Syria Between Challenges and Opportunities: Security, Reconstruction, and Reintegration (2/4)

In our previous article, we explored Syria’s various economic assets.

Thanks to its fertile land and strategic location, Damascus holds major—yet largely untapped—economic potential. Moreover, the fall of Bashar al-Assad’s regime in December 2024, the rise of Ahmad al-Shareh to power, the lifting of U.S. and European sanctions, and the Syrian-Saudi summit held in July 2025 have launched a new dynamic of reconstruction and reintegration into the Arab sphere and international trade. But not everything is rosy in post-Assad Syria, and many challenges still lie ahead.

Security

The new leadership’s first and enduring challenge remains security. After more than 13 years of civil war, during which sectarian and ethnic factions fought relentlessly, the country is still plagued by sectarian-driven unrest, particularly along the coast and in Sweida. Added to this are recurring clashes along the Lebanese border with groups affiliated with Hezbollah, as well as Israeli airstrikes.

The government is gradually consolidating its authority and working to restore order and security nationwide. The road is long, and sustained efforts are needed to ensure lasting stability—without which many investors may hesitate to engage.

Everything Must Be Rebuilt

The IMF estimates that nearly 50% of Syrian housing has been destroyed or requires major renovation. Nearly half of the population is now outside the country, and the return of displaced Syrians will only increase demand for housing.

Much of the country’s infrastructure has been destroyed as well—factories, hospitals, water-pumping stations, power plants, wells, and oil refineries—all essential components for reconstruction.

Gulf investments aim to fill this infrastructure gap and help the country recover. But several years will be needed before these new production capacities become operational. In the meantime, reconstruction is expected to generate nearly 200,000 jobs, according to the World Bank, and bring billions of dollars into the country, boosting the Syrian central bank’s foreign-currency reserves.

Major Structural Economic Challenges

After more than 13 years of civil war, Syria’s economy is in ruins. GDP fell from nearly $60 billion in 2010 to just over $20 billion in 2022. In 2018, the UN reclassified Syria from a developing country (like India, Mexico, or Indonesia) to a low-income country (such as Afghanistan, Burkina Faso, or Angola). According to UN data, nearly 90% of the population lives below the poverty line, on less than two dollars a day.

The Syrian pound has lost almost 99% of its value—from 47 pounds per US dollar in 2010 to nearly 22,000 in late 2024. Since the fall of Assad, it has recovered slightly to around 11,000 pounds. But the central bank holds only $200 million in foreign-currency reserves, making it ill-equipped to handle another monetary shock.

On the other hand, the central bank reportedly holds around 26 tons of gold—nearly $3 billion at a price of $3,700 per ounce. This gold could be used as collateral to unlock vital credit lines.

Syria’s government owes around $23 billion to various creditors—nearly 115% of its GDP. Most of this debt is owed to Iran ($17 billion) and Russia ($1.2 billion). Servicing this debt absorbs nearly 30% of the state budget—funds that could otherwise support reconstruction or public services.

The current leadership is considering refusing repayment of debts owed to Iran and Russia, deeming them “odious”—contracted without the consent or benefit of the population. But although these debts were incurred by the Assad regime to buy weapons and fuel used against its own people, international law does not provide a clear mechanism for managing odious state debts. A default on all or part of the debt would contradict the principle of “state succession,” whereby a new government inherits the rights and obligations of its predecessor.

The Need for a Robust Institutional Framework

Reforming public institutions, combating corruption, and improving governance and transparency are essential to restore the trust of citizens and investors. Without a reliable rule of law, all economic initiatives risk being undermined.

Strengthening judicial, administrative, and economic institutions is a prerequisite for placing Syria on a path of sustainable growth. Moreover, reforms aimed at privatizing parts of the economy are necessary. Under Bashar al-Assad, the state controlled most production capacities and exercised direct control over the economy. It is therefore crucial to privatize key sectors and allow more companies to compete, stimulating innovation through competition.

Social Reintegration and Managing Population Movements

Millions of Syrians have been displaced internally or have taken refuge abroad. Their return represents a major social and economic challenge that must be accompanied by reintegration programs. Without such efforts, the country risks deepening social fractures, fueling communal tensions, and prolonging precarious living conditions—factors that could seriously hinder reconstruction and development.

The challenges ahead are many and complex, but not insurmountable. Security, infrastructure reconstruction, economic stabilization, social reintegration, and institutional reforms must be addressed in a coordinated manner to establish a stable and attractive environment. By overcoming these obstacles, Syria could build lasting peace and finally harness its considerable economic potential for the benefit of the Syrian people and the entire region.