Rebuilding the Syrian Economy After a 14-Year Crisis

Syria witnessed a radical transformation with the change of regime on December 8, 2024, following the takeover of Damascus by opposition forces. Despite a sense of relief felt by some Syrians, the future remains uncertain amid extremely complex economic challenges, the roots of which trace back to the crisis that began in 2011. That crisis was driven by a combination of factors: a severe drought that lasted from 2006 to 2011, the worsening economic conditions, and what became known as the “Arab Spring,” which rapidly accelerated the country’s deterioration. Today, the economy faces enormous challenges, with GDP having collapsed by 84%, poverty rates exceeding 90%, and infrastructure suffering extensive damage.

In light of this, the purpose of this paper is to explore the Syrian people’s needs in terms of reconstruction and rebuilding, including the rehabilitation of infrastructure, improvement of basic services, revitalization of economic life, and the revival of key sectors such as tourism. It also aims to assess the current situation in Syria from these perspectives, identifying both challenges and available opportunities by answering key questions such as: What are the main challenges facing Syria? How can infrastructure and services be improved? What are the prospects for economic life and tourism in Syria?

It is important to note the difficulty of obtaining accurate figures and data, as statistics and indicators issued by international organizations (whether humanitarian, economic, or developmental) are often no more than estimates. Finding reliable or at least relatively accurate figures amid a vast number of often conflicting estimates remains one of the main challenges.

The Economic Landscape Following the Outbreak of the Syrian Crisis

Before 2011, the Syrian economy was relatively diversified. Although its performance was not exceptional, it was experiencing growth, according to Benjamin Fève, a researcher at Triangle, a research center in Lebanon, who noted, “The Syrian economy benefited from wheat, phosphate, and fuel exports, a small industrial base, rising real estate prices, and tourism revenues.”

However, the Syrian crisis left behind enormous economic and humanitarian consequences. The economy suffered a sharp decline in the years leading up to the regime change. According to economic and social indicators at the end of 2024, more than 90% of the population was living below the poverty line and the local currency (the Syrian pound) had lost nearly 99% of its value since the beginning of the crisis in 2011.

Moreover, at least 70% of Syrians relied on humanitarian aid to meet their basic needs amid rising living costs and a collapse in purchasing power. In addition to the economic collapse, the country experienced one of the worst displacement crises in modern history, with millions of Syrians displaced internally and externally. The average individual income also plummeted, with more than 90% of Syrians earning less than $2.15 a day. Nearly 13 million Syrians now face severe hunger due to the collapse of food systems and skyrocketing prices.

In addition to the repercussions of the crisis itself, Syria has also faced a series of successive shocks that have further exacerbated the country’s humanitarian and economic conditions. In 2019, the Lebanese economic crisis significantly impacted Syria due to the close financial and economic ties between the two countries. As a result, Syria implemented multiple exchange rates for different transactions in an effort to secure access to scarce foreign currency. While the official exchange rate stood at around 435 Syrian pounds to the U.S. dollar in early 2019, it surpassed 3,000 pounds per dollar on the parallel market by late 2020.

In 2021, a second drought struck the country, intensifying food and water shortages. Then, in 2022, the war in Ukraine triggered a global surge in food and fuel prices, severely affecting Syria, which relies heavily on imports. The situation further deteriorated in February 2023 when a devastating earthquake displaced approximately 600,000 Syrians. In 2024, the war between Israel and Hezbollah led to the influx of more than half a million refugees into Syria.

Overall, the Syrian crisis has resulted in immense economic devastation. A study conducted by the Syrian Center for Policy Research in 2015—jointly funded by the United Nations Development Programme (UNDP)—estimated the cost at $254.7 billion. This figure includes the loss in GDP due to the abrupt halt in the growth patterns that had prevailed prior to 2010, in addition to the estimated cost of physical destruction.

By 2020, this estimate had risen significantly to $442 billion, according to a study by the United Nations Economic and Social Commission for Western Asia. Of this amount, approximately $118 billion was attributed to the destruction of physical infrastructure, while $324 represented lost economic revenue. According to a UNDP report, “The Impact of the Conflict in Syria: a devastated economy, pervasive poverty and a challenging road ahead to social and economic recovery,” the total financial and economic cost of the conflict could reach $923 billion by the end of 2024.

At the same time, international support for the humanitarian response in Syria has declined, largely due to donor fatigue resulting from the prolonged and increasingly complex nature of the Syrian crisis. This reduction in support has been exacerbated by the international community’s preoccupation with other urgent humanitarian emergencies in Sudan, Gaza, and Ukraine. As a result, funding for the UN’s humanitarian plan for Syria has fallen significantly short—by the end of 2024, the aid fund had received only 28% of its estimated financial requirements. This shortfall has brought the country to the brink of a full-scale humanitarian collapse.

The Economic Landscape After the Regime Change

More than three months have passed since the regime change—a period too short to expect tangible results on the ground but long enough to grasp the complexities of the current reality and move beyond the initial emotional reactions to the change. The aftermath has brought with it new economic dynamics and emerging challenges, as evident in repeated observations across major Syrian cities. Among these are the hundreds of street stalls spread across sidewalks and roads, most selling smuggled goods from Turkey or items that entered the country through Idlib. These are low-cost, low-quality products that align with the extremely low purchasing power of Syrian citizens but are detrimental to the country’s formal merchants, whose struggles have now become even more severe.

One of the most striking observations on the streets of Damascus is the large number of money changers—both mobile exchangers and shops that have added currency exchange services to their regular business activities. These exchangers are willing to provide Syrian pounds in exchange for foreign currencies roughly 40% lower than the official rate set by the Central Bank of Syria. This phenomenon is highly unusual compared to other countries, where currency values typically collapse in the wake of coups, revolutions, or other major shocks.

The issue of the exchange rate is also closely linked to another visible scene: long queues of people waiting to withdraw their salaries or deposits from ATMs. Both public and private banks have imposed strict daily withdrawal limits. The daily cap does not exceed 200,000 Syrian pounds (equivalent to about $20), and in the best of cases may reach 500,000 pounds.

Moreover, car dealerships selling modern vehicles have become widespread, particularly those carrying license plates marked either “Al-Muharrar,” referring to opposition-held areas such as Idlib, Aleppo, and Azaz, or “Idlib - Experimental.” These cars are in high demand among Syrians due to their low prices, despite their frequent mechanical issues and the lack of any formal registration process or issuance of official documentation. There are now more alternative license plates on cars than the official Syrian government-issued ones.

In addition, vendors selling smuggled fuel—gas, gasoline, and mazut—sourced from Lebanon or northwestern Syria are ubiquitous along the roads. They sell their goods at prices lower than official gas stations, which are now almost deserted due to the significant price gap. For example, the official price of one liter of gasoline is $1.16, but payment is only accepted in Syrian pounds at an exchange rate arbitrarily set by the station. Meanwhile, the same liter of gasoline is sold by roadside vendors for just $1. (In Syria, 16 cents is a significant price gap.)

These observations are new to the Syrian streets and have spread in number after the change in the regime. However, in order to accurately and objectively describe the Syrian reality and determine what Syrians truly want in the economic domain, it is essential to deepen the understanding of the country’s economic and service reality. This is also the right time to begin posing critical questions and carefully evaluating the first steps taken by the transitional government in Syria before the window for real change begins to close.

Given the complexities and challenges posed by the ongoing crisis in Syria, it is understandable that a swift solution may not be possible. However, it is crucial that the transitional government implements a clear and effective plan that ensures progress in the medium term. Economic stability remains a key step in addressing broader issues and preventing potential public disturbances with unforeseeable consequences.

Challenges Facing the Syrian Economy

The Syrian economy faces major challenges. Some are old, others arose as a result of the crisis that began in 2011, and more than a few have started to emerge following the change in the regime. Partial solutions will not be enough after 14 years of conflict and destruction. Only comprehensive and pragmatic reforms supported by international participation can pave the way forward. While the Syrian economy has never been in a worse state since 2011, the roots of the crisis are deeper and more complex than just sanctions and blockades. Attempting to address it without conducting a thorough analysis of its roots will not be effective and will certainly not lead to practical solutions. Blaming the economic crisis solely on sanctions, war, and corruption—despite their undeniable impact—simplifies the situation and overlooks deeper complexities. Among the most important are the following six challenges.

- The Absence of an Economic Identity

The Syrian economy has suffered from a deep structural identity crisis that manifested in the absence of a clear developmental vision and the fluctuation between a restrictive socialist model and a distorted liberal one. Since Syria won its independence in 1941, its economic system has been unable to shape an integrated model capable of achieving a balance between development requirements and social justice needs, leading to chronic structural distortions. As a result, the Syrian economy became a hybrid entity, combining remnants of a centralized planning system with semi-capitalist practices that grew under corruption and nepotism.

This fundamental contradiction deprived the private sector of flexibility, limited its growth, and exacerbated its inability to achieve public-sector efficiency. It also failed to build a competitive productive base due to the fluctuation between selective openness and self-isolation. This structural crisis worsened during the past 14 years of the conflict, pushing the economy to rely on remittances from expatriates, humanitarian aid, an informal economy, networks of corruption and smuggling, and other activities that do not contribute to the GDP or foster economic growth.  

Today, Syria faces the challenge of redefining the identity of its national economy. It must either build an integrated developmental model capable of absorbing global transformations or it will continue with policies of dependency and fragility. This requires boldness in restructuring the tax system, industrial policy, legislative framework, and governance mechanisms.

Economic identity is not just a slogan, but a comprehensive system of policies and institutions that define a country’s position on the global economic map. While Syria stands at a crossroads today, it must either rediscover its economic self or continue with economic policies that are procedural and lack identity.

- Unifying the Fragmented Syrian Economy

The Syrian economy faces an extremely complex challenge represented by the unification of four independent economic regions that emerged during the years of crisis. Each of these regions has its own financial system, trade policies, and currency, which has created a sharp disparity in living standards and hindered real economic recovery.

Areas controlled by the Syrian government have relied on the Syrian pound, while northern regions under Turkish influence use the Turkish lira. Meanwhile, the Kurdish self-administration and the Syrian Salvation Government have implemented separate economic systems. This fragmentation has led to numerous difficulties in commercial transactions and financial transfers.

The problem is further exacerbated by the divergent protectionist trade policies among these regions, especially in terms of previously imposed restrictions on the flow of goods and the current lack of economic integration. This is particularly concerning given that a new elite of business owners and warlords who emerged during the crisis—operating outside the traditional sphere—may obstruct any efforts to unify the economy and shift it from a regional to a national framework. Additionally, the management of natural resources—especially oil fields controlled by the Syrian Democratic Forces—remains a fundamental point of contention that threatens any attempt to build a unified economic framework.

Unifying the Syrian economy represents a critical test for the transitional government, as it requires innovative solutions and strong political will to overcome deep divisions. Without the adoption of comprehensive economic reforms and the achievement of genuine political settlements, sustainable economic recovery will remain a distant goal—and thus prolong the suffering of the Syrian people.

In reality, this process demands fundamental reforms, including unifying the national currency, removing restrictive trade barriers, and adopting policies that support local production without wasting resources on ineffective subsidies. There must also be efforts to reconcile the interests of both the new and traditional economic elites and to reach a fair agreement on the distribution of natural resources revenues. Achieving this will not be possible without an active international role, particularly from the United States and other influential countries, to ensure the protection of Syrian Kurdish rights and their integration into the country’s economic and political structure—while also preventing armed factions from becoming an obstacle to stability.

- Drought

Agriculture has long been a cornerstone of Syria’s national economy, yet it now faces severe challenges due to increasing droughts and the worsening effects of climate change. Between 2006 and 2010, the country experienced a catastrophic drought that led to a collapse in agricultural production by up to 60%, mass livestock deaths, and the displacement of hundreds of thousands of farmers to urban areas.

Today, the sector faces compounded crises, including the deterioration of irrigation infrastructure—50% of which has been damaged—an increase in temperatures by 1.5°C, and an 18% decrease in rainfall. This has led to a decline in agriculture’s contribution to the GDP from 20% to just 8%. The crisis has been further exacerbated by a shortage of agricultural inputs and a whooping 300% increase in production costs, forcing more than half of the population to rely on food aid.

In the face of these challenges, there is an urgent need to rehabilitate Syria’s agricultural infrastructure and adopt modern irrigation techniques, in addition to developing early warning systems and cultivating drought-resistant crops. These measures are critical entry points for restoring food security and ensuring social stability in the post-crisis phase.

- Western Economic Sanctions
The economic sanctions imposed on Syria since 2011 represent one of the most significant obstacles to any effort of economic recovery. These sanctions, alongside the broader consequences of the crisis, have deepened the humanitarian situation and hindered reconstruction efforts. They are primarily imposed by the United States and the European Union, targeting vital sectors such as oil and gas, banking, and foreign investment.

These sanctions have effectively isolated Syria’s banking and financial sector from the global financial system, especially due to the U.S. “Caesar Act” Congress passed in 2020. This act has made it extremely difficult to transfer funds and import essential goods, including medicines and medical equipment.

The sanctions also contributed to the collapse of the oil sector, as the ban on Syrian oil exports reduced revenues by 90% compared to pre-2011 levels. This forced Damascus to rely on smuggling oil through intermediaries, which diminished returns and increased corruption. The sanctions also worsened the negative impact on the industrial and commercial sectors, which were already suffering from difficulties in importing raw materials and machinery due to restrictions on international transactions.

Although the sanctions are theoretically intended to exert political pressure, their real effects have primarily impacted the standard of living for ordinary civilians and obstructed reconstruction efforts. Exiting this impasse requires a multi-layered strategy that includes internal economic reform, smart regional alliances, and a realistic international dialogue. In the absence of such an approach, sanctions will continue to stand as a major obstacle to reviving Syria’s exhausted economy.

In the aftermath of the regime change, several regional initiatives emerged to support the Syrian economy. Turkey proposed providing electricity through floating power stations, while Qatar offered to cover public-sector salaries. Additionally, Syrian businesspeople and regional investors expressed readiness to finance reconstruction projects and the rehabilitation of vital infrastructure.

While these initiatives hold potential significance, their actual effectiveness remains contingent on the easing of international sanctions—especially those imposed by the United States. In January 2025, the Biden administration issued six-month sectoral exemptions under General License No. 24. In February 2025, the European Union announced the lifting of sanctions on the energy and transport sectors, four banks, Syrian Airlines, and reconstruction-related activities.

However, these steps have yet to result in tangible economic progress, and U.S. sanctions remain the decisive factor in shifting this equation.

Thus, a highly complex political dilemma emerges. On one hand, Syria needs economic stability as a fundamental condition for a successful political transition. On the other hand, sanctions remain a vital tool to pressure for comprehensive political reforms. However, the continued rigidity in applying sanctions without considering the deteriorating on-the-ground reality carries serious risks that could lead to the collapse of the entire transitional process.

- Smuggling

This challenge is one of the emerging features in the post-regime collapse phase. In areas that were previously under the control of the former regime, including major Syrian cities, radical economic transformations are occurring. Local productive institutions, traditional merchants, and industrialists are facing existential challenges due to the liberalization of imports and smuggling policies adopted by the transitional government. This liberalization came as a surprise, and although it could be justified by the need for a quick economic recovery, it has resulted in negative consequences for the local production and commercial base, which are likely to worsen in the short and medium terms.

In comparison, local production dominated the markets under the previous regime. Even smuggling was tightly controlled and confined to a small group closely connected to the regime. When these smuggled goods were available on the market, their prices were much higher than the purchasing power of Syrians. Therefore, once the regime changed, imported and smuggled goods—especially from Turkey—flooded the local market, putting local producers in an unfair competitive position. Field data indicates that more than half of medium- and small-sized industrial establishments suffer from marketing deficits and are selling their goods at significant losses, with some opting for temporary closure.

The first wave of imported goods, which included products that were previously scarce, such as food, cleaning materials, and cosmetics, sparked a varied social reaction. While it was initially welcomed, it quickly became clear that its positive impact was limited due to a shortage of cash liquidity and a reduction in purchasing power. Estimates indicate a 35% decrease in the cash turnover rate during the first three months of the transitional administration’s tenure.

Structurally, this policy has sparked widespread protests within economic circles, especially in the capital, Damascus, where traditional industrial elites feel deliberately marginalized in favor of the northern regions. Some personal interviews reveal that the majority of traders and business owners support the need for economic liberalization, but they stipulate that this should occur within a gradual plan that allows for a sufficient transitional period to restructure the production sector and the regulations governing imports and exports.

This issue takes on exceptional importance in strategic sectors such as the pharmaceutical industry, where local factories face a serious risk of closure this year if the current policy continues. Economic experts indicate that the success of any reconstruction plan depends on the transitional administration’s ability to strike a delicate balance between the requirements of economic openness and the need to protect the national production base, which will serve as a true test of its legitimacy and ability to lead the transitional phase.

- Currency Hoarding

Field data indicates a decrease in the prices of most consumer goods due to the drop in the exchange rate of the dollar from around 15,000 Syrian pounds per dollar before the regime change to about 10,000 pounds per dollar after the first 100 days of the transitional administration—except bread, for which subsidies were removed, causing its price to rise about tenfold. However, this decrease has not translated into an actual improvement in people’s purchasing power. Moreover, the country’s banking system suffers from severe liquidity constraints and a clear lag in adopting modern electronic payment methods.

Obtaining cash has become a daily dilemma that drains the time and patience of citizens who must spend long hours in bank queues to withdraw small amounts barely enough to meet basic needs, let alone fulfill the requirements of social and family events like Ramadan and Eid al-Fitr, which have added further pressures on Syrians. The hundreds of people standing in line in front of banks in Damascus to withdraw amounts not exceeding $15 serve as evidence of the depth of the currency crisis.

The Central Bank of Syria imposed strict withdrawal limits in December 2024 and, although they were described as temporary measures, they still exist today without any tangible improvement. Here, Syria’s continued reliance on Moscow for its paper currency needs stands out, due to Western sanctions that prevent international printing presses from working with Syrian monetary authorities. In early March 2025, the country received a shipment of new banknotes printed in Russia; the total value not disclosed.

This currency crisis reflects the depth of the structural challenges the transitional government faces. The decline of public trust in local banks makes citizens hesitate to deposit their savings for fear of difficulty in withdrawing them later. In addition to the continued reliance on Goznak, the Russian state printing press, for issuing the local currency, there is a lack of transparency in monetary policy with no accurate data being published about the circulating money supply, and the private sector is suffering from a liquidity shortage that hinders the payment of financial obligations and salaries.

The future of the paper currency raises many questions, especially regarding the fate of the 2,000 Syrian pound note that still bears the image of the deposed former president. Additionally, while the lifting of export restrictions is expected to have positive effects, it has also increased liquidity pressures on local companies are already suffering from a sharp decline in sales. Thus, these circumstances raise fundamental questions about the ability of the new monetary reforms to achieve the desired financial stability, given the exhausted banking infrastructure and ongoing external constraints.

In reality, what has been mentioned here is only a part of the economic challenges that Syria faces today. It is accompanied by an interconnected set of serious challenges that hinder any efforts for recovery. Among the most important is the collapse of the currency and hyperinflation; the destruction of infrastructure; the erosion of the middle class with the exacerbation of the class gap; the fuel crisis; the spread of smuggling and the informal economy; the displacement and refugee crisis with 6.7 million internally displaced people and 5.5 million refugees that has deprived the economy of skilled labor and expertise; and, lastly, the lack of trust in economic policies due to the failure of partial reforms and the absence of a comprehensive vision for recovery.

Therefore, while Syrians today may differ greatly in politics, they are unified when it comes to the economy. Every citizen needs an economy that provides them with at least the minimum standard of a decent life under a fair and inclusive economic system free from corruption and monopoly. In such a system, the country’s resources would be distributed across all regions, and Syria’s workforce and potential would be invested in sustainable projects that improve the standard of living and lay the foundation for a free and integrated Syrian economy.

Scenarios of the Syrian Economic Landscape

Economic priorities are interwoven and vary due to the multiplicity and complexity of challenges. But the future of Syria’s economy, which is closely linked to its political future, remains open to many divergent scenarios that range from the utmost optimistic to the utmost pessimistic, and they are determined by a set of influencing factors that include international sanctions, especially American ones; the full resumption of oil flow; achieving a comprehensive and inclusive political settlement; the amount and quality of international aid; and the success of internal economic reform programs.

- The Pessimistic Scenario (Worst Case)

The liquidity crisis and the deterioration of the Syrian pound continues in the short term due to the failure of monetary reforms and the lack of fruitful negotiations on the resumption of oil supplies between Damascus and the Kurdish self-administration. This leads to the deterioration of the industrial and agricultural sectors due to fuel and electricity shortages, while humanitarian aid continues to flow at insufficient levels. In the medium term, this results in the exacerbation of economic division between areas of influence, continued financial isolation of Syria due to U.S. sanctions, and the degradation of infrastructure to an irreparable extent, accompanied by an increase in secondary migration waves. As a result, Syria transforms into an economically failed state in the long term, fully dependent on external aid, with ongoing regional fragmentation of the economy and the loss of an entire generation of skilled labor.

- The Moderate Scenario (Realistic)

In the short term, there is a limited improvement in liquidity with the arrival of regional financial aid, a partial resumption of oil supplies under certain political conditions, the initiation of preliminary monetary and customs reforms, and a slight increase in funding by international organizations. In the medium term, there is a partial lifting of U.S. sanctions on specific sectors, small and medium-sized reconstruction projects begin with regional funding, gradual improvements in the electricity and transport sectors, and a limited return of displaced persons. In the long term, there is partial reintegration into the regional economy, along with slow growth in the private sector, and relative improvement in human development indicators despite continued structural challenges.

- The Optimistic Scenario (Best Case)

In the short term, a comprehensive political agreement leads to a gradual lifting of sanctions, a swift return of oil and energy supplies, a large package of international aid, and radical monetary and customs reforms. In the medium term, international banks resume operations in Syria, major reconstruction projects begin with rapid growth in productive sectors and a wide return of displaced persons and refugees. In the long term, Syria transforms into a regional logistics hub and enjoys sustainable economic growth, comprehensive infrastructure reform, and full integration into the global economy.

 While the moderate scenario presents a real opportunity for economic recovery, achieving the optimistic scenario requires national consensus between political will, internal forces and components, and favorable regional and international conditions. Syria’s long-term recovery will depend on its reintegration into the global economy through trade agreements, regional partnerships, and diplomatic engagement.

However, the monopolization of power in Syria and the failure to meet the international community’s expectations for political reform and transparency will prolong its economic crisis and complicate its political stability. The transitional government may navigate the spaces left open by sanctions, but comprehensive and sustainable development in the long term will not be possible without access to foreign capital and technology. Moreover, the time available to make economic progress is limited, threatening to plunge the country back into a spiral of violence.