States accused the Russian air force of potential war crimes when a UN aid convoy was bombed just west of Aleppo last month. It was carrying food and medicines when it was hit. Since then, the UK and France have said that Russia’s bombardment of Aleppo amounts to a war crime.

Putin’s support has come as a boon to Assad ever since Russia formally entered the conflict in September 2015. Despite his administration already using Iranian forces and aligned groups such as the Lebanese Shia militia Hezbollah, rebels had continued to make significant gains throughout the early months of 2015. The most important of these was the capture of Idlib city, 40 miles from Aleppo, which presented Assad with two problems. The first was that it dented the official narrative of revanchist military successes by his forces. The ­second was that it handed the rebels power in a province adjoining Latakia Governorate in the west, where Syria’s Alawites are largely concentrated (Russia has an airbase in an area south-east of the city of Latakia). The Alawites are a heterodox Shia sect to which the Assad family belongs, and which forms the core of their support base.

Keen to reverse these gains – and others made elsewhere – Assad enlisted Putin, given Russia’s long-standing interests in, and ties to, Syria. The Kremlin has long regarded Syria as an important ally, and has served as the country’s main arms supplier for the past decade. There are important assets to preserve, too, such as the Russian naval base in the port city of Tartus on the Mediterranean, which was first established during the Soviet era.

For his part, Putin has felt emboldened by events. The world is changing – not just in the Middle East and North Africa, where the
contours of power continue to be recast, but also closer to home in Ukraine, where the pro-Russian president Viktor Yanukovych was overthrown in 2014.

The West is still haunted by the 2003 invasion of Iraq and has been reluctant to be drawn too deeply into the Syrian War. In 2013, the Assad regime used chemical weapons against its own people. This was a violation of President Barack Obama’s so-called red line against the use of chemical weapons, but no retaliatory action came and there was nothing to prevent the Kremlin from using force to shape events in Syria – as it had done in Ukraine.

All of this has marked a new phase of brutality in a conflict already noted for its barbarism. Civilians who avoid death from combined Russo-Syrian air assaults suffer under Assad’s strategy of “starve or submit”, in which supplies are withheld from besieged areas, slowly choking off those ­inside. It has been used to devastating effect against civilians in towns such as Madaya and in Daraya, on the outskirts of Damascus, both of which fell to government control after being sealed off from the outside world for several years. Such a strategy is not designed to deliver quick victories, however. Consider how the residents of Daraya defied Assad’s forces for four years before capitulating in August 2016.

Assad and his allies (Putin, Iran, Hezbollah) have decided to punish and brutalise, deliberately, civilian populations in rebel-held areas. To invert the famous aphorism attributed to Chairman Mao, they hope to dredge the sea in which the revolutionaries swim. And so, it is the 300,000 residents of eastern Aleppo who must suffer now.




It’s easy to lose track of precisely what is happening in the Syrian War as parcels of land swap hands between rebels and the regime. Assad’s forces first began encircling Aleppo at the start of July this year and succeeded in imposing a siege by the middle of that month, after cutting off the last of two rebel-controlled supply routes into the city. The first was the Castello Road, which leads from the town of Handarat into the north-western part of ­rebel-controlled territory. The second route, via the Ramouseh district (which led into the south-western end of the city), had already been sealed off.

The closure lasted for roughly four to five weeks before the rebels re-established access. Aleppo is too important for them, and the siege has forced various groups to work together in breaking it. The effort was led by Jaish al-Fateh (JaF, the “Army of Conquest”), an umbrella group and command structure for several of the most prominent jihadist and Islamist groups operating in northern Syria. JaF also co-ordinated the Idlib military campaigns. One of its key members is Jabhat Fateh al-Sham (JFS, “the Syrian Conquest Front”), which was previously known as Jabhat al-Nusra (JaN or “the Supporters’ Front”) and was recognised as al-Qaeda’s official chapter in Syria.

Several months before the regime began its assault on Aleppo, rebel groups in the north recognised the deteriorating situation there, stemming principally from Russian air strikes. As a result, al-Qaeda urged the various factions to merge and work together to counteract not just Assad, but also Putin. Even the global leader of al-Qaeda, Ayman al-Zawahiri, issued a speech last May titled “Go Forth to Syria”, in which he called on all fighting groups to unite in order to consolidate their control across the north. This opened the way at the end of July for Jabhat al-Nusra to declare that it was formally severing its links with al-Qaeda. It “rebranded” as Jabhat Fateh al-Sham.

There are two reasons for doing this. The first is to erode partisanship among the Islamist groups, forcing them to set aside differences and narrow their ambitions in favour of the greater goal – in this case, the breaking of the siege of Aleppo, while also deepening rebel control across the north. The second aim of rebranding is to win popular support by portraying themselves as fighting in the service of ordinary civilians.

Groups such as JFS and others are succeeding in both of these goals. Responding to the abandoned and assaulted residents of Aleppo, they have repeatedly demonstrated their commitment to alleviating the humanitarian crisis. Much of their messaging echoes this theme. The group’s English-language spokesman is Mostafa Mahamed, an Egyptian who previously lived in Australia. “[JFS] is deeply embedded in society, made up from the average Syrian people,” he explained on Twitter, after the group decoupled from al-Qaeda. “We will gladly lay down our lives before being forced into a situation that does not serve the people we are fighting for . . . jihad today is bigger than us, bigger than our differences.”

It is indisputable that this ethos of “fighting for the people” has endeared the group to civilians living in besieged areas – even when those civilians don’t necessarily agree with the full spectrum of its religious beliefs or political positions. That goodwill was only reinforced when the group helped break the siege of Aleppo (in which approximately 500 rebels were killed) in August, if only for a few days. Assad reasserted control within a week, and entrapped the residents again in the middle of that month. The rebels are now planning how to break the siege decisively, but have not yet launched a major counteroffensive.




A freelance American journalist and film-maker, Bilal Abdul Kareem, who has reported on rebel movements inside Syria more intimately than most, has found himself among those trapped inside eastern Aleppo since the siege was restored seven weeks ago. “We came here expecting a two- or three-day trip,” he told me during an interview over Skype.

Life inside is becoming insufferable for civilians, Abdul Kareem said; every building is potted and scarred by shrapnel damage. Those whose homes remain standing are the lucky ones. “Your day consists of nothing,” he said. “There’s no work, there’s no fuel, no industrial zone, no food to sell. ­People sit around and chit-chat, drink tea, and that’s all they do.”

Food supplies are already running low, with most people limiting themselves to basics of chickpeas and groats – crushed grains such as oats or wheat. Sealed off from the rest of the world, those inside preoccupy themselves with survival and wait for the next wave of attacks.

It is tempting to ask why the inhabitants of Aleppo did not flee when they had the chance. Indeed, the Assad regime routinely accuses the rebels of preventing civilians from leaving besieged areas, though there is no evidence to support this view. On 17 October Russia and the Syrian regime said they would halt their bombardment for eight hours on 20 October to allow rebels and civilians to evacuate the city.

In truth, what choice do the civilians have? Most do not trust Assad and they are therefore unwilling to move into regime-administered areas. The alternative is to become refugees, with all the uncertainties and trials associated with that. For instance, refugees have found themselves subject to sectarian violence in Lebanon, and they have few opportunities to find employment in Lebanon, Turkey or Jordan, the three countries where most of the fleeing Syrians have found shelter.

For them, merely to exist in rebel territory is an act of defiance, which is precisely why Assad’s forces make no effort to distinguish between combatants and civilians in rebel areas. To be present is a crime.

The effects of this have been devastating. A spokesman for the Syrian American Medical Society told Middle East Eye, an online news portal, that in July, Syrian and Russian jets had hit medical facilities in rebel-held territory every 17 hours.

Only a few hospitals and medical staff remain. The physical conditions are primitive and perilous. Doctors work in makeshift facilities – a former flat, a commercial garage – which makes them unable to provide anything beyond basic emergency care. In-patient facilities are non-existent, not just because of high demand from those newly injured in fresh attacks, but also from fear that the facility itself will be targeted. “People are literally shuffled out of the hospital with IV [intravenous drips] in their arms,” Abdul Kareem says.

The West’s indifference to all this – coupled with its occasional pious pronouncements and diplomatic dithering – has squandered any goodwill Washington might once have had among Syria’s beleaguered civilians. When Sergey Lavrov, Russia’s foreign minister, and John Kerry, the US secretary of state, agreed a ceasefire in September it lasted barely two days because they overlooked the fears of those trapped inside eastern Aleppo.

The deal had stated that no party would try to capture any new territory. That might seem reasonable enough but given that the ceasefire came into effect just days after Assad re-established the siege of Aleppo, those on the inside were being asked, in effect, to acquiesce to their own starvation.

Deprived of food and medication, no one trusted Assad to negotiate access in good faith, especially after he thwarted UN efforts to deliver aid. “People saw it as a conspiracy,” Abdul Kareem told me. Moreover, there were no significant groups inside eastern Aleppo that claimed to have accepted the terms of the ceasefire in the first place. Kerry had negotiated on their behalf without approval and without securing any humanitarian concessions.

“What planet are these people on?” Abdul Kareem asked. “[Do] they think people will turn on their protectors, for people who didn’t do them any good? They look to JFS and Ahrar [Ahrar al-Sham is one of the Islamist groups fighting in JAF]. Western intervention is pie in the sky.”

The rise of these reactionary rebels is a direct result of liberal elements not being strongly supported at any stage in the conflict. Left to fend for themselves, many have deserted their cause. Those who have persisted not only risk the constant threat of being killed by Russo-Syrian bombs, but are also at threat from jihadist elements operating in rebel areas. That much was clear when remnants of the secular opposition protested against the leader of JFS, Abu Mohammed al-Golani, in the southern Idlib town of Maarat al-Nouman earlier this year. Many of those who did were arrested by jihadists and intimidated into silence.

Whereas liberals are fragmented and frayed, the Islamist rebels continue to coalesce into an ever more coherent unit. The overwhelming might of Russian airpower has convinced them of the need to form a united front in order to pool their resources and co-ordinate their efforts. That is one of the reasons why a jihadist group called Jund al-Aqsa (“Soldiers of al-Aqsa”) announced early this month that it was disbanding and being absorbed into JFS.

Herein lies the real story of how Aleppo – and, indeed, Syria itself – has been delivered to the jihadists. A conspiracy of all the external parties has forged a menacing millenarian movement that is embedded in civil society and communities across the north. Whether Aleppo falls or not, the jihadists will endure.

Shiraz Maher is a contributing writer for the New Statesman and a member of the war studies department at King’s College London

Shiraz Maher is a contributing writer for the New Statesman and a senior research fellow at King’s College London’s International Centre for the Study of Radicalisation.

This article first appeared in the 20 October 2016 issue of the New Statesman, Brothers in blood