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
  • Delivery unlocks gigaproject investment

    29 September 2026

     

    Register for MEED’s 14-day trial access 

    Completed infrastructure and open assets are making it easier to attract private developers and foreign investors to Saudi Arabia’s gigaprojects, said speakers at MEED’s Shaping Mega Projects conference in Riyadh on 28 September.

    Dale Chadwick, acting CEO of King Salman Park Foundation, said investor appetite had grown as construction advanced. The foundation has received 23 expressions of interest from private developers, and Chadwick said that number was increasing.

    “What the private sector is looking for in terms of investment is surety of what we’re doing,” he said. “As soon as a private developer comes in and sees what we’re doing, they’re blown away. The closer we get to completion, the greater the appetite.”

    He said interest from foreign direct investors was also rising, and that a deal the foundation expects to award soon involves foreign investment.

    The foundation times its private asset awards to follow infrastructure and landscaping works. “They don’t have to take the leap of faith that we are going to execute on our side of the equation,” said Chadwick. “They can see it.”

    Partnership model

    Mohamed Saad, president of DevCo at Diriyah Company, said investors wanted a relationship rather than a transaction.

    “The first thing they’re looking for is partners,” he said. "They’re looking for master developers who act as true partners to them.”

    Saad said master developers acted as the catalyst, investing in infrastructure and anchor assets before the private sector joins. He said investors also wanted healthy supply and demand, and a market able to absorb commercial assets in phases.

    He said Diriyah had prioritised delivery over publicity. “People want to see to believe,” said Saad. “We are delivering on the ground, and when people come and visit, they’re pleasantly surprised.”

    Chadwick said developers also wanted flexibility, with some seeking more height or a different mix of uses. “We ourselves have a plan, but in order to make that more attractive, we have to be prepared to make adjustments as well,” he said.

    Ben Edwards, group head of cost, commercial and procurement at Red Sea Global, said the operating track record of The Red Sea and Amaala was now its strongest pitch to investors.

    "We’ve gone past the field of dreams approach of ‘if you build it, they will come',” he said. "We’ve built it now. The tourists are coming.”

    Edwards said Red Sea Global was at various stages of negotiation on several joint venture opportunities for future projects.

    The developer’s utilities public-private partnership (PPP) at The Red Sea is fully operational. Its Amaala equivalent is in final testing and commissioning and is due to be operational before the end of the year. Edwards expects the model to spread.

    "I’m sure the PPP market will continue to expand into the different infrastructure sectors here, and then lead into other sectors, from schools to hospitals,” he said.

    He added that Red Sea Global’s environmental credentials were a selling point for investors.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/20084647/main.jpeg
    Colin Foreman
  • KBR seeks renewable energy contracts in Libya

    29 September 2026

     

    The US-headquartered technology and engineering company KBR is seeking renewable energy project contracts in Libya.

    Representatives from KBR met with Abdussalam Elansari, chairman of the Renewable Energy Authority of Libya, earlier this month to discuss project opportunities, sources said.

    The meeting with Elansari followed KBR’s opening of a new branch in Libya and its securing of several contract awards in the oil and gas sector.

    In March, KBR announced that it had been awarded a contract by Zallaf Exploration, Production & Refining of Oil & Gas Company to provide project management and technical services for the South Refinery Project in Libya’s southern city of Ubari.

    Under the terms of the contract, KBR will provide contract management, project management and supporting technical services throughout the engineering, procurement and construction (EPC) phases of the project, according to a company statement.

    The EPC work is expected to be executed over a 50-month period.

    KBR is also carrying out work to re-evaluate the front-end engineering and design (feed) for the project to develop Libya’s J6 North Gialo field.

    In January, KBR signed a memorandum of understanding (MoU) with the state-owned Libyan Post, Telecommunications & Information Technology Company.

    Under the MoU, KBR agreed to support efforts to develop and improve Libya’s communications infrastructure and enhance fifth-generation (5G) mobile networks in the country.

    KBR has previously provided engineering services for major national projects in Libya, but was forced to shut down its office in the country several times amid political instability and security issues.

    When the company was known as Brown & Root, it worked on the Great Man-Made River Project in Libya, which is widely recognised as the largest irrigation project in the world.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/20081880/main.jpg
    Wil Crisp
  • Giga developers absorb supply chain shocks

    29 September 2026

     

    Register for MEED’s 14-day trial access 

    Saudi Arabia’s gigaproject developers are rerouting shipments and absorbing higher freight costs as regional geopolitical tensions disrupt supply chains. Executives discussed the impact at MEED’s Shaping Mega Projects conference in Riyadh on 28 September.

    Mohamed Saad, president of DevCo at Diriyah Company, said supply chain disruption was one of several challenges facing the developer. He said it required the company to be adaptive and quick in its decision-making.

    He said the wider situation had also weighed on end-user demand. “The appetite to buy residential units or lease retail or commercial office spaces has softened,” he said. “We also see opportunity, and developers who believe in the future and invest and develop in these times will catch the opportunity.”

    Rerouted shipments

    Dale Chadwick, acting CEO of King Salman Park Foundation, said the park had been fortunate because much of its supply chain was already in place.

    Some bespoke construction materials sourced from India have been affected, forcing suppliers to change routes. The foundation has also been unable to import some trees from China, because extended delivery times meant they would spend too long at sea.

    “It is a genuine challenge, and it’s on a case-by-case basis,” said Chadwick. “We make the call, then we pivot and start trying to secure the material from elsewhere.”

    He said one alternative was sourcing from Europe through a different supply route into the kingdom’s west coast. Chadwick said the impact had so far been manageable, with no significant effect on the park linked to the geopolitical situation. He added that contractors were facing the same pressures and suggested some might be seeking higher margins as a result.

    Local content

    Ben Edwards, group head of cost, commercial and procurement at Red Sea Global, said the developer had been shielded by the stage its projects had reached. The high proportion of local content in its procurement had also helped.

    Red Sea Global set up a landscape nursery to bring plants in early and acclimatise them. Edwards said the nursery, the largest in the region, had doubled in size to about 200 hectares.

    Freight costs have still risen sharply. “Container prices have doubled, and you have to just face that,” he said. “Where you haven’t got any other route to bring things in, and you’ve got to pay double, and you need the stuff, then you have to be flexible and deal with it accordingly with the supply chain.”

    Edwards said the local supply chain had strengthened since the peak of gigaproject construction activity.

    “The capability was here in Saudi, but the capacity wasn’t necessarily here at the time that everybody needed it three or four years ago,” he said. “Everybody needed all the same stuff all at the same time.”

    He said support from the Ministry of Investment and government programmes to build supplier capability was starting to pay off. Supplier quality was improving as capacity grew.

    Saad said the contracting market was also maturing. A correction was allowing contractors to be more selective about the work they pursue.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/20082381/main.jpg
    Colin Foreman
  • Sharakat receives bids for Riyadh East sewage treatment plant

    29 September 2026

    Saudi Arabia’s state water offtaker Sharakat has received bids for the contract to develop the $150m Riyadh East independent sewage treatment plant (ISTP).

    Bids were submitted on 28 September.

    The plant will have a treatment capacity of 200,000 cubic metres a day (cm/d) in its first phase, expanding to 500,000 cm/d in the second phase.

    Five consortiums made offers, including:

    • EtihadWE (UAE) / Metito (UAE) / Thrustboring Construction Company (TCC, Saudi Arabia)
    • GS Inima (Spain) / Alkhorayef (Saudi Arabia) 
    • Lamar (Bahrain) / China Harbour Engineering Company (CHEC)
    • Miahona (Saudi Arabia) / Marafiq  (Saudi Arabia) / Bin Omairah Holding (Saudi Arabia)
    • Suez (France) / Civil Works Company (Saudi Arabia) / Alwael (Saudi Arabia)

    In May, MEED exclusively reported that groups had begun to form for the project, which will be developed under a build‑own‑operate‑transfer model with a 25‑year concession term.

    It is understood that at least two other potential consortiums weighed up making an offer for the contract, but did not bid.

    In 2024, Sharakat prequalified 53 companies that could bid for the Riyadh East ISTP, part of seven planned ISTP projects it said it would procure between 2024 and 2026. The request for proposals was issued last October. 

    WSP is the technical adviser, and KPMG Middle East is the lead and financial adviser.

    The targeted commercial operation date for the facility is 2029.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/20066914/main.jpg
    Mark Dowdall
  • Egypt firm wins Al-Dabaa desalination O&M contract

    29 September 2026

    Elsewedy Utilities has been awarded a three-year operation and maintenance (O&M) contract for a seawater desalination plant in Al-Dabaa on Egypt’s north coast.

    The plant has a production capacity of 40,000 cubic metres a day (cm/d), and the contract runs for three years.

    The award reflects Egypt’s increased focus on involving local private sector companies in operating and maintaining existing seawater desalination plants.

    In March, Egypt’s Ministry of Housing, Utilities & Urban Communities directed that a number of existing desalination plants with capacities of more than 10,000 cm/d be offered to specialised local private sector companies for O&M. The plants include facilities in Al-Dabaa, Matrouh and El-Alamein, as well as sites in the Red Sea region and North and South Sinai.

    The government said the move is intended to improve operating efficiency, strengthen maintenance systems and make greater use of specialised technical expertise. The contract value was not disclosed.

    Elsewedy Utilities is the utilities and facilities management arm of Elsewedy Electric, with activities spanning engineering, procurement and construction, O&M and utility management.

    As MEED understands, the contract is separate from the South Med desalination project at Al-Dabaa, which is being developed for the Engineering Authority of the Armed Forces’ Water Management Department.

    Elsewedy Electric Infrastructure previously announced it is the main engineering, procurement and construction contractor for the planned 160,000-cubic-metre-a-day seawater reverse-osmosis plant.

    Cairo-headquartered Engineering Experience Group also won a design and engineering services contract for the project in June.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/20066727/main41574303.jpg
    Mark Dowdall