The article titled “Syria at the crossroads: From sanctions and collapse to redevelopment and reintegration” appeared in the print edition of The National on 18th July 2025 and is posted below.

Syria at the crossroads: From sanctions and collapse to redevelopment and reintegration

Nasser Saidi 

The pre-2011 Syrian economy, while facing structural challenges, was that of a lower-middle-income country with a functioning industrial base, a significant agricultural sector and nascent potential in tourism and services.

That reality was devastated by 14 years of war, violence and sanctions, emerging into a drug-based Captagon economy. Its gross domestic product contracted by more than 50 per cent from its pre-war peak (by 83 per cent if one uses night-time light estimates) between 2010 and 2024.

Half the pre-war population has been forcibly displaced, representing lost generations of economic output and potential. About two-thirds of the current population lives in poverty (earning less than $3.65 per capita a day), and more than half the population faces food insecurity.

The directly visible indicator of the devastation was the collapse of the local currency (from 47 Syrian pounds per US dollar in 2010 to 14,800 by the end of 2024), as growing budget deficits were financed by the monetary printing press and people shifted into foreign currencies to hedge against near-hyperinflation.

The removal of US sanctions and of Syria’s “designation as a state sponsor of terrorism” is strategically important. The decision was followed by the EU passing legislation to lift all sanctions, thereby enabling Syria’s reintegration into the international economic and financial community.

The Gulf and other Arab countries are steadily bringing Syria back into the fold, restoring long-disrupted economic and financial relations. Saudi Arabia and Qatar have settled Syria’s arrears to the World Bank, pledged to fund public sector restructuring and rebuild energy infrastructure, signed agreements for major infrastructure and power projects, and the resumption of airline services. Iraq has reopened a main border crossing, and DP World has signed an $800 million deal to develop Tartus Port.

Sanctions removal allowed for Syria’s renewed participation in the SWIFT payment system, reactivating formal channels for international trade, remittances and financial flows, delivering a powerful antidote to the scenario of hyperinflation and a dominant illicit sector.

The removal unlocks a multistage recovery process, sequentially addressing the critical deficits in liquidity, capital and strategic infrastructure investment that currently paralyse the country.

Transparent reforms urgent

However, the success of this pathway will be contingent on the implementation of credible and transparent, domestic, structural and institutional reforms.

Syria needs a comprehensive IMF programme and support from the Arab Monetary Fund and Gulf central banks (possibly through central bank swaps and trade financing lines).

The institutions of the central bank, banking supervision and AML/CFT need to be rebuilt. A new monetary and payment system has to be established.

The banking and financial sector has to be restructured, and banks recapitalised, while allowing for private banks (including foreign) to re-emerge. The Syrian pound should stay floating until macroeconomic stability has been restored, including through fiscal reform and access to international finance for trade.

Importantly, the government and central bank need to rebuild the statistical system for evidence-based policymaking; one cannot govern, reform, regulate and manage what one does not know.

Removal of sanctions will allow transfers and remittances through formal channels from the large Syrian expatriate community, a lifeline for returning families, as well as financing reconstruction of housing and businesses.

Restoring the banking system means less reliance on the use of cash – helping to revive the formal economy as compared to the dominant informal economy, and also combating money laundering and terrorist finance associated with the production and trade of drugs. Remittances and capital inflows would allow the Central Bank of Syria to rebuild its foreign currency reserves, stabilise the forex market and restore monetary stability to control inflation.

The removal of sanctions will also lower the prohibitive risk premium associated with Syria and open the country for the much-needed foreign direct investment to stabilise the economy, and for broader reconstruction funding.

The Damascus Securities Exchange, now operational again, could evolve from a symbolic entity into another channel of financing, allowing the government and Syrian businesses to tap into local and international capital for the first time since 2009.

Tapping energy potential

The country’s substantial, largely unexploited, onshore and offshore oil and gas reserves could become an important source of reconstruction finance and job creation. Strategically and importantly, the removal of sanctions would allow oil and gas pipelines to be reopened, and new ones built; pre-civil war, Syria produced up to 400,000 barrels a day of crude versus between 80,000-100,000 bpd this year.

Reactivating existing wells and oil export infrastructure could become a major source of revenue and foreign exchange, dramatically improving Syria’s fiscal position and its ability to reconstruct the devastated country, and bring in international funding.

New pipelines linking oil and gas from the Gulf (notably Qatar, Kuwait and Saudi) and Iraq to the Mediterranean would provide a strategic alternative to maritime routes through the Straits of Hormuz and Red Sea.

Azerbaijan and Syria signed a preliminary agreement on July 12, pledging co-operation in the energy sector – to enable export of gas from Azerbaijan to Syria, through Turkey – and help in rebuilding Syria’s energy infrastructure.

Over the medium and longer term, a new, transformative energy infrastructure and map linking the hydrocarbon-rich regions of the Gulf and Iraq to the Mediterranean coast can be developed: a major building block in stabilising and helping to redevelop Syria.

The lifting of sanctions is a critical initial step supporting Syria in emerging from a vicious cycle of destruction, economic collapse and illicit activity into a virtuous circle of reconstruction, redevelopment, regional and international reintegration.

The realisation of this road map requires a commitment from Syria to undertake essential reforms in governing, the rule of law and institutional transparency. Only then can the country hope to attract and retain the human and financial capital needed to rebuild its economy, regain investor trust, and reclaim its historic role at a vital geostrategic crossroads.

Nasser Saidi is the president of Nasser Saidi and Associates. He was formerly Lebanon’s economy minister and a vice-governor of the Central Bank of Lebanon. 

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.

Dr. Nasser Saidi’s comments on inflation in Syria and the collapsing pound were part of an Associated press article titled “EXPLAINER: Why has Syria’s economic crisis hit a new low?“. The article was published on 5th January 2023.

Comments are highlighted below:

Apart from years of war, sanctions and widespread corruption, Syria’s economy has gone through a series of shocks since 2019, beginning with the collapse of Lebanon’s financial system that year.

“Given the open borders between Syria and Lebanon and both of them (being) increasingly cash based economies,” their markets are inextricably linked, said Nasser Saidi, a former Lebanese economy minister The currency collapse and removal of subsidies in Lebanon has driven devaluation and higher prices in Syria, he said.

Dr. Nasser Saidi presented on the topic “Turning War Economies into Peace Economies: Lessons from Lebanon and Beyond” (click title to download), at a webinar hosted by the Institute for Integrated Transitions (IFIT) on 24th Sep 2020.

In conflict-affected states, achieving sustainable and inclusive growth depends in no small part on transforming the incentives and structures that underpin a wartime economy. The talk analysed key structural lessons from Lebanon and other countries in the wider region.

Dr. Nasser Saidi’s comments appeared in the Gulf News article titled “Syria’s collapse compounded by COVID-19“, published 16th July 2020.
Comments are posted below:
“Economic collapse in Lebanon lowers the demand for imports from Syria and leads to the firing and rising unemployment of Syrian workers in Lebanon,” said Nasser Saidi, a Lebanese economist and former minister. Speaking to Gulf News, he added: “This results in a decreased flow of remittances to Syria. The freezing of the deposits of Syrians (individuals and businesses) in Lebanese banks results in an inability to finance Syrian imports and trade through Lebanon.”
He added: “The financial, banking and fiscal crisis in Lebanon means increasing pressure in supplying/smuggling of fuel, wheat and other subsidised commodities into Syria.”

Dr. Nasser Saidi’s comments on the Caesar Act appeared in the article titled “Lebanon braces for ‘pain’ of Caesar Act amid financial meltdown” in The National’s 27th June 2020 edition. The comments are posted below.
 
Because of the close historical ties between Lebanon and Syria, the law will make business between the two countries “more problematic and expensive” and “hurt Lebanon”, said Nasser Saidi, a former vice-governor of Lebanon’s central bank.
The Caesar Act provides for secondary sanctions, which significantly widens its scope, he said.
“In other words, they are imposing sanctions on Syrian entities and business people and also on the people who deal with them,” Mr Saidi told The National.
Should the US decide to impose sanctions against the Syrian central bank, transactions inside the country “would be highly complicated”, said Mr Saidi.

Dr. Nasser Saidi’s comments on Lebanon’s currency appeared in the article titled “Lebanon’s currency takes a new dive, and there is no end in sight” in Washington Post’s 26th June 2020 edition. The comments are posted below.
 

Dr. Nasser Saidi appeared in an interview with Forbes Middle East, broadcast on 12th June 2020, discussing Lebanon & import of essential materials into Syria.
The video can be viewed below; an article based on the interview can be accessed here.

Dr. Nasser Saidi commented on the currency fluctuations and associated protests in Lebanon in the FT article titled “Currency collapse fuels mass protests in Lebanon” published on 12th June 2020.
The full article can be accessed at: https://www.ft.com/content/a1c5f2aa-79a6-48ec-aa8e-6b5d60bda1f7
 
The comment is posted below:
Nasser Saidi, a former central bank vice-governor, said there was little the government could do at this point to stop the slide. “This is a cash market, not your usual forex market. The central bank is no longer able to intervene.”
Mr Saidi, the former central banker, said the volatile price swings were driven by four main factors: uncertainty among currency traders about government policy; the printing of currency to cover a fiscal deficit left by falling tax receipts; the economic impact of coronavirus; and panic in the exchange market in neighbouring Syria, where business people are anticipating the impact of new US sanctions next week.
 

Dr. Nasser Saidi’s comments on the Lebanese pound and fluctuations appeared as part of the Reuters article titled “Lebanese pound changes hands near 5,000 per dollar, market sources say” published on 11th June 2020. Comments are posted below.
Nasser Saidi, a former economy minister, said the pound’s decline had accelerated because of increased demand for dollars in neighbouring Syria, where the local currency has also hit record lows as new U.S. sanctions are set to come into effect. “There is the beginning of panic in Syria over the availability of dollars. This has transferred itself into increased demand in the Beirut market,” he said.