The new Syrian authorities risk perpetuating some of the harmful economic policies of the Assad regime, unless they take the necessary measures to guarantee improved living conditions for the population.
While hopes ran high for Syria’s future after the fall of the Assad regime in December 2024, the country soon began grappling with a slew of complex challenges ranging from political and territorial fragmentation to foreign meddling, sectarian tensions and violence, and a flawed democratic transition. Such challenges cast a long shadow over a bleak economic reality and difficult path toward recovery. Reconstruction alone is estimated to cost between $250 billion and $400 billion. The economy has shrunk to an estimated $17.5 billion in 2023 from $60 billion before 2011. Around 16.7 million people are in need of humanitarian aid according to the United Nations High Commissioner for Refugees, while over 90 percent of the population lives below the poverty line.
Decisions to ease sanctions levied on Syria by the United States, the European Union and Japan brought hope in May, with Syrians taking to streets in celebration across the country. On June 30, United States President Donald Trump signed an executive order dismantling the web of sanctions against Syria. The US Treasury Department stated that this decision offered sanctions relief for “entities critical to Syria’s development, the operation of its government, and the rebuilding of the country’s social fabric.”
These measures have already generated tangible policy outcomes by paving the way for renewed regional and international engagements. At the same time, they enable the reintegration of Syria’s economy into regional and global markets through facilitating financial transactions, opening the door for Foreign Direct Investment (FDI), and engaging with the Syrian business diaspora. The government has already started mobilizing to bring in much-needed investments in various areas, notable of which is the energy sector.
Even without sanctions, Syria still faces deep structural economic challenges which hinder economic recovery and the reconstruction process
That being said, even without sanctions, Syria still faces deep structural economic challenges which hinder economic recovery and the reconstruction process. Over the past decade or more, millions fell into poverty due to the destructive consequences of the war, sanctions, and the Assad regime’s policies. Those included the liberalization of consumer prices, state assets privatizations, and austerity measures including the reduction of subsidies—policies that favored a small minority of businessmen affiliated with the presidential palace. For instance, the former regime excluded approximately 600,000 families from its subsidy program in February 2022, while raising the price of necessities such as fuel and bread, leaving the population increasingly dependent on remittances sent by the diaspora to survive.
Against this backdrop, guaranteeing social protection mechanisms is essential to safeguard Syrians’ living conditions. It is also integral to preserving the country’s political stability and encouraging the participation of a large segment of the population in the transitional political phase. Similarly, no early economic recovery can be envisioned in the absence of productive economic development. Any potential economic recovery should be rooted in the re-development of national production, particularly in the manufacturing and agricultural sectors, and focused on decreasing unemployment rates in the country.
Privatization and austerity measures
The new Syrian regime’s declarations and economic decisions thus far point that it favors an economic system based on free market competition, while upholding Islamic laws. Officials have also held numerous meetings since the beginning of the year with representatives from the country’s chambers of industry and commerce, as well as businessmen, both domestically and internationally.
Moreover, officials have shown a willingness to accelerate the process of privatization. Prior to his visit to the World Economic Forum in Davos in January 2024, Foreign Minister Asaad al-Shibani told the Financial Times that the government plans to privatize state-owned ports and factories—including factories that produce oils, cotton, and furniture—and wants to invite foreign investment and boost international trade. He added that the government “would explore public-private partnerships to encourage investment into airports, railways and roads.” For instance, the recent deal signed by the government with a Qatari-led consortium of international companies regarding energy sector privileges constitutes forms of full privatization through the Build-Own-Operate model. In this model, a private company undertakes the construction and operation of a project, maintaining ownership of the asset indefinitely. This signifies that the control over a public service or infrastructure asset transitions permanently from state to private hands.
Alongside these policies, the new ruling authorities have already undertaken austerity measures or signaled that they will move in that direction,
Alongside these policies, the new ruling authorities have already undertaken austerity measures or signaled that they will move in that direction, floating plans to lay off up to a third or even a half of the country’s public employees, who, according to the new authorities, were receiving a salary without working. However, the interim government did not explain its methodology or justifications for identifying these employees, who are in the hundreds of thousands. Since then, there have been no official estimates for the total number of those dismissed; some are currently on paid leave for three months to clarify their situation.
At the same time, in the private sector, the Ministry of Economy and Industry issued in May a decision abolishing the requirement for business owners to register workers with social insurance, citing the need to streamline procedures and encourage investment. Following widespread criticisms of the decision, the ministry issued a clarification the day after, explaining that the measure suspends the requirement until the end of the year, rather than abolishing it. Nonetheless, the fear of enshrining the exploitation of workers lingers.
Cutting subsidies
In addition to layoffs, the issue of cutting or reducing subsidies is also on the table. As early as mid-December 2024, merely weeks after the fall of Assad, officials of the new regime were already discussing the fate of the subsidies that support the livelihoods of millions of Syrians. Meanwhile, authorities raised the price of subsidized bread nearly tenfold, while slightly increasing the portion size offered. A few months later, bread subsidies offered by the government were altogether removed.
In January, in an interview with the Syria Report, interim Minister of Electricity Omar Shaqrouq stated that the government would eventually reduce or even remove subsidies on electricity prices because current “prices are very low, much below their costs.” The state’s electricity provision in the country’s main cities does not generally exceed four hours per day.
Similar to the Assad regime, the new ruling authorities are seeking to mitigate the rise in prices by raising salaries and wages or offering bonuses. This is certainly a step in the right direction, but is still insufficient to alleviate the population’s needs and counter the increase in the cost of living. After months of waiting, the government finally raised the salaries of public employees and retirees by 200 percent, making the minimum wage SYP 750,000 per month, or around $68 (according to the official exchange rate of SYP 11,000 for $1), effective as of July.
Most of the population, whether employed by the state or the private sector, cannot cover their monthly needs with their salaries
Most of the population, whether employed by the state or the private sector, cannot cover their monthly needs with their salaries. According to estimates made by the newspaper Kassioun at the end of June 2025, the minimum cost of living for a five-member Syrian family living in Damascus reached approximately SYP 9 million (around $818).
The Syrian population not only needs jobs, but jobs that pay enough to allow individuals to live in dignity and cover their daily needs. In this framework, the cuts in subsidies and rise in the prices of essential products will only worsen the situation and cancel out the effects of a salary increase. Similarly, the cuts or cessation of subsidies of oil products, including fuel, diesel and gasoline, will also negatively impact the economy as a whole, as well as the population. The suspension of subsidized fuel in December 2024 for example increased production costs for farmers and restricted planting for the 2025 wheat harvest.
Now, the local price of oil products is set in US dollars, making it subject to fluctuations of the Syrian pound’s exchange rate, which is still far from being stable. Recently, the Syrian pound experienced an improvement in its value, therefore slightly decreasing the price of fuel oil in the market compared to previous unsubsidized prices, though without decreasing the cost of transport and electricity used by Syrians. The appreciation in the currency was not a result of an improvement of the fundamentals of the economy, or increased inflows of foreign currency, rather it was caused by an administrative decision by the Central Bank of Syria to restrict access to deposits in Syrian pounds. Once these restrictions are lifted, the pound will likely depreciate causing oil prices to rise again, which in turn will raise costs for manufacturing and agriculture.
Moreover, the government does not provide local manufacturing and agriculture any protection against foreign competition—quite the opposite. At the end of January 2025, Damascus reduced custom duties on more than 260 Turkish products, causing imports from Turkey to surge by 47 percent between January and May 2025, compared to the same period a year earlier, surpassing $1 billion. In addition, Syrian and Turkish officials have agreed to initiate negotiations to revive the Turkey-Syria Free Trade Agreement (FTA), signed in 2005 and suspended in 2011, with a broader understanding of economic partnership. This will affect Syria’s manufacturing and agricultural operations, both of which cannot compete with their Turkish counterparts.
At the same time, Syria is facing one of the most severe food crises in the recent decades, as a “historic drought” is heavily impacting the domestic wheat harvest, a cornerstone of the country’s agricultural output. In response, the government decided in mid-June to provide a financial incentive for Syrian wheat farmers, by rewarding each farmer $130 per ton, supplementing the purchase price currently set by the Ministry of Economy and Industry, effectively raising the total procurement price to $450. However, according to The Syria Report, the Ministry of Agriculture is considering abandoning support for wheat cultivation in the future. The sector was already struggling as fertilizer prices tripled since 2023, which increased production expenses, and limited farmers’ access to inputs and negatively affected agricultural output.
What are the alternatives?
Measures seeking to reduce or end subsidies in Syria have generally created or deepened social and political tensions. These policies are intended to reduce the distortions created by subsidies, including waste and smuggling, by providing greater agency to households with regards to their spending priorities. However, they have left significant sectors of the society suffering from poverty and unemployment, and created instability. While ending subsidies could improve the government’s fiscal posture, it will come at a severe cost on the population and the economy as a whole. Decisions to symbolically raise salaries and wages or granting bonuses do not compensate for rising living costs and the loss of purchasing power.
Reforms promoted by the World Bank and the International Monetary Fund for decades which sought to replace subsidies with cash transfers, and end price controls on goods, have only resulted in more suffering for the populations of many countries, including Syria. Similarly, foreign funding and investments should focus on serving the country’s national interests and common good, particularly by promoting key sectors essential for reconstruction, job creation, productive sectors, and long-term economic stability.
Economic plans and initiatives should provide solutions seeking to assist the 90 percent of the Syrian population that lives below the poverty line. To that end, several short-term measures could stem inflation and preserve Syrians’ purchasing power. Those include introducing price controls on essential products, such as bread and oil derivatives, and linking salaries to inflation rates. Similarly, fiscal reforms should prioritize a progressive taxation system for individuals and companies, while strengthening tax compliance and broadening the tax base. Such a system is preferable to indirect taxes on goods and services, which are generally considered as regressive and socially unjust due to their uniform application on everyone regardless of individual income.
The economic policies of Syria’s new rulers should not solely be considered as technocratic attempts to deal with the economic crisis, but rather indicators of their political economy orientation
On a broader macroeconomic level, authorities could promote national production through state investments in public industries and the provision of large-scale, low-interest loans to small and medium-sized enterprises and small farmers. These investments would improve equipment, introduce renewable technologies, and reduce dependence on oil derivatives across several sectors in the economy. For agriculture specifically, these measures could notably support new irrigation technologies to help limit groundwater depletion while also reducing diesel use for water pumping.
Expanding public transport networks, such as buses and railways and connecting periphery and urban centers, would reduce transport costs both for individuals and businesses while reducing urban car congestion. Implementing such measures, which would require international assistance, would also create more jobs due to the scale of these infrastructure projects.
The economic policies of Syria’s new rulers should not solely be considered as technocratic attempts to deal with the economic crisis, but rather indicators of their political economy orientation. They seek to enable new forms of capital accumulation through the privatization of state assets and further market liberalization at the expense of productive sectors of the economy, while implementing austerity measures that reduce the state’s social responsibilities and protection mechanisms. While the new leadership has promoted its economic policies as a departure from those of the former Syrian regime, there are ways in which they continue to perpetuate some of the previous trends. Ultimately, the new ruling actors risk deepening socioeconomic inequalities, continued impoverishment, and a lack of productive development—some of which were behind the eruption of the 2011 popular uprisings alongside the absence of democracy.