Economy Of Syria

During the early years of its independence, Syria’s economy was predominantly agrarian, with agriculture serving as the cornerstone of economic activity and employment. The country’s fertile lands, particularly in the Euphrates River valley and the western coastal regions, supported the cultivation of a variety of crops such as wheat, barley, cotton, and fruits, which not only sustained domestic consumption but also contributed to export revenues. Rural communities formed the backbone of the economy, with a large proportion of the population engaged in farming and related agricultural industries. This reliance on agriculture shaped Syria’s economic structure, limiting industrial development and urbanization during the mid-20th century, as the government focused on land reforms and improving agricultural productivity to achieve food self-sufficiency and stimulate rural development. The Syrian economy underwent a profound transformation following the outbreak of the civil war in March 2011, which triggered a severe and sustained economic decline. The conflict disrupted key sectors including agriculture, industry, and trade, leading to widespread destruction of infrastructure, loss of human capital, and collapse of institutional frameworks essential for economic governance. International sanctions and the breakdown of trade routes further isolated Syria from global markets, exacerbating shortages of essential goods and inflationary pressures. The war caused massive displacement of populations, both internally and as refugees abroad, undermining labor markets and consumer demand. Economic output contracted sharply as industrial facilities were damaged or abandoned, agricultural production plummeted due to insecurity and landmine contamination, and the service sector faced immense challenges amid ongoing instability. The deterioration of the economy profoundly affected living standards, with poverty rates escalating and access to basic services becoming increasingly limited. As of June 2025, the information available on Syria’s economy requires significant updating to incorporate recent developments and newly accessible data. The protracted nature of the conflict, coupled with evolving geopolitical dynamics and intermittent ceasefires, has led to complex shifts in economic conditions across different regions of the country. Reconstruction efforts, albeit limited and uneven, have begun to take shape in government-controlled areas, while other territories remain under varying degrees of control by opposition groups or foreign actors, complicating comprehensive economic assessment. Additionally, changes in international relations, sanctions regimes, and humanitarian aid flows have influenced economic trajectories and recovery prospects. The availability of more recent statistical data, including updated figures on GDP, inflation, employment, and sectoral performance, is essential to provide an accurate and current portrayal of Syria’s economic landscape. Consequently, ongoing monitoring and revision of economic information are necessary to reflect the dynamic and multifaceted realities of Syria’s economy in the post-conflict context.

Since the establishment of the First Syrian Republic in 1946, the nation’s economy underwent numerous structural transformations and significant changes that shaped its developmental trajectory. The period following independence was marked by efforts to consolidate economic sovereignty while grappling with the legacies of colonial rule and regional instability. Syria’s economic landscape was characterized by a gradual transition from a primarily agrarian base toward a more diversified economy, although this process was uneven and punctuated by political upheavals and policy shifts. The nascent republic faced challenges in modernizing its infrastructure, expanding industrial capacity, and integrating its rural and urban economies, all of which influenced the pace and nature of economic growth in the decades that followed. During World War II, the presence of Allied forces in Syria served as an unexpected catalyst for commercial activity, stimulating Syrian commerce by opening new markets for agricultural products, textiles, and other locally manufactured goods. The stationing of troops and the logistical demands of the war effort created increased demand for foodstuffs and basic manufactured items, which Syrian producers sought to supply. This temporary boost in trade and production provided some relief to the Syrian economy, which had been constrained by limited industrial development and infrastructural bottlenecks. However, the wartime economic stimulation was largely circumstantial and did not translate into sustained economic prosperity, as the underlying structural deficiencies of the Syrian economy remained unaddressed. Despite the wartime commercial stimulus, Syria lacked the necessary infrastructure, capital resources, and institutional frameworks to achieve long-term economic growth during this period. The country’s transportation networks, including roads and railways, were underdeveloped, limiting the efficient movement of goods and labor. Industrial capacity was minimal and concentrated in a few urban centers, while access to credit and investment was constrained by a nascent financial sector. Furthermore, the Syrian economy was heavily dependent on agriculture, which itself was vulnerable to climatic variability and limited by traditional farming techniques. These factors combined to restrict the country’s ability to capitalize fully on the temporary economic opportunities presented during the war years. Agriculture played a central and defining role in the Syrian economy throughout the mid-20th century, serving as both the primary source of livelihood for the majority of the population and a catalyst for industrial expansion. The export of agricultural commodities such as cotton, cereals, and tobacco generated profits that were often reinvested by landowners into agroindustrial ventures and related urban enterprises. This reinvestment helped to stimulate the growth of processing industries, including textile manufacturing and food processing, which were closely linked to the agricultural sector. The interdependence between agriculture and industry fostered a degree of economic diversification, although the benefits of this growth were unevenly distributed across social and geographic lines. The rural population, which constituted a significant portion of Syria’s demographic makeup, primarily worked under land tenure and sharecropping systems that limited their economic gains from the agriculturally driven growth experienced in the 1950s. Large landowners controlled substantial tracts of arable land, while tenant farmers and sharecroppers had limited rights and received only a small share of the agricultural output. This system perpetuated rural poverty and inequality, as the majority of agricultural workers remained economically marginalized despite the expansion of agricultural exports and agroindustrial development. The persistence of traditional landholding patterns and limited agrarian reform efforts constrained the potential for broad-based rural development during this period. Syria’s brief political union with Egypt from 1958 to 1961, known as the United Arab Republic (UAR), alongside the rise of the Baath Party as the dominant political force in the 1960s, brought about significant alterations in the country’s economic orientation and development strategy. The UAR period was marked by attempts to integrate the economies of Syria and Egypt, with a focus on central planning and socialist-inspired policies. Although the union was short-lived, it introduced new ideas about state-led economic development, industrialization, and land reform that influenced subsequent Syrian economic policy. Following the dissolution of the UAR, the Baath Party’s ascendancy reinforced these trends, emphasizing state control over key sectors, nationalization of industries, and efforts to reduce rural inequality through agrarian reform. These political developments reoriented Syria’s economy toward a model that sought to balance socialist principles with pragmatic considerations of economic growth and social equity. The historical development of Syria’s real GDP per capita since 1820 reflects the profound economic transformations and structural shifts that the country experienced over nearly two centuries. Early in the 19th century, Syria’s economy was predominantly agrarian and subsistence-based, with limited integration into global markets. The gradual expansion of agricultural exports and the introduction of modest industrial activities in the late Ottoman and French Mandate periods laid the groundwork for economic modernization. Post-independence, fluctuations in GDP per capita mirrored the political instability, policy shifts, and external shocks that Syria faced, including the impact of World War II, the UAR experiment, and the Baathist economic reforms. Over time, the interplay between agriculture, industry, and state intervention shaped the contours of Syria’s economic growth, with real GDP per capita serving as a quantitative indicator of these evolving dynamics.

By the mid-1960s, Syria’s economic policy had decisively embraced a socialist orientation, marked by extensive government intervention in both agriculture and industry. This shift was embodied in comprehensive land reform programs that sought to redistribute agricultural land from large landowners to peasant farmers, thereby aiming to reduce rural inequality and increase agricultural productivity. Concurrently, the Syrian government undertook widespread nationalization of major industries, including banking, insurance, and key manufacturing sectors, as well as foreign investments that had previously dominated the economy. These measures were intended to consolidate state control over the economy, reduce foreign influence, and direct resources toward national development goals. The nationalization policies often targeted foreign-owned enterprises, reflecting a broader trend of economic nationalism and a desire to assert sovereignty over Syria’s economic assets. The state’s increasing control over economic decision-making was further reinforced through the establishment of centralized planning mechanisms and stringent regulation of commercial activities. The government implemented multi-year development plans designed to coordinate investment, production, and distribution across various sectors, thereby attempting to align economic output with national priorities. However, this centralization and regulatory oversight led to unintended consequences, including a significant exodus of skilled workers, experienced administrators, and private capital. Many professionals and entrepreneurs, disillusioned by the restrictive economic environment and uncertain property rights, chose to emigrate or withdraw from active economic participation. This brain drain and capital flight weakened the private sector’s capacity and posed challenges to efficient economic management, even as the state sought to expand its role. Political instability and upheavals throughout the 1960s and 1970s further eroded the confidence of traditional economic actors such as landowners, merchants, and industrialists. Frequent changes in government, coupled with ideological shifts toward socialism and Arab nationalism, created an unpredictable business environment that discouraged private investment. Despite these challenges, the Syrian state managed to execute large-scale development projects aimed at modernizing the country’s industrial base, enhancing agricultural output, and improving infrastructure. These initiatives included the construction of factories, expansion of irrigation networks, and development of transportation systems, reflecting the government’s commitment to economic modernization and self-sufficiency. The state’s ability to mobilize resources for these projects demonstrated a degree of administrative capacity and political will, even in the face of social and economic disruption. During the 1970s, Syria experienced notably high rates of economic growth, a phenomenon partly attributable to the dramatic increase in world oil prices following the 1973 Arab-Israeli War. The quadrupling of oil prices between 1973 and 1974 significantly enhanced the revenues generated by Syria’s domestic oil refineries, which, although modest compared to major oil-producing neighbors, became an important source of foreign exchange and government income. This windfall allowed the government to finance ambitious development programs and reduce reliance on external borrowing. The surge in oil revenues coincided with a broader rise in prices for Syria’s agricultural exports, including cotton and cereals, further bolstering the country’s trade balance and fiscal position. These favorable external conditions provided a crucial impetus for Syria’s economic expansion during the decade. In addition to the benefits derived from higher commodity prices, Syria’s economic growth in the 1970s was supported by cautious economic liberalization measures implemented by the government. While maintaining a dominant role for the public sector, the state introduced policies that allowed for limited private sector activity and foreign investment, particularly in areas such as trade and services. These reforms aimed to stimulate economic dynamism and attract capital without relinquishing overall state control. The combination of increased export earnings and selective liberalization created a more favorable environment for growth and diversification, enabling the economy to expand beyond its traditional agrarian base. The economic boom of the 1970s was further underpinned by substantial remittances sent home by Syrians working in the oil-rich Arab states of the Persian Gulf. The rapid development of countries such as Saudi Arabia, Kuwait, and the United Arab Emirates generated a demand for labor, attracting thousands of Syrian workers who contributed significantly to household incomes through remittance flows. These funds increased domestic consumption and investment, providing an important source of foreign currency and helping to stabilize the balance of payments. Moreover, Syria benefited from increased levels of Arab and other foreign aid during this period, with financial assistance from Gulf states, the Soviet Union, and other allies playing a critical role in supporting development projects and budgetary needs. By the end of the 1970s, the Syrian economy had undergone a substantial structural transformation, shifting from a predominantly traditional agrarian economy to one increasingly dominated by the service, industrial, and commercial sectors. The expansion of manufacturing industries, growth of urban centers, and development of trade and services reflected the success of state-led industrialization efforts and changing patterns of employment and production. This transition marked a significant departure from the pre-1960s economic model, which had relied heavily on agriculture as the primary source of income and employment. The diversification of the economy was intended to reduce vulnerability to external shocks and lay the foundation for sustained development. Massive government expenditures were directed toward the construction and improvement of critical infrastructure, which played a vital role in supporting economic growth and improving living standards. Investments were made in irrigation systems to enhance agricultural productivity and mitigate the effects of drought and water scarcity. The expansion of electricity generation and distribution networks facilitated industrial development and rural electrification, while improvements in water supply systems contributed to public health and sanitation. Road construction projects enhanced connectivity between urban and rural areas, promoting trade and mobility. Additionally, the government prioritized the expansion of health services and education, particularly in rural regions, aiming to reduce disparities and foster human capital development. The establishment of irrigation plants and other agricultural facilities further supported modernization efforts and increased prosperity across the country. Despite these advances, the Syrian economy remained heavily dependent on foreign aid and grants to finance its growing budgetary and trade deficits. The ambitious development programs and expanding public sector expenditures outpaced domestic revenue generation, necessitating continued reliance on external financial support. This dependency reflected structural weaknesses in the economy, including limited export diversification and low levels of domestic savings. Foreign aid, often tied to geopolitical considerations and alliances, provided essential resources for sustaining government spending and investment but also exposed the economy to external vulnerabilities. Syria’s geopolitical position as a front-line state in the ongoing Arab-Israeli conflict compounded its economic challenges by necessitating substantial defense expenditures. The persistent state of military readiness and periodic hostilities required significant allocation of resources to defense, diverting funds from social and economic development. This strategic vulnerability made Syria reliant on transfers of aid from fellow Arab states, which sought to support the country’s military and political objectives. Additionally, Syria received considerable assistance from the Soviet Union, its principal ally during the Cold War, which supplied military equipment, technical expertise, and economic aid. The interplay of regional conflict and international alliances shaped Syria’s economic trajectory, intertwining security imperatives with development policies throughout the 1960s and 1970s.

By the mid-1980s, Syria’s economic environment underwent a marked transformation, shifting from a period characterized by relative prosperity to one dominated by austerity and economic retrenchment. This shift was precipitated by a confluence of adverse factors that collectively undermined the foundations of the country’s earlier economic boom. Central among these was the precipitous decline in world oil prices, which had a profound impact on Syria’s export revenues. As a modest oil producer, Syria had benefited from elevated oil prices during the 1970s and early 1980s, which bolstered government income and foreign exchange reserves. However, with the rapid fall in global oil prices, export earnings contracted sharply, depriving the state of critical financial resources needed to sustain public spending and economic growth. Compounding the decline in oil revenues, agricultural production in Syria suffered significantly due to severe drought conditions that afflicted the region during this period. The drought not only reduced crop yields but also strained rural livelihoods, which were heavily dependent on agriculture. This environmental setback diminished the sector’s contribution to the national economy and exacerbated food security concerns. The agricultural downturn was particularly damaging given the sector’s role in providing employment and raw materials for agro-based industries, thereby creating ripple effects throughout the broader economy. Simultaneously, worker remittances, which had been a vital source of foreign currency inflows, also experienced a notable decline. Many Syrian expatriates, particularly those working in the Gulf states, faced economic difficulties as oil-producing countries implemented austerity measures and reduced labor imports in response to their own economic challenges. The contraction in remittances further weakened Syria’s external financial position, limiting the availability of foreign exchange necessary for imports and investment. The reduction in Arab aid constituted another significant blow to Syria’s economic stability. During the early 1980s, Syria had received substantial financial assistance from oil-rich Arab states, which helped to finance development projects and budget deficits. However, the economic retrenchment in these donor countries, driven by falling oil revenues, led to a sharp decrease in aid flows. Moreover, Syria’s political alignment during the Iran-Iraq War, particularly its support for Iran, alienated some Arab states and contributed to the curtailment of financial assistance. This geopolitical dimension of the crisis underscored the interconnectedness of Syria’s economic fortunes with regional political dynamics. The cumulative effect of these adverse developments was reflected in a significant contraction of the Syrian economy. Between 1982 and 1989, real per capita gross domestic product (GDP) declined by approximately 22 percent, signaling a substantial reduction in the average economic well-being of the population. This decline represented one of the most severe economic downturns in Syria’s modern history and highlighted the depth of the crisis confronting the country. In response to the deteriorating economic conditions, the Syrian government undertook a series of austerity measures aimed at stabilizing the fiscal situation and restoring economic balance. These measures included sharp reductions in government spending, particularly on subsidies and public sector wages, as well as stringent cutbacks on imports to conserve foreign exchange reserves. The austerity policies reflected a recognition of the need to curb budget deficits and reduce dependence on external financing, albeit at the cost of slowing economic activity and increasing social hardship. Alongside fiscal tightening, the government sought to stimulate economic recovery by encouraging greater participation of the private sector and attracting foreign investment. This represented a cautious shift from the predominantly state-controlled economic model toward a more mixed economy, with the aim of enhancing efficiency, generating employment, and diversifying sources of growth. Efforts to liberalize certain sectors and improve the investment climate were part of this broader strategy to revitalize the economy and reduce the burden on public finances. To complement these economic reforms, an anticorruption campaign was launched targeting smugglers and black-market money changers, who were perceived as undermining the formal economy and exacerbating financial instability. The campaign aimed to strengthen economic governance by curbing illicit activities that distorted market mechanisms, drained scarce foreign exchange, and eroded public trust in economic institutions. By addressing these informal economic practices, the government hoped to improve resource allocation and enhance the effectiveness of its austerity measures. Despite these initiatives, Syria’s economic recovery was hampered by the continuation of massive defense expenditures, which absorbed a significant portion of the country’s financial resources. The ongoing regional conflicts and security concerns necessitated high military spending, diverting funds away from productive investments in infrastructure, industry, and social services. This persistent allocation of resources to defense constrained the government’s ability to implement comprehensive economic reforms and invest in long-term development priorities. By the late 1980s, the cumulative impact of these challenges manifested in frequent spot shortages of basic commodities across the country. These shortages reflected underlying difficulties in supply chains and production capacities, which were exacerbated by the austerity measures and economic disruptions. Consumers faced intermittent scarcities of essential goods, contributing to public dissatisfaction and social tensions. Industrial production during this period operated well below its potential capacity, hindered by structural inefficiencies and recurrent power outages that disrupted manufacturing activities. The unreliable electricity supply not only reduced output but also increased production costs, undermining the competitiveness of Syrian industries. These operational challenges highlighted the broader infrastructural deficiencies that constrained economic performance. Financial instability was further aggravated by a sharp decline in foreign exchange reserves, which limited the government’s ability to finance imports and service external debts. The depletion of reserves was a direct consequence of reduced export earnings, declining remittances, and diminished foreign aid. This erosion of financial buffers heightened vulnerability to external shocks and complicated macroeconomic management. The trade deficit widened significantly during the decade, reflecting the imbalance between imports and exports. The growing deficit placed additional strain on the country’s balance of payments, necessitating further adjustments in economic policy and foreign borrowing. The persistent external imbalance underscored the structural challenges facing the Syrian economy, including limited export diversification and dependence on imported goods. Real GDP growth slowed markedly as the decade progressed, with economic difficulties compounding and undermining prospects for recovery. The slowdown was indicative of the cumulative effects of declining investment, reduced consumer demand, and structural inefficiencies. This sluggish growth trajectory contrasted sharply with the expansion experienced in earlier decades and underscored the need for substantive policy changes. Although the Syrian government introduced limited reforms aimed at addressing the escalating economic crisis, these measures were insufficient to reverse the downward trend. The severity and complexity of Syria’s economic problems necessitated a fundamentally restructured economic policy framework to restore stability and promote sustainable growth. This recognition set the stage for more comprehensive reforms in subsequent years, as policymakers grappled with the imperative of transforming the country’s economic model to better respond to internal and external challenges.

In 1990, the government of Hafez al-Assad initiated a series of economic reforms aimed at liberalizing Syria’s economy, marking a significant shift from the strict state-controlled model that had predominated since the Ba’ath Party’s rise to power. These reforms sought to introduce market-oriented policies, encourage private sector participation, and reduce the dominance of the public sector in economic activities. Despite these efforts, the Syrian economy remained highly regulated throughout the 1990s and into the early 2000s, with the state maintaining substantial control over key industries, foreign trade, and investment. The reforms were implemented gradually and cautiously, reflecting the regime’s desire to maintain political stability and control while attempting to stimulate economic growth and integration with the global economy. During the 1990s and early 2000s, Syria experienced a period of relatively strong economic growth, supported by both the initial liberalization measures and favorable external conditions. The country’s gross domestic product (GDP) expanded steadily, contributing to improvements in living standards and economic indicators. By 2010, Syria’s per capita GDP had reached approximately US$4,058, reflecting the gains made over two decades of economic development. This growth was driven by a combination of factors, including increased agricultural productivity, oil exports, and the gradual expansion of private enterprise. However, the growth was uneven and accompanied by persistent structural challenges, such as high unemployment and regional disparities. Reliable and authoritative GDP data for Syria became unavailable after 2012, coinciding with the outbreak of the Syrian civil war. The conflict severely disrupted economic activities, destroyed infrastructure, and displaced millions of people, making it impossible to produce accurate and comprehensive economic statistics. The war led to a dramatic contraction of the economy, with widespread damage to productive sectors and a collapse in public services. Consequently, official economic data ceased to be published regularly, and international organizations have had to rely on estimates and proxy indicators to assess the state of Syria’s economy during the ongoing conflict. When Bashar al-Assad assumed the presidency in 2000 following the death of his father, he placed a strong emphasis on modernizing and opening the Syrian economy. His administration prioritized reforms aimed at transforming the regulatory environment to foster a more dynamic industrial base and stimulate private sector growth. Key objectives included removing bureaucratic obstacles that hindered investment, expanding job opportunities to address high unemployment, and improving the quality of human capital through better education and training programs. Additionally, the government sought to promote the adoption of information technology as a means to enhance productivity and integrate Syria into the global digital economy. These priorities reflected a shift towards neoliberal economic policies, with an increased focus on market mechanisms and private enterprise as engines of growth. The neoliberal reforms implemented under Bashar al-Assad led to tangible increases in trade volumes and a revitalization of the private sector, which had previously been marginalized under the state-dominated economic model. The expansion of private businesses and the easing of restrictions on foreign investment contributed to a more diversified economic landscape. However, these reforms were accompanied by a number of adverse social and economic consequences. Economic inequality widened significantly, as the benefits of growth were unevenly distributed, often favoring urban elites and those with political connections. Public services, including healthcare and education, experienced a decline in quality, partly due to reduced state funding and increased privatization. Corruption also became more pervasive, undermining public trust and exacerbating social grievances. These negative outcomes fueled discontent among various segments of the population and laid the groundwork for social unrest. The cumulative impact of these economic and social challenges played a significant role in the outbreak of protests in 2011, which eventually escalated into the Syrian civil war. Public frustration with rising inequality, unemployment, and deteriorating public services intersected with broader demands for political reform and greater freedoms. The economic grievances were particularly acute in rural areas and among marginalized communities, where the effects of neoliberal policies were felt most harshly. The protests initially called for economic justice and political accountability but quickly evolved into a widespread movement challenging the Assad regime’s authority. In February 2011, the Syrian Agricultural Workers Union issued a public criticism of the state’s economic management, highlighting the detrimental effects of policy decisions on the agricultural sector. The union specifically condemned the removal of input subsidies, which had previously helped farmers manage costs related to seeds, fertilizers, and irrigation. This policy change, combined with poor state planning and mismanagement, exacerbated the impact of a severe drought that had struck Syria in preceding years. The drought had already inflicted significant damage on agricultural productivity, and the withdrawal of subsidies further strained farmers’ ability to sustain their livelihoods. The union’s statement underscored the vulnerability of rural populations and the failure of government policies to mitigate the crisis, contributing to the broader narrative of economic hardship fueling social unrest. Before the onset of the civil war, agriculture and oil constituted the two main pillars of the Syrian economy, together accounting for roughly half of the country’s GDP. Agriculture was a particularly vital sector, not only for its economic contribution but also for its role as a major source of employment. It accounted for approximately 26% of GDP and employed about 25% of the total labor force, reflecting the sector’s importance to rural livelihoods and food security. The agricultural sector included the cultivation of cereals, cotton, fruits, and vegetables, supporting both domestic consumption and export markets. Oil production, meanwhile, provided critical revenues for the government budget and foreign exchange earnings, underpinning public spending and economic stability. However, the agricultural sector faced significant challenges due to poor climatic conditions and a severe drought that struck Syria in the late 2000s. These adverse environmental factors caused substantial reductions in crop yields and livestock productivity, leading to a decline in agriculture’s share of GDP. According to preliminary data from Syria’s Central Bureau of Statistics, the sector’s contribution to GDP fell to about 17% in 2008, down from 20.4% in 2007. This sharp contraction reflected the severity of the drought’s impact and underscored the sector’s vulnerability to climatic variability. The decline in agricultural output had ripple effects throughout the economy, affecting rural incomes, food prices, and overall economic growth. Despite a decline in oil production during this period, Syria benefited from higher crude oil prices on international markets, which helped offset losses in output volume. The increased prices boosted budgetary revenues and export receipts, providing the government with much-needed financial resources. These revenues were crucial for sustaining public expenditures and financing development projects amid other economic challenges. Nonetheless, the reliance on oil revenues also exposed the Syrian economy to fluctuations in global energy markets, contributing to its overall economic fragility in the years leading up to the civil war.

Since the outbreak of the Syrian Civil War in 2011, the country’s economy has been profoundly affected by a wide array of economic sanctions imposed by numerous international actors. These sanctions have significantly restricted Syria’s ability to engage in trade and financial transactions with a broad coalition of countries and organizations. Among the entities imposing sanctions were the Arab League, which took collective measures early in the conflict, as well as individual countries including Australia, Canada, and the European Union. Within the EU, specific member states such as Albania, Iceland, Liechtenstein, Moldova, Montenegro, North Macedonia, Norway, Serbia, and Switzerland also enacted their own sanctions regimes targeting Syria. Beyond Europe, sanctions were extended by Georgia, Japan, South Korea, Taiwan, Turkey, and the United States. These measures encompassed prohibitions on trade in various goods, restrictions on financial dealings, and limitations on investments, all aimed at exerting pressure on the Syrian government and its affiliates. The cumulative effect of these sanctions was to isolate Syria economically, severely constraining its access to international markets and financial systems. The scope and intensity of sanctions against Syria were further escalated by the United States with the enactment of the Caesar Syria Civilian Protection Act, which came into force in June 2020. This legislation represented a significant tightening of economic restrictions, targeting not only the Syrian government but also foreign entities and individuals who engaged in business with the regime. The Caesar Act introduced extraterritorial sanctions, threatening penalties against third-party companies and countries that maintained commercial relations with the Syrian government, particularly in sectors such as oil, construction, and military supplies. By expanding the reach of sanctions beyond Syria’s borders, the act aimed to curtail the regime’s financial resources and military capabilities, thereby increasing economic pressure in an effort to influence political outcomes. The implementation of the Caesar Act compounded the economic challenges faced by Syria, further limiting its ability to recover from the devastation wrought by years of civil war. The civil war itself inflicted catastrophic damage on Syria’s economy, infrastructure, and population. The extensive destruction and displacement caused by the conflict devastated the country’s economic foundations. By the end of 2013, the United Nations estimated the total economic damage resulting from the conflict at approximately $143 billion. This figure accounted for the widespread destruction of urban centers, industrial facilities, agricultural land, and critical infrastructure such as roads, bridges, and utilities. The scale of damage was unprecedented in Syria’s modern history and reflected the intensity and duration of the hostilities. The conflict also precipitated massive population displacement, both internally and externally, which disrupted labor markets, reduced domestic demand, and strained social services. The economic dislocation contributed to a sharp contraction in economic output and a collapse in public revenues, further exacerbating the country’s fiscal crisis. By 2018, the World Bank provided a detailed assessment of the war’s impact on Syria’s physical infrastructure, reporting that approximately one-third of the country’s housing stock had been destroyed or severely damaged. The destruction extended beyond residential buildings to critical public facilities, with half of Syria’s health and education infrastructure rendered inoperative or destroyed. Hospitals, clinics, schools, and universities suffered from bombardments, neglect, and looting, severely impairing access to essential services for millions of Syrians. The loss of educational and healthcare facilities not only affected immediate welfare but also undermined long-term human capital development, posing significant challenges to post-conflict recovery efforts. The widespread devastation of infrastructure highlighted the profound humanitarian and economic toll of the conflict, demonstrating the extensive barriers to reconstruction and development. The World Bank also estimated the cumulative economic losses sustained by Syria during the initial years of the civil war, calculating that from 2011 to 2016, the country’s gross domestic product (GDP) contracted by an estimated $226 billion. This staggering figure underscored the severe economic disruption caused by the conflict, including the collapse of key sectors such as manufacturing, agriculture, and services. The decline in GDP reflected not only physical destruction but also the breakdown of institutions, loss of human capital, and the erosion of investor confidence. The prolonged conflict led to a sharp decline in production capacity and export revenues, while increasing military expenditures and humanitarian costs placed additional burdens on the economy. The cumulative GDP loss represented a significant setback to Syria’s economic development, reversing years of progress and deepening poverty and unemployment. One of the most visible economic consequences of the civil war was the onset of conflict-related hyperinflation, which severely eroded the purchasing power of Syrian citizens. The annual inflation rate soared to become one of the highest globally during the conflict period, driven by a combination of factors including currency depreciation, supply chain disruptions, and scarcity of goods. Inflationary pressures were exacerbated by the sanctions regime, which limited Syria’s access to foreign currency and imports, thereby reducing the availability of essential commodities and driving up prices. The hyperinflation undermined economic stability, eroded savings, and increased the cost of living, disproportionately affecting vulnerable populations and contributing to widespread economic hardship. The Syrian pound, the national currency, experienced a dramatic and sustained devaluation throughout the conflict. Prior to the 2011 uprising, the exchange rate was approximately LS 47 to the US dollar, reflecting relative currency stability. However, by mid-2020, the Syrian pound had plummeted to over LS 3,000 to the dollar, signaling a severe economic downturn and loss of confidence in the national currency. This precipitous decline was driven by factors such as diminished foreign exchange reserves, disrupted trade flows, and the impact of international sanctions. The devaluation intensified inflationary pressures and undermined the ability of the government to finance imports and public expenditures. The rapid depreciation of the currency also complicated economic planning and contributed to increased uncertainty in domestic markets. The collapse of the Syrian pound and the resulting inflation had profound effects on the availability and affordability of basic goods. Prices for staple items soared, placing essential commodities beyond the reach of many Syrians. The market experienced shortages as merchants and the public struggled to cope with the escalating cost of living and the uncertainty of supply. In some cases, staple goods disappeared from the market altogether, either due to hoarding, disrupted supply chains, or the inability of consumers to afford them. This scarcity contributed to worsening humanitarian conditions and increased reliance on aid and informal markets. The economic hardship caused by hyperinflation and currency devaluation became a defining feature of daily life for much of the Syrian population during the conflict years. In 2022, Syria took a significant step toward economic recovery by joining the Chinese Belt and Road Initiative (BRI), a global infrastructure development strategy aimed at enhancing regional connectivity and economic integration. This strategic move was expected to assist in rebuilding Syria’s war-damaged infrastructure, including transportation networks, energy systems, and industrial facilities. Participation in the BRI offered the prospect of attracting Chinese investment and technical expertise to support reconstruction efforts, potentially revitalizing key sectors of the economy. The initiative also symbolized Syria’s intention to diversify its international partnerships and reduce economic isolation. Engagement with the BRI represented a critical component of Syria’s long-term strategy to revive its economy and restore stability after years of conflict. Following the conclusion of Bashar al-Assad’s regime and the civil war, the interim Syrian government undertook significant institutional reforms to facilitate economic recovery and modernization. On December 30, 2024, Maysaa Sabreen was appointed as the governor of the Central Bank of Syria, marking a historic milestone as the first woman to hold this position in the country’s history. Her appointment signaled a potential shift toward more inclusive governance and economic management. As governor, Sabreen was expected to play a central role in stabilizing the national currency, managing monetary policy, and overseeing financial sector reforms critical to economic reconstruction. This leadership change reflected broader efforts to reform Syria’s economic institutions in the post-conflict period. Prior to Sabreen’s appointment, on December 10, 2024, Basel Abdul Hannan was named Minister of the Economy in the interim government. In this capacity, he announced plans to implement comprehensive market liberalization reforms aimed at dismantling the existing import-export control system, which had been characterized by heavy state intervention and bureaucratic restrictions. Abdul Hannan’s reform agenda sought to transition Syria toward a free-market economic model, encouraging private sector growth, increasing trade openness, and attracting foreign investment. These reforms were viewed as essential to revitalizing economic activity, improving efficiency, and integrating Syria into the global economy. The minister’s policy direction indicated a clear departure from the centralized economic controls that had dominated Syria’s economy during the conflict years. During a meeting with the Damascus Chambers of Commerce, Minister Basel Abdul Hannan elaborated on his intentions to remove import restrictions and enable registered businesses to engage in freer trade. This policy shift was designed to reduce barriers to commerce, stimulate entrepreneurship, and foster a more dynamic and competitive economic environment. By empowering the private sector and facilitating access to international markets, the government aimed to accelerate economic recovery and create employment opportunities. The meeting underscored the government’s commitment to economic openness and reform, signaling a new chapter in Syria’s economic policy framework focused on liberalization and market-driven growth. These initiatives represented a critical foundation for rebuilding Syria’s economy after years of conflict and isolation.

During the 1960s, the Syrian government undertook a sweeping transformation of the country’s economic landscape by nationalizing most major enterprises in accordance with socialist principles. This policy shift was driven by a desire to address entrenched regional and class disparities that had persisted under previous economic arrangements. The nationalization campaign encompassed a broad array of sectors, including banking, industry, and agriculture, effectively placing significant portions of the economy under state control. These measures were intended to redistribute wealth more equitably across the population and to foster economic development that prioritized social justice and regional balance. The state’s interventionist approach also sought to reduce foreign influence and consolidate economic sovereignty, which was a hallmark of Syria’s political ideology during this period. Economic reform in Syria proceeded in an incremental and gradual manner, reflecting the government’s cautious approach to liberalization amid concerns about maintaining social stability and political control. One of the most significant milestones in this protracted reform process was the legalization of private banking in 2001, which marked a departure from the purely state-dominated financial sector. This policy change allowed private banks to operate legally within Syria’s borders, introducing competition and potentially increasing efficiency in the financial system. The legalization was part of a broader strategy to modernize the economy and attract foreign investment, although the state retained substantial regulatory oversight. The gradual nature of reforms underscored the government’s balancing act between opening the economy and preserving its socialist-oriented framework. Following the legalization of private banking, the year 2004 witnessed a tangible manifestation of financial sector liberalization when four private banks commenced operations in Syria. This development represented a notable shift in the country’s financial landscape, as private banks began to offer services alongside the existing state-owned institutions. The entry of these banks was expected to enhance the availability of credit, improve banking services, and stimulate economic activity by facilitating greater access to capital for businesses and individuals. The establishment of private banks also signaled Syria’s tentative move toward integrating with global financial systems, although the sector remained relatively small and tightly regulated compared to international standards. In August 2004, the Syrian government took another step toward economic modernization by forming a committee tasked with overseeing the establishment of a stock market. This initiative indicated an effort to develop capital markets within the country, which would provide new avenues for raising funds and investing in the private sector. The creation of a stock market was seen as a critical component of broader financial reforms aimed at diversifying the economy and encouraging private sector growth. By facilitating the trading of shares and other securities, the government hoped to mobilize domestic savings and attract foreign investment, thereby stimulating economic development. The establishment of regulatory frameworks and institutional infrastructure for the stock market was an essential precursor to its eventual launch, reflecting the government’s cautious but deliberate approach to financial liberalization. Beyond reforms in the financial sector, the Syrian government enacted major changes to rental and tax laws, which were designed to improve economic efficiency and incentivize investment. These legislative adjustments aimed to modernize the regulatory environment by clarifying property rights, streamlining tax administration, and encouraging private sector participation in the economy. Reports indicated that the government was also considering similar reforms to the commercial code and other laws affecting property rights, although specific details and timelines remained unclear. Such reforms were critical for creating a more business-friendly climate, reducing bureaucratic obstacles, and enhancing legal protections for investors and entrepreneurs. The government’s focus on property rights and taxation underscored its recognition of the importance of legal and fiscal frameworks in supporting sustainable economic growth. Syria’s domestic oil industry began to take shape in the late 1960s with the production of heavy-grade oil from fields located in the northeast of the country. This development marked the establishment of a significant energy sector that would become a cornerstone of the Syrian economy. The extraction of heavy crude oil provided a valuable source of revenue and energy security, reducing Syria’s dependence on imported fuels. The northeast region, rich in hydrocarbon resources, became a focal point for exploration and production activities, supported by state-owned enterprises and infrastructure investments. The emergence of the oil industry also had broader economic implications, including the generation of foreign exchange earnings and the stimulation of related industries such as refining and petrochemicals. In the early 1980s, Syria discovered light-grade, low-sulphur oil near Deir ez-Zor in eastern Syria, a development that significantly enhanced the country’s oil production capabilities. The availability of this higher-quality crude eliminated the need to import light oil for blending with heavy crude in domestic refineries, thereby improving the efficiency and cost-effectiveness of the refining process. The discovery of light oil not only bolstered Syria’s energy self-sufficiency but also increased the potential for export revenues by enabling the production of a broader range of petroleum products. This diversification within the oil sector contributed to the country’s overall economic resilience and underscored the strategic importance of hydrocarbon resources in Syria’s development plans. By 2011, at the onset of the Syrian civil war, the country’s oil production had already experienced a decline, reaching approximately 353,000 barrels per day (bpd). This reduction reflected both the natural depletion of existing fields and challenges in maintaining production levels amid growing political and economic instability. The outbreak of conflict further exacerbated the decline, and by 2018, oil production had plunged dramatically to around 24,000 bpd, representing a near collapse of the sector. The war disrupted infrastructure, deterred investment, and led to the loss of control over key oil-producing regions, severely undermining Syria’s capacity to generate revenue from hydrocarbons. The precipitous fall in oil output had profound implications for the country’s fiscal position and overall economic stability during this period. Syria’s oil reserves were gradually depleted over the decades, with estimates placing the remaining reserves at approximately 2.5 billion barrels by 2018. This figure reflected the cumulative extraction of oil since the industry’s inception in the late 1960s and the limited discovery of new fields in subsequent years. The depletion of reserves posed long-term challenges for Syria’s energy sector and economic prospects, particularly in light of the ongoing conflict and the difficulties in attracting investment for exploration and development. The finite nature of the country’s hydrocarbon resources underscored the need for economic diversification and the pursuit of alternative sources of growth beyond oil revenues. In 1990, the Syrian government introduced an official parallel exchange rate system aimed at incentivizing remittances and exports through official channels. This policy was designed to improve the supply of basic commodities by encouraging the inflow of foreign currency via legal means, thereby reducing reliance on informal or black-market transactions. The establishment of the parallel exchange rate helped contain inflation by removing risk premiums associated with smuggled goods and unofficial currency exchanges. By offering more favorable rates for exporters and remittance senders, the government sought to channel foreign exchange earnings into the formal economy, supporting macroeconomic stability and enhancing the availability of essential goods for the population. Foreign aid to Syria in 1997 was estimated at approximately US$199 million, reflecting the country’s engagement with international donors and development agencies during that period. This level of assistance was part of broader efforts to support economic development, infrastructure projects, and social programs. Foreign aid played a role in supplementing domestic resources and addressing gaps in financing for key sectors. However, the amount of aid was relatively modest compared to the scale of Syria’s economic challenges, highlighting the government’s emphasis on self-reliance and gradual reform rather than dependence on external assistance. By July 2004, the World Bank had committed a total of US$661 million for 20 operations in Syria, with one investment project remaining active at that time. This engagement illustrated the international financial institution’s involvement in supporting Syria’s economic reform agenda and development initiatives. The projects funded by the World Bank spanned various sectors, including infrastructure, social services, and institutional capacity building. The relatively large volume of commitments demonstrated confidence in Syria’s reform efforts and the potential for economic growth, despite the cautious pace of liberalization. The World Bank’s presence also signaled Syria’s integration into the global development community and its willingness to collaborate on economic modernization. Key economic indicators for Syria over selected years provide insight into the country’s economic trajectory amid these reforms and challenges. These indicators encompass metrics such as gross domestic product (GDP) growth rates, inflation levels, employment figures, and sectoral contributions to the economy. Tracking these data points allows for an assessment of the effectiveness of policy measures, the impact of external shocks, and the overall health of the Syrian economy. While specific numerical values for these indicators vary across years, they collectively reflect the complex interplay of state-led development, gradual liberalization, resource dependence, and the disruptive effects of conflict on economic performance.

In 2006, Syria’s economy was navigating a complex landscape marked by both recovery and persistent challenges. The country had recently emerged from the adverse effects of a severe drought that had struck in the late 1990s, which had significantly undermined agricultural productivity and rural livelihoods. Concurrently, Syria experienced an increase in revenues from energy exports, particularly crude oil and refined petroleum products, which provided a vital source of foreign currency and government income. Despite these positive developments, the economy continued to grapple with longstanding structural difficulties, including inefficiencies in state-owned enterprises, limited private sector development, and the lingering impact of decades of economic isolation and regulatory constraints. Commerce played a crucial role in Syria’s economic framework, leveraging the nation’s strategic geographic position along key east–west trade corridors that historically connected the Mediterranean basin with the interior of the Middle East and beyond. This advantageous location facilitated the growth of both traditional industries and emerging sectors. Traditional industries such as weaving and the packing of dried fruits had deep roots in Syrian society and contributed to both domestic consumption and export earnings. At the same time, Syria was developing modern heavy industries, including manufacturing and petrochemicals, which aimed to diversify the economic base and reduce dependence on agricultural outputs and raw material exports. The interplay between these sectors underscored the multifaceted nature of Syria’s commercial activities and its potential as a regional trade hub. From the 1960s through the late 1980s, Syria’s economic policies reflected a period of relative isolation from the global economy, characterized by protectionist measures and state-led development strategies. During this era, the government implemented policies that effectively excluded the country from broader international trade networks and financial markets. These policies included extensive nationalization of industries, stringent import substitution strategies, and limitations on foreign investment and trade liberalization. The result was a largely closed economy that prioritized self-sufficiency and state control over integration with the global market. This period of economic isolationism hindered Syria’s ability to attract foreign capital, access advanced technologies, and benefit from international trade flows, thereby constraining economic growth and modernization efforts. A significant shift in Syria’s approach to external trade occurred in late 2001 when the country formally submitted a request to the World Trade Organization (WTO) to initiate the accession process. This move signaled Syria’s intention to integrate more fully into the global trading system and to align its trade policies with international norms and standards. The application to join the WTO was a critical step in Syria’s broader economic reform agenda, which sought to open markets, attract foreign investment, and enhance competitiveness. However, accession to the WTO required Syria to undertake substantial reforms, including the amendment of major elements of its trade regulations to comply with WTO rules. These reforms encompassed tariff reductions, the elimination of non-tariff barriers, and the establishment of transparent trade policies consistent with WTO obligations. Historically, Syria had been a contracting party to the General Agreement on Tariffs and Trade (GATT), the precursor to the WTO. However, Syria withdrew from GATT in 1951 following Israel’s accession to the agreement. This withdrawal reflected the geopolitical tensions and conflicts in the region, which influenced Syria’s trade relations and participation in international economic institutions. The legacy of this withdrawal contributed to Syria’s prolonged absence from multilateral trade frameworks and underscored the political complexities entwined with economic policy decisions. In March 2007, Syria took another important step toward economic integration by signing an Association Agreement with the European Union (EU). This agreement aimed to foster closer economic and political ties between Syria and the EU, with a particular focus on encouraging negotiations for a free trade agreement. The objective was to conclude these negotiations before 2010, thereby facilitating increased trade flows, investment, and cooperation between Syria and European countries. The Association Agreement represented a strategic effort to diversify Syria’s trade partnerships and to benefit from the EU’s large and dynamic market. It also reflected Syria’s broader aspirations to modernize its economy and improve its international economic relations. The composition of Syria’s imports was heavily weighted toward raw materials essential for the functioning of its industrial and agricultural sectors. These imports included inputs such as metals, chemicals, fertilizers, and other commodities necessary for production processes. Additionally, Syria imported equipment and machinery critical for various economic activities, including manufacturing, construction, and infrastructure development. The reliance on imported capital goods and raw materials underscored the country’s ongoing industrialization efforts and the need to support domestic production capabilities. This import structure was vital for sustaining economic growth and meeting the demands of both traditional and emerging sectors. Syria’s export portfolio was diverse, reflecting the country’s varied economic base. Major exports included crude oil and refined petroleum products, which were the cornerstone of Syria’s foreign exchange earnings and government revenues. Alongside energy exports, Syria also exported raw cotton, which was significant given the country’s agricultural sector and textile industry. Clothing and garments formed another important export category, benefiting from domestic textile production. Additionally, Syria exported a range of agricultural products such as fruits and cereal grains, which contributed to the country’s trade balance and rural incomes. This diversity in exports highlighted Syria’s efforts to balance reliance on energy with other sectors to stabilize its external trade position. The Syrian government implemented policies to manage the exchange rate in a manner that supported regional trade relations. Over time, the authorities progressively expanded the application of a more favorable exchange rate regime for transactions with neighboring countries. This preferential exchange rate aimed to facilitate cross-border trade, reduce transaction costs, and strengthen economic ties within the region. By offering a more advantageous rate for regional trade, Syria sought to enhance competitiveness and encourage the flow of goods and services with its immediate neighbors, thereby integrating more closely into regional markets. In 2001, Syria introduced a quasi-exchange rate system for non-commercial transactions. This system was broadly aligned with prevailing black market rates, which had emerged due to the official exchange rate’s divergence from market realities. The introduction of this quasi-exchange rate was an attempt to address currency valuation issues and to provide a more realistic benchmark for transactions not related to commercial trade. This measure reflected the challenges Syria faced in managing its currency amid limited convertibility and parallel market pressures. It also indicated a gradual move toward exchange rate liberalization, albeit within a controlled framework. Syria’s monetary policy was constrained by structural limitations within its financial system. The country’s domestic capital markets were underdeveloped, lacking the depth and liquidity necessary to support robust financial intermediation and investment. Furthermore, Syria had restricted access to international money and capital markets, limiting its ability to attract foreign financing or to diversify sources of funding. As a result, the government’s monetary policy was heavily influenced by the need to finance the fiscal deficit, which often involved domestic borrowing and monetary expansion. These constraints hindered the effectiveness of monetary policy tools and complicated efforts to stabilize the economy and promote sustainable growth. In 2003, Syria undertook a significant monetary policy adjustment by lowering interest rates for the first time in 22 years. This reduction was part of a broader effort to stimulate economic activity and improve credit conditions. The government further reduced interest rates again in 2004, signaling a continued commitment to monetary easing. Despite these reductions, interest rates in Syria remained legally fixed rather than being determined by market forces. This fixed-rate regime limited the responsiveness of interest rates to economic conditions and impeded the development of a more dynamic financial sector. The controlled interest rate environment reflected the government’s cautious approach to financial liberalization and its desire to maintain stability. By 2012, the outbreak and escalation of the Syrian civil war had inflicted severe damage on the country’s economy, particularly its external trade. The value of Syria’s overall exports plummeted by two-thirds, falling from approximately US$12 billion in 2010 to only US$4 billion in 2012. This dramatic decline was attributable to widespread disruptions in production, destruction of infrastructure, loss of access to key markets, and the general breakdown of economic activities caused by the conflict. The collapse in export revenues severely constrained the government’s fiscal capacity and exacerbated the humanitarian crisis. The Syrian civil war also had a pronounced impact on the country’s Gross Domestic Product (GDP). In 2011, the first year of the conflict, Syria’s GDP contracted by more than 3%, reflecting the immediate economic disruptions caused by violence, displacement, and uncertainty. The decline in GDP was driven by reduced industrial output, decreased agricultural production, interrupted trade flows, and the deterioration of public services. This contraction marked a significant setback for the Syrian economy, reversing years of gradual growth and undermining prospects for recovery in the near term. The economic consequences of the civil war underscored the profound interconnection between political stability and economic performance in Syria.

Under the presidency of Bashar al-Assad, Syria experienced a notable reduction in its national debt relative to the size of its economy. In the year 2000, the national debt stood at an exceptionally high level, representing 152.09% of the country’s gross domestic product (GDP). This indicated that the total debt exceeded the annual economic output by more than one and a half times, reflecting a severe fiscal imbalance and a heavy debt burden carried by the state. Over the subsequent decade, significant efforts were made to address this challenge, resulting in a marked decline in the debt-to-GDP ratio. By 2010, Syria had successfully reduced its national debt to 30.02% of GDP, a substantial improvement that indicated more sustainable fiscal management and a strengthened economic position. This decline was achieved through a combination of economic reforms, debt restructuring initiatives, and improved fiscal discipline, which collectively helped to stabilize the country’s financial standing prior to the onset of the civil war. In the years leading up to the outbreak of the Syrian civil war in 2011, the Syrian government actively pursued strategies to alleviate its substantial foreign debt burden. This involved engaging in bilateral debt rescheduling agreements with several major European creditors, reflecting a concerted effort to manage external liabilities and improve Syria’s international financial relations. Among the key partners in these negotiations were Germany, France, and Russia, all of which held significant claims on Syrian debt. These agreements typically involved restructuring the terms of repayment, including reductions in principal amounts owed, extended repayment periods, or partial debt forgiveness. Such measures were aimed at easing the immediate fiscal pressures on the Syrian government, enabling it to allocate resources more effectively toward domestic economic development and infrastructural investments. The willingness of these creditor nations to enter into rescheduling agreements underscored the strategic importance of maintaining economic ties with Syria and the recognition of the country’s precarious financial situation. A notable example of Syria’s debt management efforts occurred in December 2004, when the Syrian government reached a debt settlement agreement with Poland. At that time, Syria owed Poland a total outstanding debt of $261.7 million. Under the terms of the agreement, Syria committed to pay $27 million as a settlement amount, representing a significant reduction from the original debt figure. This settlement was part of a broader pattern of debt negotiations aimed at reducing the overall debt stock through partial repayments and write-offs. The agreement with Poland illustrated Syria’s pragmatic approach to debt resolution, whereby it sought to negotiate manageable repayment terms that reflected its limited financial capacity while maintaining diplomatic and economic relations with creditor countries. The settlement also provided Poland with a degree of financial recovery, albeit at a reduced level, and helped to clear one of the many complex foreign debt obligations facing Syria at the time. In January 2005, Syria achieved a landmark debt restructuring deal with Russia, which dramatically altered the scale of its indebtedness to the Russian Federation. Prior to the agreement, Syria’s debt to Russia was approximately $13 billion, a figure that constituted a major component of the country’s external liabilities. The restructuring deal resulted in the forgiveness of nearly 75% of this debt, effectively writing off about $9.75 billion. This substantial debt relief was a critical development for Syria, as it significantly eased the country’s financial burdens and improved its prospects for economic stability. The agreement reflected the close political and strategic ties between Syria and Russia, with Russia demonstrating a willingness to provide substantial financial concessions in support of its ally. The debt forgiveness also underscored Russia’s interest in maintaining influence in the Middle East and preserving its long-standing relationship with Syria. Following the 2005 agreement, the remaining debt that Syria owed to Russia was reduced to less than €3 billion, which was equivalent to just over $3.6 billion at the time. This marked a dramatic reduction from the original $13 billion figure and represented a more manageable level of indebtedness for the Syrian government. The terms of the agreement stipulated specific arrangements for the repayment and utilization of this residual debt. Half of the remaining debt was to be repaid over the subsequent ten years, providing Syria with a relatively extended timeline to meet its obligations without imposing immediate fiscal strain. The other half of the debt was not required to be repaid in cash but was instead deposited into Russian accounts held within Syrian banks. This innovative arrangement effectively converted a portion of the debt into funds that could be used for mutual economic benefit, rather than constituting a traditional loan repayment. The funds deposited in Russian accounts within Syria were earmarked for specific purposes that aligned with the economic interests of both countries. Primarily, these funds were designated for use in Russian investment projects within Syria, facilitating Russian participation in the development of Syrian infrastructure, energy, and other sectors. This arrangement allowed Russia to maintain and expand its economic footprint in Syria through direct investment, leveraging the debt funds to support projects that would generate returns and strengthen bilateral ties. Additionally, the deposited funds were intended to be used for the purchase of Syrian products, thereby promoting Syrian exports and supporting the country’s domestic industries. This mechanism created a form of debt-for-investment and trade exchange that was mutually beneficial, helping Syria to mobilize resources for economic development while enabling Russia to secure strategic economic interests in the region. Later in 2005, Syria continued its efforts to resolve outstanding foreign debts by concluding a debt settlement agreement with Slovakia and the Czech Republic. The combined estimated total debt owed to these two countries was approximately $1.6 billion. Under the terms of the agreement, Syria agreed to settle this debt through a one-time payment of $150 million, representing a significant reduction from the total amount owed. This settlement was part of a broader pattern of debt negotiations whereby Syria sought to reduce its external liabilities through lump-sum payments that were feasible within its financial constraints. The agreement with Slovakia and the Czech Republic demonstrated Syria’s continued commitment to addressing its foreign debt challenges through negotiated settlements, which helped to improve its creditworthiness and international financial relations. By resolving these debts, Syria aimed to create a more stable economic environment conducive to growth and investment, while also maintaining constructive diplomatic ties with European nations.

Agriculture has historically been a central focus of Syria’s economic development strategies, reflecting the sector’s critical role in ensuring national food security, generating foreign exchange through exports, and curbing the persistent trend of rural-to-urban migration. The government prioritized agricultural development as a means to achieve food self-sufficiency, aiming to reduce dependence on food imports while simultaneously increasing export earnings from key commodities. This emphasis was also motivated by the need to sustain rural livelihoods and stabilize demographic patterns by providing employment opportunities in the countryside, thereby limiting the socio-economic pressures associated with urban overcrowding. Prior to the outbreak of the civil war in 2011, Syria experienced a notable transformation in its agricultural sector, driven by sustained capital investment and comprehensive infrastructure development. The government implemented a range of supportive measures, including subsidies on agricultural inputs such as fertilizers and seeds, as well as price support mechanisms designed to stabilize farmers’ incomes. These policies facilitated the country’s transition from a net importer of food products to an exporter of significant quantities of cotton, fruits, vegetables, and other foodstuffs. This agricultural turnaround was underpinned by the expansion and modernization of irrigation infrastructure, particularly through large-scale irrigation projects in the northern and northeastern regions of Syria. These irrigation systems harnessed water resources from major rivers and reservoirs, enabling the cultivation of previously arid or semi-arid lands and increasing overall agricultural productivity. By 2009, the agriculture sector remained a vital component of Syria’s economy, employing approximately 17% of the labor force and contributing about 21% of the national gross domestic product (GDP). Within the sector, livestock production accounted for roughly 16% of agricultural output, while fruit and grain cultivation represented more than 40%, underscoring the diversity and importance of these subsectors. The agricultural workforce was predominantly engaged in smallholder farming, with livestock rearing and crop production forming the backbone of rural economic activity. In 2015, Syria’s main agricultural exports included spice seeds, which were valued at $83.2 million, and apples and pears, which accounted for $53.2 million in export revenue. These figures highlighted the country’s continued reliance on agricultural exports as a source of foreign currency earnings despite ongoing challenges. Most agricultural land in Syria was privately owned, a factor that played a crucial role in the sector’s performance and resilience. Private ownership encouraged individual investment and innovation in farming practices, contributing to improved productivity and responsiveness to market demands. Syria’s total land area measured approximately 196,000 square kilometers (76,000 square miles), of which around 28% was cultivated. Of this cultivated land, 21% was irrigated, reflecting the importance of irrigation in sustaining agricultural output in a predominantly arid environment. The irrigated lands were largely concentrated in strategic regions where water availability could be managed effectively through state-supported infrastructure. A significant portion of the irrigated land was classified as “strategic,” subject to considerable state intervention in terms of pricing, subsidies, and marketing controls. Crops designated as strategic, such as wheat, barley, and sugar beets, were required to be sold to state marketing boards at fixed prices. These prices were often set above prevailing world market rates to ensure that farmers received adequate compensation and to maintain production incentives. While this policy supported the agricultural sector and helped stabilize rural incomes, it imposed a substantial financial burden on the state budget, necessitating ongoing subsidies and administrative oversight. Among arable crops, wheat was the most widely cultivated, serving as a staple food and a fundamental component of national food security. Cotton, on the other hand, was the most important cash crop and had historically been Syria’s largest single export commodity prior to the expansion of the oil sector. Cotton cultivation was concentrated in irrigated areas and was a key source of foreign exchange earnings. However, the total area planted with cotton declined over time due to increasing water shortages and the persistence of outdated, inefficient irrigation techniques. These challenges constrained the expansion of cotton production and necessitated efforts to improve water management and irrigation efficiency. Grain production, including wheat and barley, was often hampered by inadequate post-harvest storage facilities, leading to significant underutilization of output. The lack of sufficient storage infrastructure increased the risk of spoilage and losses, reducing the availability of grains for both domestic consumption and export. This deficiency highlighted the need for investment in agricultural logistics and storage capacity to enhance food security and market stability. Water scarcity and energy shortages represented pervasive challenges confronting Syria’s agricultural sector. The country’s arid climate and limited renewable water resources placed considerable constraints on irrigation and crop production. Energy shortages, particularly in rural areas, further complicated agricultural operations by limiting access to mechanized equipment, irrigation pumps, and processing facilities. These interrelated issues underscored the vulnerability of Syria’s agriculture to environmental and infrastructural constraints. In response to fiscal pressures and market liberalization efforts, the government decided to liberalize fertilizer prices, resulting in increases ranging between 100% and 400%. This sharp rise in input costs significantly complicated agricultural production, as farmers faced higher expenses for essential nutrients required to maintain crop yields. The increased cost of fertilizers, combined with energy shortages and water scarcity, placed additional strain on the profitability and sustainability of farming operations. The year 2008 was marked by severe drought conditions that adversely affected agricultural output across Syria. However, the situation improved somewhat in 2009, when wheat and barley production roughly doubled compared to the previous year. Despite this recovery in crop yields, the livelihoods of up to one million agricultural workers remained threatened due to the lingering effects of drought and economic hardship. In response to this crisis, the United Nations launched an emergency appeal for $20.2 million to provide humanitarian assistance and support agricultural recovery efforts. Wheat was among the most affected crops during this period of climatic stress, and for the first time in two decades, Syria shifted from being a net exporter to a net importer of wheat. This reversal underscored the fragility of the country’s food security situation and the critical importance of stable agricultural production for national well-being. Following the onset of the civil war in 2011, Syria’s agricultural sector faced further disruptions. Despite the conflict and the imposition of international economic sanctions, the Syrian government issued a tender for 100,000 metric tonnes of wheat, one of the few trade products exempt from sanctions. This procurement effort aimed to secure essential food supplies amid the deteriorating security and economic conditions. Forestry represented a limited component of Syria’s natural resource base, with less than 2.7% of the country’s land area covered by forests. Only a portion of these forested areas was commercially viable for timber and other forest products. Forestry activities were primarily concentrated in the higher elevations of mountainous regions near the Mediterranean coast, where rainfall was more abundant and climatic conditions favored tree growth. These forested zones provided important ecological functions and some economic benefits but remained a relatively minor sector compared to agriculture.

As of 2022, captagon emerged as the most valuable export product of Ba’athist Syria, playing a crucial role in sustaining the economic framework of the Assad regime. This synthetic stimulant, widely known for its psychoactive properties, became a significant source of revenue amid the country’s protracted conflict and international sanctions that severely limited traditional trade avenues. The production and exportation of captagon were reportedly intertwined with various state and non-state actors, reflecting a complex network that leveraged the drug trade to finance military operations and governmental functions. The prominence of captagon in Syria’s economy underscored the regime’s reliance on illicit activities to circumvent economic isolation and maintain its hold on power. In 2021, the total value of captagon drug shipments sold was estimated to be approximately $5.7 billion, highlighting the scale and profitability of this underground industry. This figure represented a substantial influx of foreign currency into the Syrian economy, which was otherwise debilitated by years of civil war and international embargoes. The captagon trade extended beyond Syria’s borders, with shipments destined for markets across the Middle East, North Africa, and parts of Europe, fueling demand in regions grappling with drug abuse and organized crime. The lucrative nature of these transactions incentivized the expansion of production facilities and smuggling routes, often facilitated by armed groups and corrupt officials who capitalized on the chaos of the ongoing conflict. The dynamics of the captagon trade underwent a significant shift in January 2025 when the new Syrian caretaker government undertook a major crackdown on drug trafficking networks. During this period, the majority of captagon shipments were dismantled, marking a concerted effort by the authorities to curb the illicit economy that had long contributed to instability and corruption within the country. This intervention involved coordinated operations targeting manufacturing sites, distribution channels, and key figures involved in the drug trade, signaling a departure from previous tolerances or complicities associated with the regime’s earlier strategies. The dismantling of these shipments not only disrupted the financial lifeline that captagon had provided but also reflected the caretaker government’s attempt to reassert control and legitimacy amid ongoing political and economic challenges. The crackdown on captagon exports in early 2025 was part of broader efforts to stabilize Syria’s economy and address the multifaceted crises facing the nation. By targeting the drug trade, the caretaker government aimed to reduce the influence of illicit networks that had thrived during years of conflict and to align Syria more closely with international norms against narcotics trafficking. However, the entrenched nature of captagon production and its integration into various sectors posed significant obstacles to these reforms. The economic vacuum left by the disruption of captagon shipments necessitated the exploration of alternative revenue sources and reforms to rebuild the country’s legitimate economy. Despite these challenges, the 2025 operations represented a pivotal moment in Syria’s ongoing struggle to transition from a war-torn state reliant on illicit economies toward a more stable and regulated economic system.

Phosphates have long represented the cornerstone of Syria’s mineral resource sector, with the country’s reserves estimated at approximately 1,700 million tons, positioning it as a significant player in the global phosphate market. This substantial endowment of phosphate rock has underpinned the development of Syria’s mining industry, particularly given the mineral’s critical role in agricultural fertilizers and various industrial applications. However, during the early 1990s, the Syrian phosphate industry encountered a notable downturn as global demand for phosphate rock diminished, accompanied by a decline in international prices. This contraction in the market adversely affected production levels within Syria, leading to a significant reduction in output during this period. Despite the challenges faced in the early 1990s, the Syrian phosphate sector demonstrated resilience and recovery in subsequent years. Production levels rebounded and eventually surpassed 2.4 million tons, reflecting both an adjustment to market conditions and increased domestic and regional demand. This resurgence was facilitated by improvements in mining techniques, investment in infrastructure, and a strategic focus on optimizing phosphate extraction and processing capabilities. By 2009, Syria had solidified its position on the global stage as the ninth largest producer of phosphate rock, contributing approximately 1.9% of the world’s total phosphate production. This ranking underscored the country’s importance as a mid-tier producer within the international phosphate industry, despite the presence of larger producers such as Morocco, China, and the United States. In addition to phosphates, Syria’s mining sector encompasses a diverse array of other mineral resources that contribute to the country’s industrial base. Key among these are cement and gypsum, which are integral to the construction industry and reflect Syria’s ongoing infrastructure development efforts. Industrial sand, particularly silica, is also extracted and utilized in various manufacturing processes, including glass production and foundry applications. Marble deposits in Syria are noteworthy for their quality and have been exploited for both domestic construction and ornamental purposes. The country also produces natural crude asphalt, which has applications in road construction and maintenance, further supporting infrastructure projects. Nitrogen and phosphate fertilizers represent an important segment of Syria’s mineral-based chemical production, leveraging the country’s phosphate reserves to manufacture agricultural inputs that support domestic food production. Salt extraction is another mineral activity, with salt being used in both industrial processes and as a commodity for consumption. Steel production, while not on the scale of major industrialized nations, forms part of Syria’s broader mineral processing industry and contributes to the manufacturing and construction sectors. Volcanic tuff, a type of porous rock formed from volcanic ash, is also quarried and used primarily in construction due to its lightweight and insulating properties. Most of these minerals, aside from phosphates, are produced predominantly for domestic consumption rather than for export. This focus on serving internal demand reflects Syria’s economic priorities, where the mining sector supports national development goals by supplying raw materials essential for construction, agriculture, and industry. The limited export orientation of these minerals is influenced by factors such as transportation infrastructure, global market competition, and the scale of production, which tends to be tailored to meet local needs. Consequently, while Syria’s phosphate production holds a notable position in the international market, the broader mineral mining activities remain primarily oriented toward sustaining the country’s internal economic activities and development projects.

In 2010, Syria’s contribution to global oil production was relatively modest, accounting for just 0.5% of the world’s total output. This positioned the country as a minor player in the international oil market, especially when compared to major producers in the Middle East and beyond. Despite this limited scale in production, oil retained a central role within Syria’s national economy, serving as a crucial source of government revenue and export earnings. The sector’s economic significance was underscored by its substantial share in the country’s fiscal and trade frameworks, reflecting the enduring reliance on hydrocarbon resources despite the modest volume of production. The International Monetary Fund (IMF) projected that oil sales in 2010 would generate approximately $3.2 billion in revenue for the Syrian government. This figure represented a significant 25.1% of the total state revenue for that year, illustrating the heavy dependence of the government budget on oil-related income. Such a proportion highlighted the vulnerability of the Syrian economy to fluctuations in oil prices and production levels, as well as the strategic importance of the sector in financing public expenditures and development projects. The IMF’s projection also indicated that, despite the relatively small scale of production, the value of Syria’s oil exports remained a cornerstone of fiscal stability. Historical data from the 2009 Syria Report published by the Oxford Business Group further emphasized the oil sector’s fiscal importance. According to this report, in 2008, the oil industry contributed 23% of government revenues, a figure that reinforced the sector’s role as a major pillar of the state’s financial structure. This contribution was critical in sustaining government operations and funding various sectors of the economy. The report’s findings highlighted the oil sector’s ability to generate substantial income for the government, which was vital for maintaining economic stability and supporting public services during that period. In addition to its fiscal contributions, oil played a pivotal role in Syria’s external trade. In 2008, oil exports accounted for 20% of the country’s total exports, underscoring the commodity’s importance in the trade balance. This significant share demonstrated how oil revenues were integral to Syria’s foreign exchange earnings, enabling the country to finance imports and manage its international economic relations. The reliance on oil exports also reflected the limited diversification of the Syrian economy, where hydrocarbons remained one of the few major sources of foreign currency inflows. The impact of the oil sector extended beyond government revenues and trade balances to the broader economy. In 2008, the oil industry represented 22% of Syria’s gross domestic product (GDP), indicating its substantial influence on the overall economic output. This sizable contribution underscored the sector’s role as a key driver of economic activity, supporting employment, investment, and related industries. The prominence of oil in the GDP composition highlighted the structural importance of the sector and its capacity to shape economic growth trajectories. During the same period, Syria exported approximately 150,000 barrels per day (bpd) of oil, a volume that constituted the majority of the country’s export income. This level of export activity demonstrated the sector’s operational capacity and its strategic role in generating foreign currency revenues. The export of crude oil was central to Syria’s economic engagement with international markets, providing a vital source of income that supported government spending and economic development. The dependence on oil exports also made the country susceptible to external shocks, such as fluctuations in global oil prices or disruptions in production and export infrastructure. Taken together, these data points illustrate the multifaceted role of oil and natural gas in Syria’s economy during the late 2000s and early 2010s. While Syria’s share of global oil production was relatively small, the sector’s contributions to government revenues, exports, and GDP were disproportionately large, reflecting the country’s reliance on hydrocarbon resources as an economic foundation. This reliance shaped economic policies and development strategies, while also exposing the economy to vulnerabilities associated with the volatile nature of global energy markets.

In 2001, Syria’s electricity sector demonstrated a modest surplus in production relative to consumption, producing approximately 23.3 billion kilowatt hours (kWh) of electricity while consuming 21.6 billion kWh. This indicated that the country generated more electrical energy than it utilized domestically, a situation that reflected both the capacity of its power generation infrastructure and the demand patterns at the time. The surplus suggested that Syria had some margin to support growing consumption or to export electricity, although the broader context of infrastructure limitations and regional dynamics influenced the practical utilization of this excess capacity. By January 2002, Syria’s total installed electric generating capacity reached 7.6 gigawatts (GW), underscoring the scale of its power generation capabilities. The primary sources of this generation capacity were fuel oil and natural gas, which together formed the backbone of the country’s energy mix. These fossil fuels were complemented by hydroelectric power, which contributed approximately 1.5 GW to the total capacity. The reliance on fuel oil and natural gas reflected Syria’s domestic energy resource endowment and infrastructure development, while hydroelectric power provided a renewable component, harnessing the country’s river systems to supplement electricity production. This diversified energy mix was critical for meeting the country’s electricity needs, although it also exposed the sector to vulnerabilities related to fuel supply and infrastructure maintenance. A significant development in regional power infrastructure occurred in March 2001 with the completion of a regional electric power grid network linking Syria, Egypt, and Jordan. This interconnected grid, with a total capacity of 45 GW, was designed to enhance power connectivity and facilitate electricity trade among the three countries. The establishment of this network aimed to improve the reliability and efficiency of electricity supply by enabling the sharing of surplus power and balancing demand fluctuations across national borders. It also represented a strategic effort to foster regional cooperation and integration in the energy sector, potentially reducing costs and increasing energy security for the participating countries. Recognizing the critical importance of electricity supply for economic development and social welfare, the Syrian government prioritized the expansion of electric supply capacity as a key national objective. Plans were formulated to add 3,000 megawatts (MW) of power generating capacity by 2010, reflecting an ambitious effort to meet anticipated growth in electricity demand. This expansion was projected to require an estimated investment of US$2 billion, signaling a substantial commitment of financial resources toward modernizing and enlarging the country’s power generation infrastructure. However, progress toward these goals was significantly hindered by a lack of investment capital, which constrained the government’s ability to implement planned projects at the desired pace. The shortfall in funding was partly attributable to broader economic challenges and limited access to international financing, which collectively impeded the realization of capacity expansion targets. In response to these challenges, Syrian power plants underwent intensive maintenance efforts aimed at improving operational efficiency and reliability. These maintenance programs were essential to sustaining existing generation capacity and preventing further deterioration of equipment. Concurrently, four new generating plants were constructed to enhance electricity production capabilities, reflecting targeted investments to augment the power sector’s infrastructure. The commissioning of these new plants contributed to incremental increases in capacity and helped address some of the supply-demand imbalances. Nonetheless, the overall pace of infrastructure development remained constrained by financial and technical limitations, which continued to affect the sector’s performance. Despite these efforts in generation, the power distribution network in Syria faced significant challenges that undermined the efficiency of electricity delivery. Transmission losses were estimated to be as high as 25 percent of the total generated capacity, a figure that represented a substantial waste of electrical energy and a financial burden on the system. These losses were primarily attributed to the poor quality of wires and transformer stations throughout the distribution network. Aging infrastructure, inadequate maintenance, and technical inefficiencies contributed to this high rate of energy dissipation, limiting the effective utilization of generated electricity and reducing the reliability of supply to end consumers. To address these inefficiencies, a project aimed at expanding and upgrading the power transmission network was scheduled for completion in 2005. This initiative sought to reduce the high transmission losses and improve the overall efficiency and reliability of electricity distribution across Syria. The project involved the modernization of transmission lines, replacement of outdated equipment, and enhancement of transformer capacity, all intended to strengthen the grid’s ability to deliver power effectively. By improving the transmission infrastructure, the project aimed to optimize the use of generated electricity, reduce operational costs, and support the country’s broader energy development objectives. Further financial support for the power sector was secured in May 2009, when the Islamic Development Bank and the Syrian government signed an agreement for a loan of €100 million. This loan was specifically designated for the expansion of the Deir Ali power station, a key facility within Syria’s electricity generation portfolio. The funding was intended to enable capacity enhancements and modernization efforts at Deir Ali, thereby contributing to increased electricity production and improved reliability of supply. The agreement underscored the role of international financial institutions in supporting Syria’s energy infrastructure development, providing critical capital to supplement domestic resources and facilitate strategic investments in the power sector.

Syria’s initial foray into nuclear energy development began with plans to construct a VVER-440 nuclear reactor, a Soviet-designed pressurized water reactor model widely used for power generation. These plans, however, were abandoned in the aftermath of the Chernobyl nuclear disaster in 1986, which profoundly influenced global perceptions of nuclear safety and led many countries, including Syria, to reconsider their nuclear ambitions. The catastrophic event underscored the potential risks associated with nuclear power, prompting Syria to halt its early nuclear initiatives due to concerns over safety, regulatory preparedness, and international scrutiny. Despite this early setback, Syria revived its interest in nuclear technology in the early 2000s, reflecting a strategic shift toward diversifying its energy sources and addressing growing domestic energy demands. During this period, the Syrian government engaged in negotiations with Russia, a country with extensive expertise in nuclear technology and a long history of exporting nuclear reactors to allied states. These discussions aimed to secure Russian assistance in constructing a nuclear facility that would serve both energy production and other strategic purposes. The renewed dialogue marked a significant development in Syria’s nuclear ambitions, signaling a willingness to re-enter the nuclear arena with international cooperation and modern technologies. The nuclear facility proposed in the negotiations with Russia was envisioned as a multifaceted complex, comprising not only a nuclear power plant but also a seawater atomic desalination plant. This dual-purpose approach was designed to address two critical needs: generating electricity to support Syria’s expanding industrial and residential sectors, and producing fresh water through desalination to alleviate the country’s chronic water shortages. The integration of a desalination plant with a nuclear power source represented an innovative solution aimed at leveraging nuclear technology for both energy and water security. The seawater atomic desalination plant would have utilized the heat generated by the nuclear reactor to power desalination processes, thereby providing a sustainable supply of potable water in a region characterized by arid conditions and limited freshwater resources. The collaboration with Russia was particularly significant given Russia’s experience in constructing and operating nuclear-powered desalination plants, a technology that had been deployed in several coastal areas to meet water demands. By pursuing this project, Syria sought to modernize its infrastructure and reduce reliance on fossil fuels, which dominated its energy mix. The proposed nuclear facility was expected to contribute to the country’s long-term economic development by enhancing energy independence and supporting agricultural and industrial growth through improved water availability. However, the project also attracted international attention and scrutiny due to concerns about nuclear proliferation and regional security dynamics, factors that complicated Syria’s nuclear ambitions and influenced the pace and transparency of its nuclear activities. Throughout this period, Syria’s nuclear program remained shrouded in secrecy, with limited publicly available information about the technical specifications, timeline, and funding mechanisms for the proposed facility. The involvement of Russia underscored the geopolitical dimensions of Syria’s nuclear pursuits, as the partnership reflected broader strategic alignments and the influence of external powers in the Middle East. Despite the ambitious plans, the actual realization of the nuclear power and desalination complex faced numerous challenges, including technical hurdles, international diplomatic pressures, and the volatile security situation within Syria. These factors collectively shaped the trajectory of Syria’s nuclear energy program during the early 21st century, illustrating the complex interplay between domestic development goals and international concerns surrounding nuclear technology.

In 2010, Syria’s industrial sector played a significant role in the national economy, contributing 27.3 percent to the country’s gross domestic product (GDP). This sector, encompassing mining, manufacturing, construction, and petroleum activities, also provided employment for approximately 16 percent of the labor force, underscoring its importance as a source of jobs and economic output. The industrial base was diverse, reflecting a combination of natural resource extraction, processing industries, and capital-intensive manufacturing endeavors. Mining operations, particularly phosphate rock extraction, formed a crucial component of the sector, supplying raw materials for both domestic consumption and export. Manufacturing activities were varied, with key outputs including petroleum products, textiles, food processing, beverages, tobacco, cement, oil seeds crushing, and automobile assembly, each contributing to the industrial landscape in distinct ways. Petroleum production stood out as a cornerstone of Syria’s industrial output, given the country’s hydrocarbon reserves and the sector’s role in generating export revenues and energy supplies. Textiles represented another vital segment, rooted in Syria’s historical tradition of fabric production and catering to both domestic markets and regional trade. Food processing industries capitalized on the country’s agricultural base, transforming raw agricultural products into consumable goods, while beverage and tobacco manufacturing catered to local demand and contributed to employment. The phosphate rock mining industry was notable not only for its domestic importance but also for its integration into global fertilizer markets, positioning Syria as a regional supplier of this essential mineral. Cement production supported the construction sector by providing necessary materials for infrastructure and building projects, while oil seeds crushing facilitated the extraction of edible oils, contributing to food industry inputs. Automobile assembly, though relatively limited in scale, represented an effort to diversify industrial capabilities and reduce dependence on imports. Prior to the 1990s, Syria’s manufacturing sector was predominantly under state control, reflecting the government’s centralized economic policies and emphasis on public ownership of key industries. This approach was characteristic of the broader economic model adopted after the Ba’ath Party came to power in 1963, which prioritized state-led development and import substitution industrialization. However, during the 1990s, a series of economic reforms marked a shift toward liberalization and market-oriented policies. These reforms allowed increased participation from both local and foreign private sectors in manufacturing, signaling a departure from strict state control and an attempt to stimulate efficiency, innovation, and investment. The introduction of legal frameworks and incentives aimed to attract private capital and expertise, thereby expanding the industrial base and integrating Syria more closely into regional and global markets. Despite these reforms, private sector involvement in manufacturing remained constrained by several significant challenges. One of the primary obstacles was insufficient investment capital, which limited the ability of private enterprises to modernize facilities, adopt new technologies, and expand production capacities. Additionally, the regulatory environment imposed controlled pricing on both inputs and outputs, which hindered profitability and discouraged entrepreneurial risk-taking. Complex customs procedures and foreign exchange regulations further complicated operations, making it difficult for private manufacturers to import necessary raw materials or export finished products efficiently. The inadequacy of marketing infrastructure also restricted the ability of private firms to reach broader markets, both domestically and internationally, thereby limiting growth potential. These factors collectively contributed to a manufacturing sector in which the private sector’s role, though growing, remained relatively modest compared to the dominant public enterprises. Within the broader context of domestic investment opportunities, the real estate sector emerged as one of the few areas offering realistic and secure returns. This attractiveness was largely due to the fact that land prices were not regulated by the state, allowing market forces to determine values and providing investors with the potential for capital appreciation. Unlike many other sectors subject to government controls and bureaucratic hurdles, real estate investments benefitted from a more liberalized pricing environment. This factor, combined with urbanization trends and demand for residential and commercial properties, made real estate an appealing option for both domestic and foreign investors seeking stable returns. The sector’s relative independence from direct state intervention distinguished it from other industries where government policies often constrained profitability and growth. The construction sector in Syria demonstrated a high degree of sensitivity to broader economic fluctuations, with activity levels closely mirroring the overall health of the economy. During periods of economic expansion, construction projects—ranging from residential housing to infrastructure development—tended to increase, driven by rising demand and greater availability of financing. Conversely, economic downturns led to a contraction in construction activity, reflecting reduced investment and consumer spending. This cyclical nature underscored the sector’s role as both a barometer and a driver of economic performance, given its linkages to employment, materials production, and related services. The construction industry’s responsiveness to macroeconomic conditions highlighted its importance in the economic structure and the potential impact of policy measures aimed at stimulating growth. A pivotal moment in Syria’s economic trajectory was the enactment of Investment Law No. 10 in 1991, which marked a significant policy shift by formally allowing foreign investment in selected sectors of the economy. This legislation aimed to attract external capital, technology, and expertise, thereby fostering economic revival and diversification. The law provided legal guarantees and incentives to foreign investors, including protections against nationalization and provisions for profit repatriation, which helped to improve the investment climate. As a result, the early 2000s witnessed tangible signs of economic recovery, with real-term growth increases recorded during 2001 and 2002. These gains reflected the combined effects of liberalized investment policies, improved investor confidence, and gradual integration into the global economy. The implementation of Investment Law No. 10 thus represented a foundational step toward modernizing Syria’s industrial and economic framework, setting the stage for subsequent development efforts.

In 2017, the services sector emerged as the dominant component of Syria’s gross domestic product (GDP), accounting for 60.4% of the total economic output. This substantial share underscored the sector’s critical role in sustaining the national economy amid ongoing challenges. The services sector encompassed a wide range of activities, including public administration, education, healthcare, retail, finance, and transportation, all of which contributed significantly to economic stability and growth. Its predominance reflected a structural shift from traditional agriculture and industry toward more service-oriented economic activities, a trend observed in many developing countries seeking diversification. The importance of the services sector extended beyond its contribution to GDP, as it also represented the primary source of employment within Syria. Data from 2008 indicated that approximately 67% of the Syrian labor force was engaged in service-related occupations, including a substantial number of government employees. This high level of employment in services highlighted the sector’s role as a critical provider of jobs, particularly in urban centers where public administration, education, and healthcare institutions were concentrated. The dominance of services in the labor market also suggested a reliance on public sector employment, which historically served as a stabilizing factor in the Syrian economy by providing relatively secure jobs amid fluctuating private sector conditions. The real estate market in Syria, particularly in the capital city of Damascus, experienced notable fluctuations that mirrored broader economic trends within the services sector. In May 2009, reports documented a sharp increase in office prices in Damascus, signaling a surge in demand for commercial real estate. This rise in office prices was indicative of growing business activity and investment interest within the city, reflecting a period of relative economic optimism prior to the escalation of conflict in subsequent years. The increase in real estate values also pointed to urban development pressures and the expanding role of services such as finance, telecommunications, and professional services, which required modern office spaces to accommodate their operations. Consequently, the real estate market became both a barometer and a driver of economic dynamics within the service sector, influencing employment patterns and investment flows in Damascus and beyond.

The Central Bank of Syria began its operations in 1959, assuming a pivotal role in the country’s financial system by overseeing all foreign exchange and trade transactions. Its mandate emphasized prioritizing lending to the public sector, reflecting the state-led economic model prevalent in Syria during much of the 20th century. The bank’s control over foreign currency transactions was instrumental in managing Syria’s balance of payments and regulating the flow of capital, which was closely aligned with the government’s broader economic policies. This centralized approach aimed to direct financial resources toward public enterprises and sectors deemed critical for national development. In May 2004, the Central Bank of Syria became subject to sanctions imposed by the United States government, which accused the institution of facilitating money laundering activities. These sanctions specifically prohibited transactions between U.S. financial institutions and the Central Bank, effectively isolating Syria’s primary monetary authority from the U.S. financial system. As a consequence, Lebanese and European banks increasingly assumed intermediary roles for transferring U.S. dollars, circumventing direct dealings with Syrian financial entities. This shift not only altered the dynamics of dollar flows into and out of Syria but also underscored the challenges faced by the Syrian banking sector in accessing international financial markets under restrictive conditions. The imposition of sanctions on the Central Bank intensified in response to the outbreak of the Syrian Civil War in 2011. The United States, European Union, Arab League, and Turkey collectively expanded their restrictive measures, targeting Syrian financial institutions to curtail the regime’s access to international funds and to pressure the government politically. These sanctions further constrained the Central Bank’s operations, limiting its ability to engage in cross-border financial transactions and exacerbating the difficulties faced by Syria’s banking system amid escalating conflict and economic instability. Syria’s banking sector comprises six specialized state-owned banks, each tailored to serve distinct segments of the economy. These include the Central Bank of Syria, which functions as the monetary authority; the Commercial Bank of Syria, focusing on general commercial banking activities; the Agricultural Co-Operative Bank, dedicated to financing the agricultural sector; the Industrial Bank, which primarily serves industrial enterprises; the Popular Credit Bank, aimed at providing credit to small and medium-sized enterprises; and the Real Estate Bank, which supports housing and real estate development. Each institution extends credit and accepts deposits within its designated sector, reflecting a segmented banking structure designed to meet the diverse needs of Syria’s economy under state control. Among these, the Industrial Bank holds a significant role in providing financial services to the public sector’s industrial enterprises. However, it has historically suffered from undercapitalization, limiting its capacity to meet the financing needs of the sector effectively. This shortfall has compelled many private sector industrial firms to seek banking services abroad, a practice that introduces additional costs and inefficiencies. Accessing foreign banking institutions often entails higher transaction fees and longer processing times, thereby impeding the growth and modernization of Syria’s industrial base. Capital flight has been a persistent issue for Syria, with estimates indicating that Syrian nationals have deposited approximately US$6 billion in Lebanese banks. This substantial outflow of funds reflects both a lack of confidence in domestic banking institutions and the restrictive nature of Syria’s financial environment. The movement of capital abroad has deprived the local economy of critical liquidity and investment resources, further constraining economic development and financial sector depth. In the early 2000s, Syria embarked on a series of financial sector reforms aimed at modernizing its banking system and integrating it more closely with global markets. A landmark reform was the legalization of private banks in 2001, which marked a departure from the exclusively state-owned banking model that had dominated for decades. This liberalization was complemented by the establishment of the Damascus Securities Exchange in March 2009, providing a formal platform for securities trading and signaling the government’s intent to develop capital markets. These reforms sought to stimulate private sector growth, attract investment, and enhance financial intermediation within the economy. The regulatory framework for foreign banks was also liberalized beginning in December 2002, following the enactment of Law 28 in March 2001. This law permitted the establishment of private and joint-venture banks, allowing foreign investors to own up to 49% of a banking institution, though it prohibited foreign entities from holding controlling stakes. This policy aimed to balance the benefits of foreign capital and expertise with the desire to maintain domestic control over the banking sector. The gradual opening to foreign participation was intended to foster competition, improve banking services, and facilitate access to international financial networks. By January 2010, the private banking sector in Syria had expanded to include thirteen private banks, among which two operated under Islamic banking principles. This growth represented a significant development in the Syrian financial landscape, indicating increasing diversification and the emergence of alternative banking models. The presence of Islamic banks catered to demand for Sharia-compliant financial products, reflecting the cultural and religious preferences of segments of the population. Concurrently, Syria began to relax its stringent foreign exchange controls, which had long restricted the use of foreign currencies by the private sector. In 2003, the government repealed a law that criminalized private sector use of foreign currencies, thereby legalizing such transactions and facilitating greater flexibility in financial dealings. Two years later, in 2005, licensed private banks received authorization to sell limited amounts of foreign currency to Syrian citizens and private enterprises, primarily to finance imports. These measures were intended to ease currency shortages, support trade activities, and gradually integrate the Syrian economy into global financial systems. Further liberalization occurred in October 2009 when Syria permitted its citizens traveling abroad to withdraw up to US$10,000 from accounts denominated in Syrian pounds. This policy effectively allowed local banks to open accounts with a maximum balance of US$10,000, which could be accessed through international payment cards. The monthly withdrawal limit of US$10,000 while abroad provided Syrians with greater convenience and autonomy in managing foreign currency transactions during travel, reflecting a cautious approach to easing capital controls. To stimulate investment and improve access to credit, the Syrian government introduced measures in 2007 allowing investors to obtain loans from foreign banks and repay them through local banks using proceeds generated by their projects. This arrangement was designed to facilitate the inflow of foreign capital and technology while ensuring that repayments remained within the domestic financial system. In February 2008, the government further expanded credit access by permitting investors to secure foreign currency loans from local private banks to finance capital investments. These policies aimed to address longstanding credit constraints and encourage private sector development. Syria maintained a fixed exchange rate system characterized by two official rates. One rate was used for the national budget and official transactions, including imports and customs duties, ensuring predictability and stability in government financial operations. The second rate, set daily by the Central Bank, applied to all other financial transactions, allowing some flexibility in response to market conditions. This dual-rate system reflected the government’s attempt to balance exchange rate stability with the realities of foreign currency demand and supply. In 2006, a new law authorized the establishment and operation of private money exchange companies, introducing additional channels for foreign currency transactions outside the traditional banking system. Despite this formalization, a small black market for foreign currency persisted, driven by discrepancies between official and market exchange rates and the demand for currency outside regulated channels. The existence of this parallel market highlighted ongoing challenges in managing currency flows and maintaining exchange rate stability. The onset of the Syrian Civil War in 2011 precipitated significant capital flight to neighboring countries, exacerbating the fragility of the domestic financial system. This outflow was intensified by a series of sanctions imposed by the United States, Canada, the European Union, the Arab League, and Turkey, which targeted Syrian financial institutions and restricted their access to international markets. The combined effects of conflict and sanctions severely undermined confidence in the Syrian pound and the banking sector, accelerating the movement of funds abroad. The Syrian pound (SYP) experienced severe depreciation during this period, with the official exchange rate plummeting from £S 47 per US$1 prior to the civil war to £S 1,256 per US$1 by June 2020. This dramatic decline reflected the deteriorating economic conditions, inflationary pressures, and loss of foreign currency reserves. The exchange rate used for money transfers stabilized at approximately £S 1,250 per US$1, while the non-official or black market exchange rate plunged even further, reaching around £S 4,000 per US$1 by March 2021. The divergence between official and black market rates underscored the ongoing challenges in Syria’s currency management and the persistent demand for foreign currency outside official channels.

Tourism in Syria underwent a profound decline as a direct consequence of the Syrian Civil War, which began in 2011 and has since inflicted widespread devastation on the country’s infrastructure and social fabric. The prolonged conflict severely disrupted the stability and safety conditions necessary for tourism, rendering many of the nation’s historic sites and cultural landmarks inaccessible or unsafe for visitors. As violence escalated and various regions fell under the control of different factions, the overall security situation deteriorated, leading to a sharp reduction in both domestic and international tourist arrivals. The civil war also triggered a massive refugee crisis, displacing millions of Syrians internally and abroad, which further strained the country’s resources and diminished its capacity to support tourism-related services and infrastructure. The tourism sector’s challenges were compounded by the global outbreak of the COVID-19 pandemic in early 2020, which imposed additional restrictions on travel and mobility worldwide. Beginning in March 2020, Syria experienced a significant downturn in tourism activity as international borders closed and flights were suspended to curb the spread of the virus. The pandemic’s impact was particularly severe given the already fragile state of the country’s tourism industry, as it further reduced the flow of foreign visitors who might have otherwise contributed to economic recovery efforts. Domestic tourism also suffered due to lockdown measures, health concerns, and economic hardships faced by the population, all of which limited discretionary travel and spending within Syria. International economic sanctions imposed on Syria have played a critical role in undermining the tourism industry’s potential for recovery and growth. These sanctions, enacted by various countries and international bodies in response to the ongoing conflict and political developments, have restricted foreign investment and curtailed Syria’s access to global financial markets. The resulting economic isolation has hindered the development and maintenance of tourism infrastructure, including hotels, transportation networks, and cultural preservation projects. Moreover, the sanctions have contributed to a broader economic environment characterized by uncertainty and limited resources, which has discouraged both domestic entrepreneurs and international stakeholders from engaging in tourism-related ventures. The cumulative effect of these sanctions has been a significant impediment to revitalizing Syria’s tourism sector in the post-conflict period. Another critical factor exacerbating the decline in tourism has been the sharp depreciation of the Syrian pound, which has led to increased costs and heightened economic uncertainty across the country. The currency’s devaluation has diminished the purchasing power of both residents and potential visitors, making travel and tourism services more expensive and less accessible. This economic instability has discouraged domestic tourists from traveling within Syria, as well as deterring international tourists who face challenges related to currency exchange and financial transaction difficulties. The loss of confidence in the national currency has also affected businesses operating in the tourism sector, as fluctuating costs and inflation have complicated budgeting and investment decisions. Together, these economic pressures have contributed to a sustained downturn in tourism activity, further limiting the sector’s ability to contribute to Syria’s broader economic recovery.

Syria’s population was estimated at approximately 21 million people, with the government reporting a population growth rate of 2.37%. This relatively high growth rate contributed to significant demographic challenges, particularly in terms of labor market dynamics and economic development. The demographic structure of the country revealed a notably young population, with about 65% of Syrians under the age of 35 and more than 40% under the age of 15. Such a youthful population implied a rapidly expanding labor force, placing considerable pressure on the economy to generate sufficient employment opportunities to accommodate the influx of new job seekers each year. Annually, over 200,000 new entrants joined the Syrian labor market, reflecting the country’s high birth rates and youthful demographic profile. Despite this steady addition of potential workers, the Syrian economy struggled to absorb this growing labor supply adequately. Structural inefficiencies, limited industrial diversification, and the impacts of ongoing political and economic challenges constrained the economy’s capacity to create enough jobs. By 2017, the total labor force was estimated to be around 3.767 million individuals, indicating the scale of the working-age population actively seeking employment or engaged in economic activities. Examining employment distribution in 2008 provides insight into the sectoral composition of Syria’s labor market. Approximately 67% of the employed population worked in the services sector, which included government employment and public administration. This dominance of the services sector underscored the importance of public sector jobs and service-oriented industries in the Syrian economy. Agriculture accounted for about 17% of employment, reflecting the country’s continued reliance on farming and related activities, particularly in rural areas. Industry, including manufacturing and construction, employed roughly 16% of the workforce, highlighting the relatively modest size of Syria’s industrial base compared to services and agriculture. Government and public sector employees constituted a significant portion of the labor force, making up about 30% of total employment. These workers typically received very low salaries and wages, a factor that contributed to limited purchasing power and constrained domestic demand. The public sector’s prominence in employment also indicated the state’s role as a major employer, but the low remuneration levels pointed to challenges in improving living standards and economic well-being for a large segment of the population. Official statistics released by the Syrian government in 2009 reported an unemployment rate of 12.6%. However, independent assessments and external observers suggested that the actual unemployment rate was closer to 20%, reflecting underreporting and the presence of hidden unemployment or underemployment. This discrepancy highlighted the difficulties in accurately capturing labor market conditions and the extent of joblessness within the country. Furthermore, approximately 70% of Syria’s workforce earned less than US$100 per month, underscoring widespread low income levels and the prevalence of poverty among employed individuals. Anecdotal evidence pointed to a significant number of Syrians seeking employment opportunities beyond the country’s borders, particularly in neighboring Lebanon. These cross-border labor movements often exceeded official figures, indicating a substantial informal labor migration driven by the search for better wages and working conditions. This trend underscored the limitations of the domestic labor market and the economic pressures faced by many Syrians, who resorted to seeking livelihoods abroad despite potential legal and social challenges. In response to the persistent unemployment and underemployment issues, the Syrian government established the Unemployment Commission (UC) in 2002. The commission was tasked with the ambitious mandate of creating several hundred thousand jobs over a five-year period, aiming to alleviate unemployment and stimulate economic growth. Despite these efforts, the scale of job creation remained insufficient to meet the needs of the rapidly expanding labor force, and unemployment continued to pose a significant socio-economic challenge. By June 2009, reports indicated that approximately 700,000 Syrian households, representing about 3.5 million people, had no income. This alarming statistic reflected the depth of economic hardship experienced by a substantial portion of the population, exacerbated by inadequate job opportunities and low wages. The Syrian government acknowledged that the economy was not growing at a pace sufficient to generate enough new jobs annually to keep up with population growth, highlighting the structural constraints and developmental challenges facing the country. The United Nations Development Programme (UNDP) provided further context to Syria’s socio-economic situation by announcing in 2005 that 30% of the population lived in poverty, with 11.4% subsisting below the subsistence level. These figures illustrated the widespread nature of poverty and deprivation, which were closely linked to labor market conditions, income distribution, and economic performance. The persistence of poverty underscored the need for comprehensive policies aimed at inclusive growth and social protection. Responsibility for labor-related issues in Syria rested primarily with the Ministry of Social Affairs and Labour. This ministry oversaw labor market regulations, employment policies, social welfare programs, and initiatives aimed at improving working conditions and labor rights. Its role was central to addressing the complex challenges of unemployment, underemployment, and poverty, as well as coordinating efforts to enhance the overall functioning of the labor market within the broader context of Syria’s economic development.

A comprehensive analysis conducted by the Strategic Foresight Group, an India-based think tank, assessed the opportunity cost of conflict for the Middle East over the period from 1991 to 2010. This extensive study quantified the cumulative economic losses attributable to regional conflicts at an estimated US$12 trillion, expressed in 2006 dollars to account for inflation and purchasing power parity. The calculation encompassed a wide range of factors including foregone economic growth, diminished investment, destruction of infrastructure, and the diversion of resources toward military expenditure rather than productive development. Within this broader regional context, Syria’s share of the opportunity cost was determined to be approximately US$152 billion, a figure that starkly illustrated the profound economic toll exacted by prolonged instability and violence. This amount was more than four times greater than Syria’s projected gross domestic product (GDP) for 2010, which stood at an estimated US$36 billion, underscoring the magnitude of economic potential lost due to conflict. The onset of the Syrian civil war in 2011 precipitated a dramatic deterioration in the country’s labor market, as documented by the Syrian Center for Policy Research in March 2015. By that time, nearly three million Syrians had lost their jobs as a direct consequence of the ongoing conflict. The widespread destruction of industrial facilities, disruption of agricultural activities, and collapse of service sectors contributed to this massive employment contraction. These job losses extended beyond individual livelihoods, affecting the broader economic fabric by eroding the primary sources of income for more than 12 million people across Syria. This figure represented a significant portion of the population, reflecting the conflict’s extensive reach into the socioeconomic well-being of Syrian households. The loss of employment not only diminished household incomes but also exacerbated poverty and food insecurity, as families struggled to meet basic needs amidst the ongoing crisis. The rapid escalation of unemployment was one of the most striking economic consequences of the civil war. Official estimates indicated that unemployment levels in Syria surged from a pre-conflict rate of 14.9 percent in 2011 to an alarming 57.7 percent by the end of 2014. This dramatic increase reflected both the destruction of economic infrastructure and the displacement of millions of workers. The collapse of key industries, such as manufacturing, construction, and agriculture, combined with the disruption of trade routes and markets, severely limited employment opportunities. Additionally, the exodus of skilled labor and the deterioration of public institutions further constrained job creation. The soaring unemployment rate not only reflected the immediate economic devastation but also highlighted the long-term challenges facing Syria’s labor market recovery. The economic decline and widespread unemployment had severe repercussions on poverty levels within Syria. By 2015, approximately four out of every five Syrians were living in poverty, a staggering increase from pre-conflict conditions. The pervasive poverty was driven by a combination of factors including loss of income, inflation, scarcity of goods, and the destruction of social safety nets. The conflict-induced economic contraction reduced access to essential services such as healthcare, education, and housing, further entrenching poverty across urban and rural areas alike. Within this context, an estimated 30 percent of the population was classified as living in “abject poverty” during 2015. This subset of the population faced extreme deprivation, frequently unable to meet basic household food needs, resulting in widespread malnutrition and heightened vulnerability among children and other at-risk groups. The prevalence of abject poverty underscored the humanitarian crisis that accompanied the economic collapse. The protracted nature of the conflict and its cumulative economic effects continued to deepen poverty well beyond 2015. By 2023, estimates indicated that approximately 90 percent of the Syrian population was living below the poverty threshold. This dramatic increase reflected ongoing instability, persistent economic sanctions, and the slow pace of reconstruction efforts. The widespread poverty encompassed not only loss of income but also limited access to essential goods and services, including food, clean water, healthcare, and education. The pervasive impoverishment contributed to social fragmentation and heightened vulnerability, complicating efforts toward national recovery and reconciliation. The scale of poverty in Syria represented one of the most severe socioeconomic crises in recent history, illustrating the profound opportunity cost of prolonged conflict on the country’s economic and social development.