The opinion piece titled “A roadmap for a new Syria” was published in Arabian Gulf Business Insight (AGBI) on 7th January 2025.
A version of this article, titled “Whither the new Syria?“, was published in Afkar (managed by the Middle East Council on Global Affairs).
A roadmap for a new Syria
The challenges are daunting and the stakes are high
History was made in Syria last month, and seismic shocks are reverberating across the region.
First, we are witnessing the final convulsion after almost 110 years of the Sykes-Picot treaty, the secret agreement between Great Britain and France in 1916 that divided the post-First World War Ottoman Empire into “spheres of influence”, the “peace to end all peace”, as the historian David Fromkin called it.
It is ironic that the modern representatives of those bygone treaty powers, Great Britain and France, have just attended a meeting with Turkey (itself the heir of the dismembered Ottoman Empire) along with the US, Germany and Arab countries to decide on the future of Syria and a new regional map.
Second, the “Axis of Resistance”, encompassing Iranian ambitions and attempted extension of power, which has resulted in an economic and financial disaster for all the countries involved, is waning.
Third, the collapse of the Bashar Al-Assad regime ends the last vestige of socialist, controlled-economy models in the Arab world. These have failed to generate economic growth and development and have created fragile, vulnerable countries.
Fourth, the Assads’ despotic regime violently suppressed political reform at the onset of the Arab Spring. Instead, a cycle of violence and destruction was unleashed, institutions were destroyed, corruption and extremism became pervasive, and another failed state on the Mediterranean was created.
Can a new Syria emerge from the ashes of collapse? The challenges are daunting.
Over the period 2010 to 2023, Syria’s real GDP contracted by an impoverishing 84 percent across all sectors, the World Bank’s Syria Economic Monitor shows.
This was caused by the destruction of infrastructure, drought, population displacement, macroeconomic instability, collapse of investment and trade – exports fell to $1 billion in 2023 from $8.8 billion in 2010 – and growing international isolation.
By 2023 the Syrian pound had collapsed 300-fold in 12 years, plunging from SYP47 to the dollar in 2011 to more than SYP14,000 per greenback.
The sharp contraction of GDP during the civil war accelerated after the imposition of the Caesar Act, through which the US imposed sanctions on the Assad regime in 2019. International sanctions and currency depreciation followed, causing inflation to surge to 115 percent in 2023.
With growing isolation and an absence of political and economic reform, Syria became increasingly dependent on Iran.
An expanding informal economy, driven by smuggling and the drug trade, primarily fenethylline, the amphetamine-like illegal stimulant better known as Captagon, generated an estimated $10 billion annually, mostly controlled by the security services and Assad allies.
How to build a new Syria
Where are the building blocks for a new Syria? An integrated transition is required.
First, a cessation of violence and restoration of security must ensure Syria’s territorial integrity and guarantee political pluralism including all ethnic and religious groups. These are critical elements in a transition to democratic governance, grounded in structural political, economic and social reform.
This requires a new constitution, elections and a new government to sweep away Baath Party institutions and heal the wounds of the nation through a “truth and reconciliation” body.
Second, humanitarian aid is a priority, along with the set-up of a fund to enable the return and resettlement of the 7.2 million internally-displaced people and the more than 6 million refugees.
Third, estimates of the cost of Syria’s reconstruction and redevelopment range from $400 billion to $600 billion. This is needed to rebuild infrastructure, given the destruction of much of Syria’s health, education, water, transport and energy systems.
Syria’s cities, including Aleppo, Homs, Hama, Daraya, and Deir El Zor, have been subject to systematic urbicide. An international reconstruction and redevelopment package of aid and grants will be required.
Debt accumulated by the Assad regime should be written off and international sanctions removed. Syria’s substantial natural resources in oil and gas, and phosphates, and the pipeline infrastructure linking Syria to the GCC can be harnessed to attract reconstruction finance.
Private sector
Fourth, building a modern Syria means dismantling the control economy along with corrupt, politically controlled, state-owned enterprises and government-related entities, allowing a resurgence of the private sector.
This will require a restructuring of institutions, with reform of economic and social policies to attract domestic and foreign – including expatriate – capital.
Fifth, reconstruction and redevelopment will require the reintegration of Syria into the GCC, the Arab world and the international economy.
A new Syria will have to be rebuilt from its foundations to undo 61 years of destruction, de-development, despotic rule, endemic corruption, and misgovernment.
Failure to ensure an integrated transition encompassing the political, security, social and economic dimensions of a new Syria has the potential to destabilise the whole region. The stakes go beyond Syria.
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The human toll from violence in the Middle East and North Africa (MENA) has reached historic proportions. Since 2000, an estimated 60% of the world’s conflict-related deaths have been in the MENA region, while violence in Iraq, Libya, Syria, and Yemen continues to displace millions of people annually.
For countries hosting refugees from these conflicts, the challenges have been acute. According to a 2016 report by the International Monetary Fund, MENA states bordering high-intensity conflict zones have suffered an average annual GDP decline of 1.9 percentage points in recent years, while inflation has increased by an average of 2.8 percentage points.
Large influxes of refugees put downward pressure on a host country’s wages, exacerbating poverty and increasing social, economic, and political tensions. And yet most current aid strategies focus on short-term assistance rather than long-term integration. Given the scale and duration of MENA’s refugee crisis, it is clear that a new approach is needed, one that shifts the focus from temporary to semi-permanent solutions.
To accomplish this, three areas of refugee-related support need urgent attention. First, donor countries must do more to strengthen the economies of host states. For example, by buying more exports from host countries or helping to finance health-care and education sectors, donors could improve economic conditions for conflict-neighboring states and, in the process, create job opportunities for refugees.
For this to pay off, however, host countries will first need to remove restrictions on refugees’ ability to work legally. Allowing displaced people to participate in formal labor markets would enable them to earn an income, pay taxes, and eventually become less dependent on handouts as they develop skills that eventually can be used to rebuild their war-ravaged countries.
Employment might seem obvious, but most MENA host countries currently bar refugees from holding jobs in the formal sector (Jordan is one exception, having issued some 87,000 work permits to Syrian refugees since 2016). As a result, many refugees are forced to find work in the informal economy, where they can become vulnerable to exploitation and abuse.
But evidence from outside the region demonstrates that when integrated properly, refugees are more of a benefit than a drain on host countries’ labor markets. For example, a recent analysis by the Refugee Studies Centre at the University of Oxford found that in Uganda, refugee-run companies actually increase employment opportunities for citizens by significant margins.
A second issue that must be addressed is protecting refugees’ “identity,” both in terms of actual identification documents and cultural rights. For these reasons, efforts must be made to improve refugees’ digital connectivity, to ensure that they have access to their data and to their communities.
One way to do this would be by using blockchain technology to secure the United Nations’ refugee registration system. This would strengthen the delivery of food aid, enhance refugee mobility, and improve access to online-payment services, making it easier for refugees to earn and save money.
Improved access to communication networks would also help refugees stay connected with family and friends. By bringing the Internet to refugees, donor states would be supporting programs like “digital classrooms” and online health-care clinics, services that can be difficult to deliver in refugee communities. Displaced women, who are often the most isolated in resettlement situations, would be among the main beneficiaries.
Finally, when the conflicts end – and they eventually will – the international community must be ready to assist with reconstruction. After years of fighting, investment opportunities will emerge in places like Iraq, Syria, and Sudan, and for the displaced people of these countries, rebuilding will boost growth and create jobs. Regional construction strategies could reduce overall costs, increase efficiencies, and improve economies of scale.
In fact, the building blocks for the MENA region’s postwar period must be put in place now. For example, the establishment of a new Arab Bank for Reconstruction and Development would ensure that financing is available when the need arises. This financial institution – an idea I have discussed elsewhere – could easily be funded and led by the Gulf Cooperation Council with participation from the European Union, China, Japan, the United States, the Asian Infrastructure Investment Bank, and other international development actors.
With this three-pronged approach, it is possible to manage the worst refugee crisis the world has experienced in decades. By ensuring access to work, strengthening communication and digital access, and laying the groundwork for post-war reconstruction, the people of a shattered region can begin planning for a more prosperous future. The alternative – short-term aid that trickles in with no meaningful strategy – will produce only further disappointment.