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Who will fund Syria’s $1tn rebuild?

11 June 2025

 

Following the end of its brutal civil war in December, Syria now faces an enormous task to rebuild its economy and society. More than half of Syrians are thought to have been displaced, either moving within the country or fleeing abroad; 90% of those still there live in poverty, according to the UN.

The World Bank has estimated that Syria’s GDP shrank by more than half from 2010 to 2020 and it has continued falling since. Just how far it might have dropped is hard to know, given the lack of reliable data. IMF spokesperson Julie Kozack said on 22 May the Syrian authorities need to rebuild basic economic institutions “including the ability to produce economic statistics”.

The cost of turning the economy around is another imponderable. One widely touted estimate is it will take $400bn to rebuild or replace everything broken, but Economy and Industry Minister Mohammad Nidal Al-Shaar has put the figure far higher. He told the Arab Media Summit in Dubai in May: “We need at least $1tn to reconstruct and rebuild a new Syria.”

For now, the sums coming in are relatively modest, given what is needed. In March, international donors pledged $6.5bn in aid, some of which will be handed out over several years.

“We don't know if the money's going to pour in, but, if it is going to, it isn't pouring in yet,” says Christopher Phillips, professor of international relations at Queen Mary University of London.

Commercial deals are being signed, however. The Ministry of Economy and Industry issued 345 industrial licences in the first quarter of 2025, in sectors such as food processing, chemicals and textiles, creating an estimated 4,242 jobs.

Larger projects are meanwhile generally still in the form of memoranda of understanding (MoUs), rather than definite contracts. In mid-May, for example, Dubai’s DP World signed an $800m MoU to develop and operate a terminal at Tartous Port. Later that month, a consortium led by Qatar’s UCC Holding signed a $7bn MoU to develop five power plants.

Such agreements have been made possible by the removal of many, though not all, international sanctions. On 23 May, the US lifted most of its trade restrictions on Syria. Ten days earlier, President Donald Trump had pledged to remove the sanctions, following lobbying by Saudi Arabia and Turkey.

European Union, UK and Japanese sanctions are also being eased.

On a trip to Damascus in late May, Saudi Foreign Minister Prince Faisal Bin Farhan said the easing of sanctions would help in “reactivating the Syrian economy”.

Commerce resumes

Trade is slowly building up. Phosphates are being shipped from Tartous Port to Romania and more traffic has been passing through the Nassib border crossing with Jordan – in early June, Amman lifted import bans on some Syrian goods.

There have been other positive signs too. The Damascus Securities Exchange reopened on 2 June, after a six-month pause, and the country is expected to rejoin the Swift international banking network soon.

Passenger traffic is building up at Damascus International airport, which now has direct links to Turkey, Jordan, the UAE and Qatar. In May, Flydubai became the first UAE carrier to land at Damascus in almost 12 years; Emirates is due to follow by mid-July. Turkish Airlines subsidiary AJet will start flying to the Syrian capital in mid-June.

However, serious domestic problems remain. In late April, there were armed clashes between Druze factions and government forces in southern Damascus. In early May, government security forces clashed with pro-Assad fighters in the northwest. More than 1,000 people were killed in these incidents.

President Ahmed Al-Sharaa included a wide range of voices in the cabinet he announced on 29 March, with representatives from the Alawite, Christian, Druze and other minority groups. However, the most important roles went to his former colleagues in Hayat Tahrir al-Sham (HTS) and it is clear he favours a strong, central government with little autonomy given to different groups or regions. Given the government does not control the whole country, that may be a difficult stance to maintain.

There have also been cross-border issues with Israel, which is occupying a swathe of territory in southern Syria beyond the 1974 ceasefire line and has conducted hundreds of airstrikes on Syria since December. Among the more recent incidents, on 30 May Israel struck what it claimed were missile storage facilities in the coastal cities of Latakia and Tartous. Israeli officials also claimed on 3 June that two projectiles had been launched from Syria towards its territory.

Riyadh has positioned itself as a guarantor and has led the way in re-engaging with Damascus
Nanar Hawach, International Crisis Group

Restoring regional relations

Wider international relations hold the key to the Syrian economy’s prospects. In particular, Gulf countries are a potential source of investment that Al-Sharaa is keen to exploit. Qatar and Saudi Arabia have been making the running, while the UAE has been more cautious, not least because of its opposition to Islamist groups gaining political power.

Al-Sharaa’s pragmatic political approach has brought some useful gains already. The World Bank is planning to restart operations in Syria, after the country’s debts to its International Development Association arm were paid by Saudi Arabia and Qatar. Those two countries are also helping to pay Syrian public sector salaries.

Saudi Arabia may prove to be the most important Gulf partner going forward, according to some analysts.

“Saudi Arabia remains the key player shaping the regional response to Syria. Riyadh has positioned itself as a guarantor and has led the way in re-engaging with Damascus,” says Nanar Hawach, a senior analyst covering Syria at the International Crisis Group. “Saudi Arabia sets the tone for how the region deals with Syria.”

But Syrian officials have also been keen to engage potential investors from further afield, including Turkey, the EU, the US and China.

“How Al-Sharaa has behaved so far has actually been quite cautious internationally,” says Phillips. “Not trying to align with any one camp or the other, not shutting off avenues. What we're seeing from Syria, is a quite pragmatic approach to foreign affairs.”

Syrians will be hoping that approach pays off economically before too long.

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Dominic Dudley

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