Written by William Luebkert
Nearly fourteen years ago, Syrians demanded political and civil reforms, the release of political prisoners, the resignation of dictator Bashar al Assad, and an end to political corruption. What started as peaceful protests escalated into a full-scale civil war when Assad ordered the Syrian police and military to begin brutal crackdowns against demonstrators (Ali et al., 2024). Over the course of the civil war, the Syrian Gross Domestic Product (GDP) has fallen from $67.5 billion in 2011 to $9 billion in 2023, a contraction of 85% (Martin, 2024). The civil war also led to a 141% depreciation of the Syrian pound against the USD and increased domestic inflation by as much as 93%. Consequently, Syrian purchasing power has drastically decreased and the poverty rate rose as high as 69%, leaving millions of Syrians unable to secure their basic food needs (World Bank Group, 2024).
Economic Reforms
Fourteen years later, the New Syrian Transitional Government has been left with the monumental task of repairing an economy destroyed by sanctions and more than a decade of war. In the months since the establishment of the Transitional Government on December 8, 2024, it has sought to do away with some of the more centrally planned aspects of the Syrian economy in favor of market liberalization policies. Among the first of the economic reforms the new Syrian government has implemented are policies aiming to entirely abolish the nation’s import and export controls. Under the Assad regime, businesses wishing to import or export goods from the country first had to gain permission from the Central Bank of Syria, and then deposit Syrian pounds at the central bank in exchange for dollars with which to conduct international trade. It would often take multiple days or weeks for the central bank to deliver the funds to those who requested them, which created delays in Syrian supply chains and contributed to the nation’s shortages of basic goods. In an interview with Reuters, four prominent Syrian business leaders stated that they have found the changes thus far to be promising (Azhari, 2024).
Since repealing its existing policy on import and export controls, the Syrian economy has undertaken further reforms aimed at market liberalization at the cost of public sector employment. In particular, the Syrian Transitional Government has declared its intent to lay off a third of the nation’s public sector workers and conduct a mass privatization of state-owned enterprises. Although the Syrian government has promised that government-owned energy and transportation assets will remain nationalized, it has pledged to privatize 107 state-owned industrial enterprises that usually fail to turn a profit, per Syrian Economy Minister Basil Abdel Hanan. In addition to its plans to privatize numerous state-owned enterprises, the Syrian government has announced its plans to close several others that appeared only to serve as vehicles to embezzle state funds. The sheer scale of the embezzlement came as a shock to Syrian Finance Minister Mohammad Abazeed, who expressed that “we expected corruption, but not to this extent” (Alkoussa, 2025). The policies aimed at laying off the hundreds of thousands of public sector employees that the Transitional Government perceives as unnecessary have resulted in protests from government employees who feared losing their jobs. Nonetheless, Abazeed hopes that the nation’s economic reforms will remove obstacles to foreign investment, encouraging the return of investors to the country “so that their factories within the country can serve as a launchpad” to grow the nation’s exports (Alkoussa, 2025).
Complications to Recovery
Even as some of the new government’s economic reforms have induced optimism among business leaders, the economic challenges facing the Syrian Transitional Government go beyond merely the devastation caused by the war itself and the prior policy choices of Assad’s regime. Amidst Assad’s human rights violations, which began the conflict and persisted throughout it, Western nations and financial institutions imposed a variety of sanctions on the country with the hope that their effects would threaten his hold on power. The sanctions had a far-reaching character and still mostly remain in place. They targeted Syria’s energy industry, banking and telecommunications firms, and even the nation’s Central Bank. The United States in particular has banned any use of the dollar in transactions involving Syria and threatened to punish foreign firms and individuals domestically should they conduct business in the country. Even with Assad gone, the fact remains that the Syrian rebel group Hayat Tahrir al-Sham (HTS) that formed and controls the new transition government has itself been the subject of material sanctions (The Economist, 2025).
Recognizing that any Syrian economic recovery would necessitate a lifting of sanctions, Syria’s international neighbors have lobbied Western nations to undertake such actions (Akour, 2025). For its part, the European Union has begun to gradually ease some sanctions. It has agreed to suspend sanctions that targeted the nation’s energy, electricity, transportation, aviation, and banking sectors. Syrians may now also import luxury goods from the EU. The EU Foreign Ministry has issued a public statement alongside the reprieve in sanctions, asserting that their efforts will “support an inclusive political transition in Syria, and its swift economic recovery, reconstruction, and stabilization” (Associated Press, 2025). The United States has thus far proved far more reluctant than their fellow transatlantic democracies. In January, the U.S. Treasury issued a six-month license that would permit some Syrian energy sales and small-scale transactions with the hope that such actions would help facilitate the flow of humanitarian aid into the country. American sanctions still remain in place, however. (Al Jazeera, 2025). Despite the EU’s partial lifting of sanctions and the recent economic reforms initiated by the Syrian Transitional Government, the persistence of American sanctions remains the primary obstacle to attracting international investment to the country. Some Qatari sources recently informed Reuters that “Qatar is refraining from providing funds to the new Syrian rulers to increase public sector salaries due to ambiguity over whether the transfers would constitute a violation of US sanctions, which poses a hurdle to efforts aimed at revitalizing the economy affected by war” (Eldin, 2025).
Bottom Line
At the present moment, most Syrians seem to share in the sentiments of renewed optimism exhibited by their new leaders (United Nations, 2025). Indeed, the Syrian Transitional Government does seem poised to remove unpopular import and export restrictions and crack down on the rampant corruption present in the nation’s public sector that played a role in sparking the civil war in the first place (Alkoussa, 2025; Azhari, 2024). That being said, no amount of domestic economic reforms can outweigh the repellant effect that sanctions threatening to punish individuals and firms that conduct business in the country have on foreign investment. As the months continue to pass since the imposition of the new government, only time will tell if it will continue to implement market liberalization policies and regain the trust of Western governments on the nation’s path to economic recovery. Should the transitional government fail in its efforts to rebuild the Syrian economy, it could risk resuming the conflict that has taken the lives of nearly 620,000 Syrians (Baker, 2024).
References
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