meed-logo

line1 line2 line3
SIGN IN / REGISTER

Regional diplomacy fails Syrian economy

6 June 2024

 

Syria’s dire economic position continues to worsen. In a report issued in May, the World Bank predicted the economy will shrink by 1.5% this year, following a 1.2% decline in 2023.

The economy had already contracted by 54% between 2010-21, according to the Washington-based body. Its international trade has also entered freefall, with the value of exports falling from $8.8bn in 2010 to just $0.7bn in 2023, while imports dropped from $17.5bn to $3.2bn over the same period. Syria was once an oil exporter with a large agriculture sector, but it has become reliant on fuel and food imports.

What makes matters worse is that the cost of importing goods is now far higher than it once was, thanks to the collapse in the value of the Syrian pound. In 2011, you needed £Syr47 to buy one US dollar; by 2023, the cost had risen to more than £Syr12,500 for every greenback. Last year alone, the Syrian pound declined by 141% against the dollar, while inflation was running at 93%.

Agriculture fared slightly better in 2023 due to improved weather conditions compared to 2022, but the north of the country suffered a devastating earthquake in February 2023, which killed several thousand people and destroyed thousands of homes.

The authorities have few spare resources to devote to rebuilding areas devastated by natural disasters or the civil war. 

The government has lost control over oil revenues to the Autonomous Administration of North and East Syria (AANES), which holds the oil-rich parts of the country. The security challenges of the past 13 years have also led to a downturn in most other parts of the economy and enfeebled the government’s ability to collect taxes.

The World Bank estimates that, after adjusting for inflation, government revenues are now 85% lower than before the war.

The poor living conditions prompted a fresh wave of protests in Daraa and Al-Sweida in August 2023, which then spread to other government and rebel-controlled areas of the country. Locals have much to complain about.

The International Rescue Committee reckons that nearly three-quarters of Syria’s population, or more than 16.5 million people, require some sort of humanitarian assistance and upwards of 90% of Syrians now live in poverty.

Smuggling economy

One area of activity that has prospered has been the production and export of Captagon. This illegal amphetamine-like drug is smuggled in huge quantities into the Gulf, where it finds a ready market despite concerted efforts by the authorities there to clamp down on it.

The World Bank has estimated Syria’s Captagon trade was worth between $1.9bn and $5.6bn a year from 2020-23; that higher figure is not far below the country’s GDP of $6.2bn in 2023.

Those linked to the Syrian trade are thought to earn between $600m and $1.9bn in revenue a year. To put that in context, the revenue generated from all legal exports from Syria last year was $960m.

The Captagon trade might be enriching some figures close to the regime of President Bashar Al Assad, but it is also undermining the country’s wider economic prospects.

One potential avenue for rebuilding the shattered economy is to attract inward investment and the rich Gulf countries are an obvious potential source for that.

However, despite the diplomatic normalisation with Gulf governments over the past few years, the hoped-for investment flows have not materialised, with unhappiness over the Captagon trade a key factor – even if there have been some signs of a reduction over the past year or two.

Caroline Rose, who runs the Washington-based New Lines Institute’s research project on the Captagon trade, said: “We keep tabs of recorded Captagon seizures … and noted a slight dip in Captagon seizures region-wide between 2022 and 2023, so the reduction in seizures could be related to a stabilisation in the supply and production of Captagon.” However, she added that Syria continued to export the drug “at industrial levels”.

Investment brakes

The drug trade is not the only barrier to attracting foreign capital, though. Inward investment has also been hampered by US sanctions set out under the Caesar Syria Civilian Protection Act of 2019, generally known as the Caesar Act, and the myriad problems within the domestic economy are also a major hurdle for any would-be investor.

“When it comes to business and investment, Syria does not really provide any good environment for that. You have high costs, high risks, absence of rule of law, low purchasing power,” said Haid Haid, a consulting fellow at UK thinktank Chatham House, in April. “Businesses in general will not be tempted to go and open businesses there because the gains are low.”

Some regional aid has been flowing in, though. Arab countries raised their contributions from 2% of the total aid in 2022 to 15% in 2023, with the UAE, Kuwait and Saudi Arabia being the largest donors.

Others have been focusing their efforts on the plight of the millions of Syrian refugees displaced inside the country and beyond its borders in Turkey, Jordan, Iraq and Lebanon. Since the war started, around half of Syria’s 23 million-strong population has been displaced, with more than 5 million fleeing abroad.

Some €7.5bn ($8.1bn) of grants and loans were pledged by international donors to help Syrian refugees at the Brussels VIII Conference on Supporting the Future of Syria and the Region on 27 May.

But until a political resolution to the civil war can be found, Syria’s enormous economic and humanitarian crises are unlikely to be solved. Speaking at the Brussels conference, the European Union’s foreign policy chief Josep Borrell said a “Syrian-owned political solution … is the only credible path for all Syrians to live in peace and stability, and for refugees to return home.”

Gaza conflict renews violence in Syria

https://image.digitalinsightresearch.in/uploads/NewsArticle/11854850/main.gif
Dominic Dudley

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Riyadh prepares Qiddiya National Athletics Stadium tender

    9 December 2025

     

    Saudi gigaproject developer Qiddiya Investment Company (QIC) is expected to float a tender soon for the construction of the estimated SR7bn ($1.8bn) National Athletics Stadium at its Qiddiya entertainment city development.

    MEED understands that the prequalification process has reached an advanced stage and the tender for the main contract is likely to be issued within a few weeks.

    The multipurpose stadium will cover an area of approximately 182,000 square metres and its design is inspired by the London Olympic Stadium.

    In September, MEED exclusively reported that QIC had begun the procurement process for the kingdom’s next major sporting destination, having received expressions of interest from contractors for the project.

    UK-based HOK is the project’s lead design consultant. It is supported by Canadian engineering firm WSP and Germany’s Schlaich Bergermann Partner.

    UK-headquartered WT Partnership is serving as the project’s cost consultant.

    The stadium will be located within the Qiddiya Sports Park cluster and is expected to be completed by 2030.

    In December 2020, Saudi Arabia was selected to host the 2034 Asian Games. The 22nd edition of the event will be held in Riyadh from 29 November to 14 December 2034.

    Saudi Arabia is also set to host the Asian Winter Games in 2029. In October 2022, the Trojena development at Neom, in the northwest of the country, was selected to host the ninth edition of the event.

    The National Athletics Stadium is one of several major projects within the wider Qiddiya development. Others include an e-games arena, Prince Mohammed Bin Salman Stadium, a performing arts centre, a motorsports track, Dragon Ball and Six Flags theme parks and Aquarabia waterpark.

    The project is a key part of Riyadh’s strategy to boost leisure tourism in the kingdom. According to UK analytics firm GlobalData, leisure tourism in Saudi Arabia has experienced significant growth in recent years.

    Domestic leisure tourism trips increased to 33.76 million in 2023, up from 16.74 million in 2018. International tourist arrivals for recreational purposes increased by 600% from 2018 to 2023.

    Image: Buro Happold

    READ THE DECEMBER 2025 MEED BUSINESS REVIEW – click here to view PDF

    Prospects widen as Middle East rail projects are delivered; India’s L&T storms up MEED’s EPC contractor ranking; Manama balances growth with fiscal challenges

    Distributed to senior decision-makers in the region and around the world, the December 2025 edition of MEED Business Review includes:

    > BAHRAIN MARKET FOCUS: Manama pursues reform amid strain
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/15217660/main.jpg
    Yasir Iqbal
  • Saudi Arabia and Qatar sign high-speed rail link agreement

    9 December 2025

    Saudi Arabia and Qatar have signed an agreement to build a proposed high-speed rail line connecting Riyadh and Doha.

    The agreement was signed by Saudi Arabia's Transport & Logistics Services Minister, Saleh Al-Jasser, and Qatar's Transport Minister, Sheikh Mohammed Bin Abdulla Bin Mohammed Al-Thani.

    The high-speed railway line will cover 785 kilometres (km) and will pass through Hofuf and Dammam, while also linking King Salman International airport and Hamad International airport.

    The train's speed will exceed 300 kilometres an hour, reducing travel time between the two capitals to about two hours.

    The project is slated for completion in six years. The project is expected to serve over 10 million passengers annually and create more than 30,000 direct and indirect jobs.

    Riyadh and Doha relaunched a proposed rail link connecting the two countries in 2022, after agreeing to set a date to begin studying the connection. 

    In July of that year, France’s Systra was selected to conduct a feasibility study on the proposed scheme, as MEED reported.

    A rail link connecting Saudi Arabia and Qatar was planned before the diplomatic dispute that froze relations between Riyadh and Doha from 2017 until the Al-Ula Declaration was signed in January 2021.

    In 2016, Qatar Railways Company (Qatar Rail) was planning to tender the design-and-build contract for the construction of regional railways in Qatar, including the link connecting to the Saudi border.

    READ THE DECEMBER 2025 MEED BUSINESS REVIEW – click here to view PDF

    Prospects widen as Middle East rail projects are delivered; India’s L&T storms up MEED’s EPC contractor ranking; Manama balances growth with fiscal challenges

    Distributed to senior decision-makers in the region and around the world, the December 2025 edition of MEED Business Review includes:

    > BAHRAIN MARKET FOCUS: Manama pursues reform amid strain
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/15217463/main.gif
    Yasir Iqbal
  • Oman green hydrogen projects cancelled

    8 December 2025

    Hydrogen Oman (Hydrom), France’s Engie and South Korea’s Pohang Iron & Steel Company (Posco) have cancelled plans to move forward with the $6.7bn HyDuqm green hydrogen project.

    In a joint statement, the firms said they had reached a decision to end the scheme by mutual consent following an “in-depth assessment” of global renewable hydrogen offtake dynamics and investment frameworks.

    The HyDuqm scheme was one of the largest green hydrogen projects awarded under Oman’s first auction round in 2023.

    The proposed development included around 5GW of combined solar and wind capacity, supported by battery energy storage, to power an electrolysis plant producing hydrogen for conversion into green ammonia.

    The facility was expected to deliver up to 1.2 million tonnes of green ammonia a year by 2030, with Posco as the main offtaker to support the decarbonisation of its steel operations.

    The consortium, led by Posco (28%) and Engie (25%), had secured a 47-year concession with the state-owned Hydrom to develop a 320-square-kilometre site near the Port of Duqm.

    Samsung Engineering, Korea Southern Power and Korea East-West Power had a 12% stake, with Thailand’s PTTEP holding the remaining 11%.

    As recently as May, the partners were still targeting a final investment decision in 2027, subject to detailed economic and technical feasibility assessments.

    Separately, a second Hydrogen project in the same area, owned by the UK’s BP, has also been cancelled. BP withdrew its plans for the Duqm green hydrogen project, which had secured land rights for the 1.5GW facility.

    Hydrom managing director, Abdulaziz Al-Shidhani, told the 2025 Green Hydrogen Summit in Oman last week that only seven of the nine original projects that won land tenders were progressing.

    Wider slowdown

    The cancellations come amid a broader slowdown in green hydrogen development globally. Several major schemes have been postponed, scaled back or withdrawn as project economics have tightened.

    In Europe, more than one-fifth of planned hydrogen projects had been stalled or cancelled by the end of 2024, according to research and consultancy firm Westwood Global Energy, largely due to high costs, uncertain demand and slow progress securing long-term offtake.

    A similar trend has emerged in the GCC, where Saudi Arabia’s flagship Neom green hydrogen project has also faced offtake and market pressures despite reaching an $8.4bn financial close in 2023.

    The 4GW scheme, designed to produce about 1.2 million tonnes a year of green ammonia, has reportedly struggled to secure multiple international buyers, with only limited offtake confirmed to date.

    Hydrogen production costs

    Global green hydrogen production costs also remain significantly higher than conventional alternatives, typically in the range of $3-$8 a kilogram compared with roughly $0.5-$2/kg for hydrogen produced from fossil fuels, leaving large export-oriented projects exposed to pricing and demand uncertainty.

    The combination of elevated capital costs, slow offtake development and evolving policy frameworks has created headwinds for investment decisions across the sector.

    In the joint statement, however, Hydrom said it is committed to “developing a competitive hydrogen-centric economy” aligned with Oman’s Vision 2040.

    It added that projects awarded in the first two auction rounds are progressing on schedule towards the country’s target of producing more than one million tonnes a year of green hydrogen by 2030.

    The company also highlighted continued international interest in the sector, noting that the third auction round is under way with strong foreign participation.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15214080/main.jpg
    Mark Dowdall
  • Regional rail industry emerges

    8 December 2025

    Commentary
    Colin Foreman
    Editor

    Read the December issue of MEED Business Review

    The GCC is experiencing a fundamental shift in its approach to rail infrastructure, as it moves from standalone projects to a self-sustaining regional industry. The transition is evident as local, national and regional projects advance across the region.

    The first wave of metro systems, in Dubai, Doha, and most recently, Riyadh, have reported stronger-than-expected ridership and demonstrated the viability of mass transit in the Gulf.

    Extensions to those networks are planned or under way, including Dubai’s Blue and Gold lines and Riyadh’s Line 2, alongside planned metros elsewhere such as Muscat and Bahrain.

    Projects are also planned and already being delivered at the national level. The UAE’s Etihad Rail and Saudi Arabian Railways are leading most of these efforts. The region’s first cross-border project is also progressing with the Hafeet Rail scheme linking the UAE and Oman.

    Other cross-border schemes are planned, including high speed links connecting Riyadh with Doha and Kuwait City, and rail links for Bahrain across causeways to Saudi Arabia and Qatar. The ultimate ambition is a GCC Rail network – a project that was reinvigorated by the Al-Ula accords in 2021.

    Sustained, simultaneous activity across the GCC is fostering the development of an indigenous regional rail industry. Rather than being executed as isolated endeavours, projects are creating ongoing demand for expertise, personnel and resources within the region.

    Project delivery capability will be complemented by the establishment of crucial ancillary services, including fabrication and servicing facilities.

    These operations will shift the GCC from a lucrative market for international contractors to a regional hub for the rail industry, capable of servicing and sustaining its growing network.

    READ THE DECEMBER 2025 MEED BUSINESS REVIEW – click here to view PDF

    Prospects widen as Middle East rail projects are delivered; India’s L&T storms up MEED’s EPC contractor ranking; Manama balances growth with fiscal challenges

    Distributed to senior decision-makers in the region and around the world, the December 2025 edition of MEED Business Review includes:

    > BAHRAIN MARKET FOCUS: Manama pursues reform amid strain
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/15213797/main.gif
    Colin Foreman
  • Aldar and Mubadala plan $16bn financial district expansion

    8 December 2025

    Register for MEED’s 14-day trial access 

    Abu Dhabi's sovereign wealth fund, Mubadala Investment Company, and local developer Aldar have established a joint venture to deliver an expansion of the financial district on Al-Maryah Island with a gross development value of AED60bn-plus ($16bn-plus).

    The development will be built on the undeveloped land bank on the north side of Al-Maryah Island, covering about 500,000 square metres (sq m), and will support the next phase of growth for Abu Dhabi Global Market (ADGM).

    The masterplan encompasses 1.5 million sq m of new office, residential, retail and hospitality floor space.

    In an official statement, the firms said that the core objective of the project is to support the continued expansion of ADGM, Abu Dhabi’s international financial centre. ADGM now has more than 11,000 active licences registered in the free zone and is among the fastest-growing financial hubs globally.

    "Nearly 40,000 people are already based within the district, and demand for space remains strong," the statement added.

    The Al-Maryah Island expansion will add over 450,000 sq m of Grade A office space, doubling the island’s current office inventory.

    The expansion will add over 3,000 residences on the waterfront.

    The next phase will also add a further 40,000 sq m of retail and dining spaces.

    A central feature of the expansion is the Al-Maryah Waterfront enhancement project. This will include a bay fountain capable of water displays up to 75 metres high, forming the focal point of a reconfigured waterfront with additional dining, leisure and event spaces designed to complement existing assets on the island.

    Three new bridges are proposed to link the north side of Al-Maryah Island with Reem Island and the Abu Dhabi mainland, reducing travel time to Saadiyat Island to under 10 minutes.

    The enabling works on these projects are due to begin in 2026.

    The new joint venture is owned 60% by Aldar and 40% by Mubadala.

    "The two organisations are close to completing the legal work on a retail joint venture that will own and operate several of Abu Dhabi’s leading retail destinations, including The Galleria Al-Maryah Island, Yas Mall and the planned Saadiyat Grove Mall," the statement added.

    READ THE DECEMBER 2025 MEED BUSINESS REVIEW – click here to view PDF

    Prospects widen as Middle East rail projects are delivered; India’s L&T storms up MEED’s EPC contractor ranking; Manama balances growth with fiscal challenges

    Distributed to senior decision-makers in the region and around the world, the December 2025 edition of MEED Business Review includes:

    > BAHRAIN MARKET FOCUS: Manama pursues reform amid strain
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/15213568/main.jpg
    Yasir Iqbal