Syria needs an economic reconstruction program. Desperately. Yet nearly a year after the fall of dictator Bashar al-Assad, there is still no talk of putting together a comprehensive economic reconstruction plan, whether in Damascus or among the obvious international stakeholders. Without clarity and wide-based consultation on the country’s new economic framework, there is a distinct risk that the cronyism of the Assad-era economy will reappear, undermining social equity and generating political discontent, and that violence will reemerge as “a central mechanism for the redistribution of power and wealth among competing forces,” as it did during the long civil war.
The new Syrian authorities have announced memorandums of understanding worth $14 billion and contracts worth billions more with foreign commercial and government entities. Yet this only underlines the absence of an integrated, overall approach to economic reconstruction, one in which the present focus on generating quick revenue through real estate schemes and leasing major infrastructure facilities to foreign investors is balanced with investment in productive sectors including industry, agriculture, and services that can generate jobs and enhance economic complementarity. Moreover, the lack of transparency when it comes to contract details, settlements with Assad-era business cronies, liquidation of Baath Party assets, and the government’s new sovereign wealth fund impedes accountability and threatens the viability of investments. The official embrace of a free-market approach lacks guardrails, and is not shaped by consultation with relevant economic actors and social groups.
The absence of a comprehensive economic reconstruction plan for Syria is paradoxical. After all, it was evident during the long, brutal war that the country would need large-scale economic reconstruction. In 2012, the United Nations’ Economic and Social Commission for Western Asia launched the first major effort to prepare for reconstruction, the National Agenda for the Future of Syria, which was intended as “a platform for technical dialogue for Syrian experts” to discuss “social, economic and governance factors” in a “post-conflict Syria.” A year later, Friends of the Syrian People, an international diplomatic collective, foreshadowed reconstruction by creating a multi-donor Syria Recovery Trust Fund “to alleviate the suffering of the Syrian people” by funding essential services.
The European Union (EU) and its member-states, collectively the largest donor of humanitarian and non-humanitarian aid to Syrian refugees and internally displaced persons as well as to neighboring countries affected by the conflict, stated in 2015 that EU funding could “also be adapted to reconstruction needs in Syria in a future post-conflict scenario.” Reconstruction remained a central framing theme for EU policy toward Syria until at least 2019. However, some member-states, tiring of the burden, subsequently sought ways of undertaking “selective reconstruction”: engaging the Assad regime through a “more for more” approach that offered support for recovery and reconstruction and a normalization of political relations in return for “structural reforms.” Since Assad’s fall, the EU has replaced talk of reconstruction entirely, preferring talk of “recovery.”
But none of this comes anywhere near addressing Syria’s present needs. The cost of repairing the country’s physical infrastructure, including much of its health, education, water, transport, and energy systems, as well as its productive sectors, was estimated in 2019 at $250–400 billion. Syrian Minister of Economy and Industry Mohammed Nidal al-Shaar claimed in May 2025 that “at least $1 trillion” was needed to “reconstruct and rebuild a new Syria,” while in August the World Bank more conservatively estimated the reconstruction bill at between $141 billion and $343 billion, with a “best estimate” of $216 billion. Repatriating and rehousing refugees and internally displaced persons, who together form over half the population, and lifting the 90 percent who live below the poverty line above it, require massive additional funding. And, according to the head of the Syrian Securities and Financial Markets Commission, although Syrian businesses held over $100 billion abroad by the start of 2024, there has been minimal return capital flow amid uncertainty about security and lack of clarity on economic policy.
Little has changed in this picture since Assad’s downfall and the establishment of an interim government under President Ahmad al-Sharaa. The EU lifted its economic sanctions against Syria and then repurposed €175 million (roughly $200 million) of already pledged assistance toward “institutional capacity building, revitalizing rural and urban economies … as well as justice and accountability efforts” in June 2025. But the EU’s eighteen-point policy statement issued a few weeks later left the notion of reconstruction broad and aspirational. Conspicuously absent were concrete steps toward planning and implementing an actual program, or proposals to set up a coordinating mechanism, whether within the European Commission or with other stakeholders and the Syrian government.
The United Nations has announced that it is updating its “Whole-of-Syria” framework to “a more inclusive and cohesive structure,” with a view to helping the country “transition from immediate humanitarian aid to long-term sustainable development and reconstruction.” But once again, the practical focus draws heavily from the United Nations’ existing Early Recovery Strategy; launched in November 2024, the latter focused on health and nutrition, education, water, and sanitation and hygiene, but did not offer a vision or modalities for reconstruction. Multilateral Arab and Gulf development agencies that have pledged support for specific sectors, such as the OPEC Fund for International Development and the Arab Gulf Program for Development, have similarly held back from promoting, let alone leading, a comprehensive approach to reconstructing the economy.
Discomfort at having to deal with authorities headed by former proscribed jihadis may serve as a disincentive to taking bold steps or formulating ambitious programs. But the drastic reduction of overseas development assistance by Western (and Gulf) governments is a more important factor. The liberal institutional framework that incorporated reconstruction as a field of development policy and practice is in serious, if not terminal, disrepair. It has been well over a decade since an internationally mediated comprehensive peace deal ended a war, and longer still since an agreed upon reconstruction plan was put in place. Indeed, even before this decline, the conventional reconstruction paradigm was rarely impressive. Its track record in bringing economic “peace dividends,” generating security (or preventing a renewal of armed conflict), creating jobs, and building the basis for genuine, equitable, and sustained economic growth was highly uneven. Not only were there more failures than success stories, but the failures left post-conflict societies worse off than before, socially and economically.
Abandoning the donor-driven approach and its handbook of depoliticized, technical solutions is therefore not a bad idea. Nonetheless, three key takeaways of the reconstruction paradigm should still guide Syrian authorities, if they are to succeed in overcoming the structural challenges facing the economy.
First, getting the institutional setting right: Restoring and strengthening the central state is a typical response to post-conflict conditions, with the aim of delivering results swiftly and efficiently. But this is often a false cost-saving move. Devolution and decentralization are a necessary complement to restoring central government functioning—in program design, the setting of economic and social priorities, and resource allocation. Moreover, devolution and decentralization are better suited to meeting the needs of vulnerable or marginal sectors such as refugees, internally displaced persons, and female-headed households, and to generating societal buy-in generally.
Second, inclusive economic agenda-setting: Who gets to shape the economic agenda is of paramount importance. Social groups diverge in their assumptions, preferences, and expectations regarding the economy and, crucially, in their economic opportunity and access. Powerful actors inevitably skew outcomes, often to the detriment of social equity and political stability. Differences regarding the role of the state in providing services, welfare, investment, and enforcing property rights are already apparent in Syria, whether across the urban-rural divide or within urban and rural communities, between the business class and state authorities and within the business class, among former and new beneficiaries of public-sector employment, and among various strands within civil society.
Third, governance: Economic reconstruction is susceptible to capture by powerful political actors, both domestic and foreign. Vulnerable groups—especially refugees, internally displaced persons, and women, but also sectarian and ethnic minorities—are at risk of being further disempowered and marginalized. Whereas devolving governance could enhance legitimacy and accountability and mute communal differences, the hollowing out of the country’s institutional framework and the striving of the new state authorities to centralize political power and social control point in the opposite direction.
Yet there has been no effort in Damascus to develop a reconstruction program, let alone finance one, nor to consult key stakeholders—whether domestic or foreign. In the absence of a coordinated initiative on either the national or international level, the Syrian government has fallen back on a mishmash of disconnected economic policy decrees and investment projects. Contradictions are evident: Some state assets are being slated for privatization in what appears to be an erratic manner, with little transparency regarding the beneficiaries and the terms of sale, making the process vulnerable to renewed cronyism; yet state companies are also being reformed and show what the respected economic newsletter Syria Report describes as “renewed dynamism.” Similarly, as Syria Report also notes, the draft tax law currently under consideration significantly reduces taxes on individuals and companies in the name of being business-friendly, yet further impedes a severely cash-strapped state from investing in rehabilitating and upgrading infrastructure, restoring a skilled workforce, and encouraging productive and exporting sectors. Indeed, the government has said that it intends neither to borrow money nor to increase fiscal revenues. This would appear to make it dependent on grants—which hardly constitutes an economic policy.
The partial lifting of U.S. and other sanctions, modest financial assistance from the Gulf countries, and preliminary talks with the International Monetary Fund and World Bank all initially generated optimism. So did agreements with Saudi, Qatari, and Emirati companies for major infrastructure and energy projects, for which the World Bank promised $146 million. Central bank governor Abdel-Qader Husrieh and several ministers have made public commitments to enact free-market reforms intended to attract foreign investment, remove barriers to trade, stabilize the currency, and restructure the banking sector. But how these differ from Assad-era economic liberalization, and what tax, investment, and subsidy policies they involve is unclear. More generally, there have been more promises than material changes on the ground, and liquidity remains short, despite the banking system’s welcome reconnection to the Swift international payment system.
The authorities are caught in a bind: Continuing hardship can no longer be blamed on suffocating international sanctions, but the benefits of investments in infrastructure and energy will not be felt for a long time. Meanwhile, real estate development, which is emerging as a quick-fix—as it did during Assad’s final years in power—is aimed at the small number of Syrians who can afford it amid rampant inflation in land prices and a housing crisis for lower-income groups. Further underlining the need for a countrywide approach is that economic revival depends heavily on reaching consensual political settlements and credible security arrangements, enabling full reintegration into the state of the resource-rich Kurdish self-administered region and the southern Suwayda Governorate.
Clearly, the authorities in Damascus face tough choices regarding how to bring money into local markets, replenish exhausted state resources, and revive the formal economy. Without figuring out how to succeed in this task, the authorities may never be able to consolidate their rule. But in their haste to generate quick cash inflows, unravel Assad-era regulations, and recentralize government control, Syria’s new rulers are leaving local producers vulnerable to the lack of liquidity and credit, and to the influx of cheap imports. This has prompted the concentration of 80 percent of new companies in the capital, which has in turn worsened conditions for families dependent on food and fuel subsidies, aggravated socioeconomic disparities, and permitted land grabs by pro-government factions and clan allies, which entrenches armed predation as an economic mode. Even if matched by inward investment flows, Sharaa’s foreign policy successes cannot substitute for the fundamental weaknesses of a heavily lopsided domestic economy.
