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
  • Doosan confirms Saudi Jafurah 2 cogen contract

    2 June 2026

    South Korea’s Doosan Enerbility has confirmed it has signed an engineering, procurement and construction (EPC) contract worth about $556m for the second phase of the Jafurah combined heat and power (CHP) plant in Saudi Arabia.

    The project is being developed by Korea Electric Power Corporation (Kepco) in partnership with Saudi Aramco.

    Doosan said the contract covers design, equipment supply, installation, construction and commissioning of the facility.

    The Jafurah CHP phase 2 project will be built near the Jafurah gas field, about 400 kilometres east of Riyadh. Once operational, it will generate 330MW of electricity and produce 465 tonnes of steam an hour for the nearby gas field.

    According to the firm, the project’s main steam turbine will be supplied by Doosan Skoda Power, a subsidiary of Doosan Enerbility.

    WSP is acting as the project management consultant for the project, which is scheduled for completion in 2029.

    The Jafurah gas development is part of Aramco’s $3.2bn unconventional resources programme, which aims to develop shale gas in three areas. Jafurah lies southeast of Ghawar, the world’s largest conventional oil field.

    The programme is part of Riyadh’s plans under Vision 20230 to ensure the kingdom remains self-sufficient in gas supply amid rising demand from the residential and industrial power sectors.

    Jafurah phase one

    In February 2025, MEED exclusively reported that talks were under way to expand the capacity of the $500m Jafurah cogeneration independent steam and power plant (ISPP).

    Construction works were completed on the facility last November.

    At the time of its procurement, the plant’s first phase was to have a power capacity of 270-320MW, and a low-pressure (LP) steam demand of 77-166 thousand pounds an hour (klb/hr) and high-pressure (HP) steam demand of 29-126 klb/hour by 2023.

    The LP and HP steam demand will increase to 283-373 klb/hr and 66-321 klb/hr by 2027, respectively.

    The oil giant issued the letter of award to Kepco for the contract to develop the Jafurah ISPP scheme in July 2022.

    Kepco subsequently awarded South Korea’s Doosan Heavy Industries & Construction the project’s EPC contract.

    US/India-based Synergy Consulting provided financial advisory services to Kepco on its bid.

    Sumitomo Mitsui Banking Corporation (SMBC) served as the client’s financial adviser for the project. Germany’s Fichtner Consulting Engineers is technical consultant, while the UK’s Wood Group is project management consultant.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17072199/main.jpg
    Mark Dowdall
  • Iraq’s reform window narrows

    2 June 2026

    Commentary
    John Bambridge
    Analysis editor

    Iraq enters mid-2026 with the most expansive projects pipeline in its post-2003 history, with more than $420bn in planned and active work, but an increasingly narrow fiscal margin within which to deliver it.

    The cumulative pipeline builds on a 2025 performance that witnessed a record $17bn in contract awards in the power and water sector and looks forward to a construction industry forecast to expand at 4.8% annually through 2028. In the energy sector, the Gas Growth Integrated Project is advancing towards its 2028 commissioning, while the country’s North-South logistics expansion remains in active procurement.

    The pipeline is very real, but the conditions that were expected to fund it no longer exist in the wake of the Iran war.

    April oil exports ran 90% below the previous year’s monthly average as Strait of Hormuz transit remained effectively suspended. The IMF projects Iraq’s real GDP to contract by 6.8% in 2026 – the sharpest regional revision after Qatar. Even before the conflict, Iraq’s reserves were falling by about $10bn every year. The three-year budget framework expired in 2025 with no 2026 successor in place, leaving forward-looking spending uncertain. Ali Al-Zaidi was sworn in as prime minister on 14 May with fragile coalition support and nine cabinet portfolios still unfilled.

    The structural collision is between an infrastructure ambition built for 4 million barrels a day of exports and a fiscal reality running at a fraction of that. Iraq’s oil revenue funds over 90% of the federal budget. An exports collapse of the scale now visible will strip more from the budget in months than any reform programme can replace in years. And some of the production lost may not return. Many of Iraq’s southern fields have been running at reduced rates rather than fully shut in – the better strategy for preserving well integrity – but the longer the downtime, the higher the share of capacity that may not recover in the coming months. The revenue base on which Iraq’s pipeline was assembled is not just suspended; some of it is structurally imperilled.

    The current situation will force reform. Every Iraqi government since 2014 has faced reform pressures, but 2026 has not just tested the underlying assumptions; it has shattered them. Past reform programmes attempted to optimise governance amid volatile oil revenues; the current one must contend with existential risk to the revenue base.

    Al-Zaidi’s first task will not be the budget or the Hormuz crisis in isolation; it will be to convert a fragile mandate into the policy leadership and governance necessary to sustain the projects pipeline. The window for this is open, but it will not stay open long.

     

    MEED’s June 2026 report on Iraq includes:

    > GOVERNMENT: Al-Zaidi takes Iraq’s premiership under US shadow
    > BANKING: Financial challenge tests Iraq’s resolve
    > ECONOMY: Iraq enters era of resilience, reform and rising risks 
    > OIL & GAS:     Iraqi oil and gas sector in crisis
    > POWER & WATER: Focus shifts to delivery of Iraq utilities expansion
    > CONSTRUCTION: Momentum builds in Iraq’s post-war construction sector

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17061271/main.gif
    John Bambridge
  • Saudi firm to build Al-Henakiyah solar IPP grid link

    1 June 2026

     

    Saudi Services for Electro Mechanic Works has won the main contract to build a 380kV overhead transmission line in Saudi Arabia’s Medina region, according to market sources.

    The project includes the construction of a 354-kilometre-long overhead transmission line that will connect the Al-Henakiyah 3 solar independent power producer (IPP) to several main substations and export power from the plant into the national transmission network.

    The scheme is being developed by Saudi Energy, formerly Saudi Electricity Company.

    The scope covers the supply and erection of transmission towers and foundations, as well as associated grid interface and termination works.

    The Al-Henakiyah 3 solar IPP is part of Saudi Arabia’s wider pipeline of utility-scale solar projects being developed under the Public Investment Fund’s (PIF’s) renewables programme, which runs parallel to the National Renewable Energy Programme (NREP), now in its seventh round.

    In 2025, the PIF outlined plans to advance second- and third-phase extensions to five existing solar plants, including Al-Henakiyah, totalling 9GW of additional capacity.

    According to official documents, the negotiation process for the directly-awarded concessions was due to start last year.

    Saudi Services for Electro Mechanic Works, meanwhile, is continuing to advance several transmission line projects for Saudi Energy.

    In June 2025, it was appointed as the main contractor to build a separate 380kV overhead transmission line linking the 2GW Afif 1 solar IPP to the national grid.

    Works on this project are not expected to be completed until at least 2027.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17058114/main.jpg
    Mark Dowdall
  • Petrofac completes sale of Abu Dhabi business unit

    1 June 2026

    UK-headquartered Petrofac has completed the sale of Petrofac Emirates, a business unit it established in Abu Dhabi in 2008.

    The unit has been bought by a consortium of financial investors led by the New York-headquartered hedge fund Mason Capital Management and UK-based asset management firm Pearlstone Alternative.

    In a statement, Petrofac said the sale was completed after the satisfaction of all required conditions and approvals.

    The business unit was originally founded with a strategy to provide engineering, design, procurement and construction services for oil, gas, refining, petrochemical and renewable energy projects.

    Petrofac Emirates has engineering and construction (E&C) capability and includes E&C teams based in the UAE and India.

    In its latest statement, Petrofac said: “Petrofac Emirates encompasses Petrofac’s core E&C capability in the UAE.

    “The transaction positions Petrofac Emirates as a strong, self-sustaining company with no funded debt on its balance sheet and substantial growth opportunities.”

    Leadership role

    Under current plans, Tareq Kawash, who has been the group chief executive of Petrofac since April 2023, will become the chief executive of Petrofac Emirates to lead the E&C business through its next phase under new ownership.

    Kawash has over 30 years of international leadership experience at engineering procurement and construction (EPC) companies.

    Prior to working at Petrofac, he was a senior vice-president at McDermott International.

    Following the completion of the sale, Afonso Reis e Sousa will step down as group chief financial officer of Petrofac.

    Commenting on the sale of Petrofac Emirates, Kawash said: “The completion of this transaction marks an important milestone for Petrofac Emirates and the beginning of an important new chapter for the business.

    “Under our new ownership structure, with a focused platform for growth, we are well-positioned to build on our track record, strengthen our long-standing customer relationships and pursue new opportunities across the wider Mena region.

    “The transaction is not the destination; it is the platform from which we move forward with confidence, discipline and ambition.”

    Sam Read, a partner at Mason, said: “Our mission is to empower Petrofac Emirates to achieve its strategic goals, capitalise on new market opportunities, and leverage significant growth potential in the dynamic energy EPC sector.

    “Petrofac Emirates has market-leading capabilities and an unmatched track record of delivering for its customers, and we look forward to partnering with the company to help drive continued success.”

    The sale of Petrofac Emirates follows the completion of the sale of Petrofac Asset Solutions in April.

    In December, it was announced that US-based CB&I had entered into a sale agreement to buy the unit.

    Petrofac’s asset solutions unit provides operations, maintenance and decommissioning services for onshore and offshore energy assets.

    In a statement, CB&I said that the acquisition would strengthen its portfolio with “a complementary reimbursable contracting model business, delivering predictable cash flow and enhancing service capabilities”.

    Restructuring disruption

    Amid Petrofac’s dramatic restructuring, there has been disruption to progress at some of the company’s projects.

    In March, MEED reported that Petrofac, along with its partner China Huanqiu Contracting & Engineering Corporation (HQCEC), had stopped work on a petrochemicals project in Algeria, valued at approximately $1.5bn.

    The news about the Algeria project came just over two weeks after MEED reported that Petrofac had also stopped work on an oil project in Libya and cut staff in the North African country.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17057152/main.jpg
    Wil Crisp
  • Chinese-Saudi joint venture to build 18GWh battery storage plant

    1 June 2026

    Register for MEED’s 14-day trial access 

    China-headquartered ZOE Energy Storage has announced it has signed a joint-venture agreement with a Saudi partner to develop a battery energy storage system (bess) manufacturing facility in the kingdom.

    The facility will be developed in two phases. The first phase will have an annual production capacity of 6GWh and is scheduled to begin operations in the first quarter of 2027.

    A second phase will increase the total production capacity to 18GWh.

    In a statement, ZOE said the manufacturing facility will cover 150 acres and will be built to European manufacturing standards.

    The location and the partner involved have not been publicly disclosed.

    The Saudi facility will be the Chinese company’s second overseas manufacturing base, following a 6GWh energy storage system manufacturing facility in Hungary. This was developed with Energy Pro Hungary and began operations in October 2025.

    Under Saudi Arabia’s Vision 2030 objectives, the kingdom plans to deploy 130GW of renewable energy capacity and 48GWh of energy storage and achieve 50% clean power generation.

    In May, Saudi Arabia’s principal buyer, Saudi Power Procurement Company, received statements of qualification from firms seeking to build, own and operate a second group of bess projects with a combined power capacity of 3GW.

    The programme comprises six independent storage provider projects with a total capacity of 3GW, equivalent to 12,000 megawatt-hours based on a four-hour storage duration.

    The main contract tender is expected to be issued in the coming months once firms are formally prequalified.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17057079/main.jpg
    Mark Dowdall