Beyond sanctions
Unleashing Syria's economy from within
Among Syrians yearning for economic relief, Donald Trump’s pledge to lift all US sanctions sparked an explosion of hope. For good reason: This is the first sign of American willingness to loosen an economic siege that brought Syria to its knees and now threatens to strangle its transition. But not all can be solved from abroad: While we wait to see how quickly and completely Trump’s promise is fulfilled, Syria must throw off the restraints that shackle its economy from within. An opaque legal environment, disjointed economic policies, a crippling humanitarian crisis: Together, they are as dangerous to Syria’s recovery as Western sanctions or simmering violence. By articulating a plan to tackle them head-on, Damascus can prepare Syria to capitalize on sanctions relief—or to withstand likely delays.
To be sure, Syria’s economy showed signs of progress even before Trump’s announcement. Petty corruption, which soared in the final years of Bashar al-Assad’s reign, has decreased palpably. Checkpoints where the former regime used to shake drivers down are now mere bumps on the road. Hotels buzz with foreign delegations and Syrian expats back from abroad, often attending conferences to scope avenues for investment. Electricity has improved in some areas, thanks to a long-awaited influx of Qatari gas. In Damascus suburbs battered by siege and bombing, locals trickle back to patch up homes and reopen shops.
This momentum, however, is fragmentary, born of countless disparate efforts rather than a consolidated vision for recovery. “All the rebuilding here is done by the community,” said a businessman in Eastern Ghouta. “Traders and industrialists have donated money to fix schools and collect waste. We started as soon as the regime fell—we didn’t wait for the state.” An economist in another Damascus suburb stressed that bottom-up recovery only goes so far: “We have lots of interesting initiatives, but it’s all local solidarity. People can do this up to a point, but really this is the work of a state.”
This longing for the state is not just about paying salaries and rebuilding infrastructure: It’s about resolving core problems of economic governance that hinder Syrian efforts to restart. Since December, for example, chaos reigns in the real estate sector, which is central to returns and reconstruction. Restrictions on property transactions have clogged formal channels to buy and sell real estate; no one seems quite sure why these restrictions persist, or when they will be lifted. Manufacturers wonder how Syria will manage trade with its neighbors, at a time when cheap Turkish goods have flooded the market and paralyzed local production. Similarly, taxi drivers that work the country’s lifelines to Lebanon and Jordan complain of ever-changing rules at Syria’s external border crossings. The list goes on, to include such essential fields as banking reform and monetary policy.
For some, the fog of unanswered questions is the greatest deterrent to investing. “There’s no clarity about where the business environment is headed,” remarked a Europe-based Syrian entrepreneur, fresh out of a tech-focused conference in Damascus. “There’s this ambiguity to everything, which makes it impossible to calculate risk.” For now, he hedges his bets: Investing some of his own money in a pilot project, but shying away from fundraising for something more ambitious.
Such ambiguity results from the absence of clear, trusted channels for communicating economic policy. Businesspeople, like everyone else in Syria, gather bits and pieces of information from myriad sources with varying levels of credibility: from formal government statements to social media, word of mouth, and local and international media reports citing anonymous sources. Hence the fact that well-informed Syrians often have totally different information on such basic matters as the state of Syria’s visa regime or property registries. Syrians are hungry for official communication that would help lift the confusion: Just take the hundreds of enthused comments thanking Abdulsalam Haykal, the newly appointed Minister of Communication, for posting on LinkedIn his directives to enable digital entrepreneurship.
Uncertainty extends beyond private business to another crucial sphere of Syria’s economy: humanitarian aid, on which so many Syrians still depend not just to survive, but to resettle and restart. International agencies have been slow to respond to Syria’s shifting needs, not least because many are struggling to survive their own deep budget cuts. But red tape in Damascus has slowed the response further, via laborious and under-resourced processes for registering NGOs and permitting activities. In the meantime, emergencies are multiplying. Save the Children reports more than 650,000 chronically malnourished children under the age of five, and warns that cuts to aid funding will likely increase the number. As summer looms, a deepening drought will further strain food, water, and health systems already on the verge of collapse.
The aid response, like the private sector, suffers from another form of ambiguity: the vacuum of hard data, which can only be filled by the state. This is nothing new: Under Assad, Syria’s Central Bureau of Statistics was so inaccessible that a particularly resourceful Syrian journalist—one who had no trouble interviewing Baathist officials and drug dealers—could never prize this black box open. War ratcheted up confusion, uprooting Syrians by the millions and plunging much of the economy into informality and criminality. As a result, today’s Syria lacks clarity even on such fundamental questions as the number of refugees returning from abroad or the population of any given city, town, or village.
Resolving such complex matters requires time and resources, more of which are needed from Syria’s external supporters. But it also requires, before all else, a sense of urgency in Damascus. It’s tempting to treat economic governance as a priority for later, which will fall into place once sanctions are eased, foreign support secured, and domestic security restored. The truth is the opposite: Without a stable legal environment and clear economic policies, even a sanctions-free Syria will struggle to attract the resources so desperately needed to stabilize the country. The good news is that unlike sanctions, foreign aid, or Israeli airstrikes, economic policy is squarely in the hands of Syria’s new leaders. By giving it the attention it demands, and fast, Damascus can take one big step toward enabling Syria’s transition.
Alex Simon is Synaps' research director.
Photos by Alex Simon / License Wikimedia Commons. Windows in Old Damascus; Cement bags in Douma
