Kazim AlamDecades of kleptocratic rule and a brutal civil war left Syria’s economy in tatters, with the GDP plummeting to a record low of $21 billion and more than 90 percent of Syrians dragged below the poverty line.
But cautious optimism is gradually returning to the war-ravaged country since the fall of the despotic Bashar al Assad, who was toppled in a lightning-quick offensive by opposition forces at the end of 2024.
Under the leadership of President Ahmed al Sharaa, the transitional government has concentrated its efforts on stabilising the economy, signalling a potential turning point for a country long plagued by corruption and conflict.
Regional powers like Türkiye are extending generous help for large-scale infrastructure projects, while international financial institutions have shown willingness to play their part in bringing the Syrian economy back from the dead.
“The most damaging sanctions have been lifted,” Richard Outzen, a Middle East expert associated with the Atlantic Council, tells TRT World.
Syria was subject to harsh sanctions that limited its ability to trade with the world. All banks, businesses and individuals that provided funding or assistance to the Assad regime were cast out of the global financial system, effectively pushing the entire country into complete economic isolation.
However, Outzen cautions that a return to full financial normalcy requires a reconstituted banking sector and transparent financial practices, conditions that barely exist in Syria after 14 years of intense civil war.
The al Sharaa government’s efforts to curb illicit payment networks, previously exploited under Assad, are a step in this direction. Outzen sees “massive commercial opportunities” in sectors such as energy, telecommunications, and agriculture, provided Syria can attract regional and Western firms to jumpstart job creation and tax revenue.
Legacy of devastation
Since the onset of the civil war in 2011, Syria’s economic foundations have been systematically eroded.
The conflict exacerbated a pre-existing kleptocratic system, where crony capitalists like Assad’s cousin Rami Makhlouf amassed wealth through monopolies in real estate, banking, and other sectors, while the broader population faced deepening poverty.
Illicit activities, including the Captagon drug trade, smuggling, and extortion, became financial lifelines for the regime, further entrenching a war economy that rewarded loyalists and warlords.
By 2023, the size of the economy had shrunk 85 percent compared to 2012. The Assad regime could not even pay adequate salaries to government workers. Average public-sector salaries in real terms dropped by 75 percent between 2012 and 2023. The drop in the subsidy budget was 83 percent over the same period.
According to Syria’s Foreign Minister Asaad al Shaibani, former civil servants have uncovered $30 billion in debt owed to Assad’s allies, mainly Iran and Russia, alongside “non-existent foreign reserves” at the central bank and a bloated public-sector payroll.
“The regime ran a closed socialist economy that neglected industries like agriculture and manufacturing,” al Shaibani says, pointing to the discovery of systemic corruption that hollowed out the nation’s coffers.
International support is proving critical to Syria’s recovery.
Last week, Damascus signed 12 agreements worth $14 billion, including a $4 billion deal with a consortium partly consisting of Turkish firms, to build a new airport and a $2 billion contract with the UAE’s national investment corporation for a subway system in the capital.
Julie Kozack, a spokesperson for the International Monetary Fund, says Syria requires “substantial international assistance” to rehabilitate its economy and rebuild essential institutions, like the finance ministry, central bank, and statistics agency.
An IMF delegation visited Damascus in June, the first by the Washington-based global lender since 2009. Kozack praised the Syrian staff at these institutions, saying they demonstrated “strong commitment and a solid understanding”.
A Marshall Plan for Syria?
The question of a large-scale economic aid programme akin to the Marshall Plan – a US-backed initiative that rehabilitated the economies of 17 European countries after World War II – has sparked debate among experts.
Outzen acknowledges that while Syria’s devastation is not as uniform as Germany’s in 1945, the country’s economic pillars have “suffered grievously”.
He suggests that a collaborative effort involving Türkiye, Gulf states, Europe, and Japan could fill the gap, with the US playing a facilitating role.
“There are more pockets and more hands that can help,” he says, pointing to relative global prosperity as a factor enabling regional investment.
Kadir Temiz, president of Ankara-based Center for Middle Eastern Studies, tells TRT World that Syria needs a “state-rebuilding programme” that balances economic and security priorities rather than a purely economic package like the Marshall Plan.
“As long as ethnicity and religion-based identity problems persist, investments and trade agreements fall apart,” Temiz warns, advocating for a strategy that addresses both economic recovery and social cohesion in post-Assad Syria.
The government’s initial steps – including ending subsidies on bread that reportedly involved “a lot of corruption” – have created some resentment as Damascus attempts to dismantle the rent-seeking model that defined Assad’s rule.
These decisions raised concerns about exacerbating hardship for a population already grappling with food insecurity and displacement.
Temiz cautions against revolutionary changes, noting that Syria’s socialist economic model, while flawed, supported a significant portion of the population.
“A step-by-step approach” should be implemented to avoid destabilising the country’s social fabric, he says.
Outzen, a self-described free-market proponent, counters that austerity measures are necessary to shift Syria away from a rent-seeking economy.
“You’re not going to need a bread subsidy if ExxonMobil is opening a gas pipeline and employing thousands,” he argues, emphasising the potential for private-sector investment to drive growth.
Zaki Mehchy, an associate fellow at Chatham House, tells TRT World that inclusivity and transparency are critical to ensuring that Syria does not revert to the crony capitalism of the Assad years.
An inclusive economic strategy that prioritises micro and small businesses and reaches all regions of the country is necessary to reshape the Syrian economy, he adds.
“You cannot focus only on Damascus. You need to adopt justice as a principle within any economic decision,” he says.
Urging the government to avoid opaque deals with “mysterious companies”, he says the al Sharaa government must engage transparently with Syrians on its economic decision-making processes.
The Levant corridor
Analysts point out that the possible revival of the 2005 Türkiye-Syria Free Trade Agreement offers a promising avenue for economic integration.
Temiz highlights its potential to signal Syria’s openness to regional and global markets, strengthen ties with Türkiye – which is already Damascus’s largest trade partner – and foster a ‘Levant Corridor’ that connects trade routes through Syria, Lebanon, and potentially Iraq.
“Türkiye will be the iron brother of Syria,” he says, envisioning a sustainable trade model that can attract broader regional connectivity projects.
The road ahead for Syria is fraught with challenges. For example, the al Sharaa government is expected to strike a delicate balance between prosecuting Assad-era elites and ensuring economic continuity.
Outzen suggests distinguishing between egregious perpetrators, who should face prosecution, and broader business elites who could contribute to recovery if aligned with international standards.
“Accountability is thorny,” he says, emphasising the need for a pragmatic approach to avoid further economic upheaval.
