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Syria’s reconstruction agenda stalls

21 June 2024

Commentary
John Bambridge
Analysis editor

In the past year, the economic prognosis for Syria has deteriorated as the initial political step in the reacceptance of Damascus into the Arab League has failed to translate into substantial gains, with reconstruction efforts stalling and the economy floundering amid a lack of investor interest.

The situation in Syria has been further complicated by the outbreak of the war in Gaza and the accompanying conflict in the Israel-Lebanon-Syria border region. Since the conflict began, Israel has intensified its bombing of targets in Syria in pursuit of the local branch of Hezbollah or other Iran-backed ‘axis of resistance’ groups in the country. This activity came to a head on 1 April, when Israel bombed the Iranian embassy in Damascus as it hosted a meeting of Iranian military personnel – a diplomatic violation that led to Tehran launching an unprecedented retaliatory strike on Israel.

The upshot for Syria from this rising maelstrom of regional violence has been to downgrade it again from a high-risk but opportune investment landscape back to an unacceptably risky conflict zone. For the Gulf states that have re-embraced Syria, a further sticking point is Damascus’ reluctance to crack down on the shadow economy that has sprung up around the export of the amphetamine-like drug Captagon across the region. 

This illicit trade is now a multibillion-dollar industry that by some accounts makes up much of Syria’s diminished GDP. It has also come at the cost of normal trade, which has been caught up in the customs crackdown on Syrian goods. 

The trickle of aid coming from regional partners is meanwhile simply inadequate to do much to revive the country’s withered agricultural and industrial sectors, and is unlikely to entice Damascus to disassemble its lucrative narco-state.

Western governments and institutions are loathe to get involved with the Assad government on any level, as this would involve facing up to the strategic failure of their support for regime change in the country. The US, which doggedly maintains a military presence on Syrian soil, is deepening its sanctions on Damascus.

More generally, Syria’s territorial fragmentation and insecurity sit as barriers to the government’s resumption of a legitimate, tax-based revenue model. The end result is a lack of funds, support and stability for any reconstruction agenda.

The situation leaves Syria needing a more dramatic reversal in its geopolitical fortunes than re-entry into the Arab League alone can provide.

MEED's July 2024 special report on Syria includes:

> GOVERNMENT: Gaza conflict reignites violence across Syria

> ECONOMY: Regional diplomacy fails Syrian economy

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John Bambridge

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