The priorities for rebuilding Syria’s economy

After more than a decade of war, destruction and economic collapse in Syria, the country’s new government faces an urgent and formidable challenge: rebuilding the nation’s shattered economy. Years of conflict have devastated infrastructure, displaced millions and left the country struggling with widespread poverty, inflation and a crumbling financial system. For Syria to move forward and achieve long-term stability, economic recovery must be a top priority.

One of the most significant obstacles to rebuilding Syria’s economy is the severe impact of Western sanctions. These restrictions, imposed over the years due to the war and political developments, have crippled Syria’s ability to trade, attract foreign investment and access global financial networks. Lifting these sanctions — a process started by the EU this week — is essential for economic revitalization, as it would allow Syria to engage in international commerce, rebuild industries and improve the daily lives of its citizens.

Regional support, particularly from Arab nations, is playing a crucial role in assisting Syria’s recovery, with efforts focused on restoring trade ties, providing investment and helping Syrians regain financial stability.

Beyond lifting sanctions and securing regional partnerships, Syria’s government must implement comprehensive economic strategies to stimulate growth, create jobs and restore essential services. Revitalizing key industries, rebuilding infrastructure and stabilizing the Syrian pound are necessary steps to ensure a sustainable recovery.

The Syrian economy has suffered one of the most severe contractions in modern history. According to reports, Syria’s gross domestic product shrank by 84 percent between 2010 and 2024. The nation’s currency has drastically devalued, leading to hyperinflation and making everyday goods unaffordable for most citizens. In 2023, it was reported that more than 90 percent of Syrians were living below the poverty line, struggling to afford food, medicine and other basic necessities.

Revitalizing key industries, rebuilding infrastructure and stabilizing the Syrian pound are necessary steps

Dr. Majid Rafizadeh

The country’s energy sector, once a crucial part of the economy, has suffered immense losses. Oil production has declined significantly, forcing Syria to rely on expensive fuel imports. Additionally, the destruction of infrastructure, including roads, power plants and water systems, has made industrial recovery even more challenging. Without a functioning economic system, businesses cannot operate efficiently and foreign investors will remain hesitant to engage with Syria due to the risks involved.

As a result, one of the most pressing steps toward economic recovery is the lifting of Western sanctions, which have placed severe restrictions on Syria’s ability to rebuild. These sanctions have frozen Syrian assets abroad, blocked financial transactions and limited the country’s access to international markets. Lifting these sanctions would have an immediate and significant impact on Syria’s economy. It would allow businesses to engage in international trade, making it easier to import essential goods and the raw materials needed for reconstruction. Additionally, easing financial restrictions would enable Syrians to receive remittances from relatives abroad — an important source of income for many families who are struggling to survive.

There have been discussions within the EU about easing sanctions and some were lifted on Monday, including restrictions on state-owned banks and investments in Syria’s energy and electricity sectors. These steps are crucial, but a broader lifting of sanctions is necessary to create real economic momentum.

To rebuild its economy, Syria must attract investment, particularly in key sectors such as infrastructure, energy and manufacturing. Infrastructure reconstruction is essential for restoring normal economic activity, as roads, ports and communication networks are necessary for trade and industry to function.

Investment in the energy sector is also critical. Syria’s electricity grid has been severely damaged, leading to frequent power shortages that make industrial and commercial activities difficult. By securing investment in power plants and alternative energy sources, the government can provide reliable electricity to businesses and households, improving overall economic stability.

Manufacturing and agriculture are two other sectors that require substantial investment. Restoring factories and supporting small businesses can help create jobs and stimulate local economies. Similarly, rebuilding the agricultural sector will ensure food security and reduce the need for costly imports.

In addition, encouraging both domestic and foreign investors to participate in Syria’s reconstruction will require significant policy reforms. The government must create a business-friendly environment by ensuring legal protections for investors, streamlining bureaucratic processes and guaranteeing stability in financial regulations. Without such reforms, potential investors may remain reluctant to engage with Syria’s economy.

A fully functioning transport network is also vital for economic recovery. The destruction of roads, bridges, railways and airports has made it difficult to move goods and people efficiently, further hindering trade and investment. Rebuilding highways and roads would allow agricultural and industrial products to reach markets more easily, reducing costs and increasing profitability for businesses. Restoring railways would enhance trade efficiency, making it easier for goods to be transported across the country and into neighboring markets. Additionally, reopening and modernizing Syria’s major ports would boost international trade, allowing the country to export its products and receive essential imports more efficiently.

Investment in transport infrastructure will also have long-term economic benefits by creating jobs, stimulating demand for construction materials and improving the overall efficiency of business operations.

Syria must attract investment, particularly in key sectors such as infrastructure, energy and manufacturing

Dr. Majid Rafizadeh

The collapse of the Syrian pound has led to inflation, making daily life increasingly difficult for citizens. Restoring confidence in the national currency is essential for economic recovery. This requires sound financial policies that promote stability, control inflation and encourage investment. Encouraging the use of banking services within Syria and strengthening financial institutions will further contribute to economic stability. Many Syrians have lost trust in the banking system due to war-related economic instability, so rebuilding confidence in financial institutions is a necessary step toward recovery.

Finally, Syria’s economy can greatly benefit from increased regional and international trade. Restoring trade partnerships with neighboring countries and reestablishing commercial routes can help Syria reintegrate into global markets. Several Arab nations have already shown an interest in helping Syria regain economic stability. Strengthening these ties can lead to trade agreements that facilitate the movement of goods, reduce tariffs and encourage business collaborations.

By improving its trade relations with regional partners, Syria can gain access to new markets and benefit from foreign investments that support key industries. The reopening of trade routes, border crossings and customs facilities will be crucial for Syria’s economic recovery. Facilitating smoother trade transactions with neighboring countries will help businesses thrive and create new opportunities for economic growth.

In sum, Syria’s economic challenges are immense, but they are not insurmountable. The key to recovery lies in a multifaceted approach that includes lifting sanctions, attracting investment, rebuilding infrastructure, stabilizing the currency and strengthening trade relations. By prioritizing economic growth and implementing sound policies, Syria’s new government can create a foundation for stability, prosperity and a better future for its people. The road to recovery will not be easy, but with the right strategies and international cooperation Syria can rebuild its economy and offer its citizens the opportunity for a more secure and prosperous life.

- Dr. Majid Rafizadeh is a Harvard-educated Iranian American political scientist. X: @Dr_Rafizadeh