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
  • Iraq’s first LNG terminal to be completed in June

    27 April 2026

    Iraq’s first liquefied natural gas (LNG) import terminal is expected to be completed in early June, according to the country’s Ministry of Electricity.

    The terminal, which has an estimated investment value of $450m, is being developed at the Port of Khor Al-Zubair and will have a capacity of 750 million standard cubic feet a day (cf/d).

    Ministry spokesperson Ahmed Mousa told the Iraqi News Agency that “work is proceeding at an accelerated pace to complete the LNG platform”, noting that “the government has set 1 June as the date for finishing the project”.

    In October last year, US-based Excelerate Energy signed a commercial agreement with a subsidiary of Iraq’s Ministry of Electricity to develop the floating LNG terminal.

    The contract was signed at the office of Iraq’s Prime Minister Mohammed Shia Al-Sudani during a ceremony attended by senior officials from both countries, including the US deputy secretary of energy James Danly.

    The contract included a five-year agreement for regasification services and LNG supply with extension options, featuring a minimum contracted offtake of 250 million cf/d.

    Ahmed Mousa said that “under the contract, the company is responsible for completing the facility as well as securing the agreed gas quantities from any source, in line with the specified terms”.

    He added: “Work is continuing according to the planned timelines to complete the project on schedule, as part of the Ministry of Electricity’s plans to keep pace with peak summer loads.”

    Although Iraq is Opec’s second-largest oil producer after Saudi Arabia, it is a net natural gas importer because its lack of infrastructure investment has meant that, until 2023, it flared roughly half of the estimated 3.12 billion cf/d of gas produced in association with crude oil.

    Iraq’s reliance on flaring associated gas instead of gathering and processing it has prevented the country from fully realising its potential as a gas producer and forced the Iraqi government to rely on costly gas and electricity imports from Iran.

    Recently, Iraq’s oil and gas sector has been disrupted by fallout from the US and Israel’s attack on Iran on 28 February and the subsequent regional conflict.

    Over recent weeks, Iraq’s oil exports have collapsed by about 80% amid problems shipping crude through the Strait of Hormuz.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16577746/main.jpg
    Wil Crisp
  • Iraqi LNG import terminal raises questions about energy strategy

    27 April 2026

    Commentary
    Wil Crisp
    Oil & gas reporter

    Iraq’s first LNG import terminal is set to come online in early June, at a time when global LNG prices are likely to remain close to their highest levels in more than three years.

    The disruption to global oil and gas exports in the wake of the US and Israel’s attack on Iran on 28 February led to LNG prices soaring, with natural gas prices in Asia and Europe rising to their highest levels since January 2023 during March.

    So far, there has been little progress towards a diplomatic or military solution to reopen the Strait of Hormuz, and most analysts do not forecast significant price declines in the near term.

    On 24 April, the International Energy Agency (IEA) said that the combined effect of short-term supply losses and slower capacity growth could result in a cumulative loss of around 120 billion cubic metres of LNG supply between 2026 and 2030.

    While the IEA expects new liquefaction projects in other regions to offset these losses over time, it still believes the crisis will lead to prolonged tight market conditions through 2026 and 2027.

    This means that Iraq will likely have to pay elevated prices for imported LNG for some time to come – if it can receive shipments at all.

    The port of Khor Al-Zubair is located in the Arabian Gulf, and LNG shipments from the US or Australia would need to pass through the Strait of Hormuz before reaching the terminal.

    This will only be possible if a solution is found to the ongoing blockade of the shipping route.

    Investment debate

    Iraq’s project to develop a floating LNG terminal is estimated to cost $450m, and many in Iraq may question whether this was the best use of these funds.

    While it may have been difficult for Iraqi policymakers to foresee the attack by the US and Israel on Iran and its impact on LNG markets, Iraq had several strong options to enhance domestic energy security rather than turning to LNG imports.

    The most obvious of these was investing in infrastructure to enable it to utilise its domestic gas reserves.

    According to the World Bank’s 2025 Global Gas Flaring Tracker Report, in 2024, Iraq burned off more unused gas than any other country, except Russia and Iran, which ranked first and second, respectively.

    That year, an estimated total of more than 18 billion cubic metres of natural gas was flared in Iraq due to a lack of infrastructure to properly capture and process it.

    It is highly likely that projects to gather and process this gas would have been more reliable and cost-effective than investing in a new floating LNG terminal, which increases the country’s exposure to global LNG price fluctuations and shipping disruptions.

    Other options could have included developing domestic gas fields or investing in solar and battery storage projects, which have become increasingly affordable in recent years.

    The cost of solar panels has fallen by more than 95% over the past decade.

    Power shortfall

    As things stand, Iraq is likely to face severe electricity shortages this summer.

    On 21 April, Iraq’s Ministry of Electricity said it plans to produce 30,000MW this summer, well short of the predicted peak demand of around 55,000MW.

    Ahmed Musa, a spokesperson for the Electricity Ministry, told the state-run Iraqi News Agency that the shortfall will result in planned outages across the country.

    He also said that even meeting the 30,000MW target is contingent on sufficient gas supplies.

    If Iraq experiences the same level of power outages as last year – or worse – many are likely to view the $450m spent on an LNG import terminal as a waste of money and an expensive symbol of poor planning.

    Power cuts this summer could stoke unrest at a time that is already politically precarious due to the ongoing regional conflict.

    In recent years, electricity shortages have repeatedly fuelled protests in Iraq during the summer months, particularly in Basra, where blackouts and poor public services have driven people to take to the streets.

    If the Strait of Hormuz does not reopen soon, Iraq’s economic crisis will deepen, and electricity shortages are likely to further undermine the country’s stability.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16577743/main.jpg
    Wil Crisp
  • Kuwait approves Doha desalination plant award

    27 April 2026

    Kuwait’s Central Agency for Public Tenders has approved the recommendation of the Ministry of Electricity & Water to award a KD114.28m ($371.5m) contract to supply, install, operate and maintain the second phase of the Doha seawater reverse osmosis (SWRO) desalination plant.

    A joint venture of Kuwait-based Heavy Engineering Industries & Shipbuilding Company (Heisco) and India’s VA Tech Wabag has been selected for the project, with the award understood to be pending final approval from the Audit Bureau.

    The project will deliver a production capacity of about 60 million imperial gallons a day (MIGD) and will include the desalination plant with full reverse osmosis trains, pre- and post-treatment systems, recarbonation equipment, booster pumps, and safety and filtration systems.

    The total project duration is 96 months. The Doha SWRO desalination plant is part of Kuwait’s broader programme to expand water production capacity and reduce reliance on thermal desalination methods.

    MEED previously reported that the Heisco/Wabag joint venture submitted the lowest bid. Bidders and prices included:

    • Heavy Engineering Industries & Shipbuilding / Wabag: $373.2m
    • Cox Water (Spain): $538.1m
    • Orascom Construction (Egypt): $568.4m

    In April 2025, MEED reported that Kuwait had retendered the contract for the facility after the ministry cancelled the initial tender in June 2024.

    The Ministry of Electricity & Water awarded South Korea’s Doosan Heavy Industries & Construction – now known as Doosan Enerbility – a $422m contract in May 2016 to build the 60 MIGD Doha 1 SWRO plant.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16577722/main.jpg
    Mark Dowdall
  • Firms prepare bids for 250MW Airtrunk data centre

    27 April 2026

     

    Contractors are preparing to submit commercial offers by 4 May for a contract to build a 250MW data centre in Riyadh.

    The project is being co-developed by Australian firm AirTrunk in collaboration with Saudi Arabia’s artificial intelligence (AI) infrastructure company Humain, which is owned by the Public Investment Fund (PIF).

    The bidders include:

    • El-Seif Engineering Contracting / Larsen & Toubro (local/India)
    • FCC / Alfanar Projects (Spain/local)
    • Albawani / Orascom (local/Egypt)
    • Nesma & Partners (local
    • James L Williams (UAE)
    • Alec (UAE)

    In October last year, AirTrunk and Humain announced a $3bn partnership to build data centres in Saudi Arabia, marking AirTrunk’s first move into the region.

    The firms said they would, along with AirTrunk investor Blackstone, “develop a long-term strategic partnership focused on financing, developing and operating next-generation data centres and AI infrastructure across the kingdom”.

    This was followed by Humain signing a $1.2bn financing agreement with the state-backed National Infrastructure Fund to support the expansion of AI and digital infrastructure projects in Saudi Arabia. The agreement was signed in January on the sidelines of the World Economic Forum in Davos, Switzerland.

    Humain said the deal will support its plan to develop up to 250MW of hyperscale AI data centre capacity in the kingdom.

    According to a joint statement, the data centres will use graphics processing units for AI training and inference, serving Humain’s customers locally, regionally and globally.

    The National Infrastructure Fund and Humain will also explore launching an AI data centre investment platform, with the two organisations acting as anchor investors to enable local and international institutional investors to back the scale-up of Humain’s AI programme.

    The National Infrastructure Fund is Saudi Arabia’s lead development financing partner for infrastructure and operates under the supervision of the National Development Fund.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16577720/main.jpg
    Yasir Iqbal
  • Diriyah confirms $490m museum construction contract

    27 April 2026

    Saudi gigaproject developer Diriyah Company has formally announced the award of a SR1.84bn ($490m) construction contract for its Saudi Arabia Museum of Contemporary Art (SAMoCA) within the Diriyah development in Riyadh.

    The contract has been awarded to a consortium comprising Egyptian contractor Hassan Allam Construction and Saudi Arabia’s Albawani.

    In February, MEED exclusively reported that the contractors were preparing to start construction work on the project. MEED understands Diriyah Company awarded the contract to the consortium in December last year.

    The announcement follows Diriyah Company’s award of an estimated SR2.5bn ($666m) contract to build the Pendry superblock package in the DG2 area.

    The Pendry superblock includes the construction of the Pendry Hotel alongside residential and commercial assets. The package will cover 75,365 square metres and is located in the northwestern district of the DG2 area.

    In February, Diriyah Company also awarded a SR717m ($192m) contract for the construction of the One Hotel, located in the Diriyah Two area of the masterplan, with a gross floor area of more than 31,000 sq m.

    The Diriyah masterplan envisages the city as a cultural and lifestyle tourism destination. Located northwest of Riyadh city centre, it will span 14 square kilometres and combine 300 years of history, culture and heritage with hospitality facilities.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16577413/main.jpg
    Yasir Iqbal