This is not meant to be an exhaustive news roundup. The aim is to track the developments that reveal where the country is heading — from reconstruction and investment to banking, energy, public services, regional connectivity, and the evolving relationship between the state and society.

This month’s digest covers seven developments across four broad themes: exchange-rate volatility and the redenomination process; agriculture, wheat procurement, and rural livelihoods; protests and service pressures in northeast Syria; and Syria’s accelerating reintegration into regional transport, aviation, and energy networks.

You can read more about The Syria Dispatch and the purpose of this publication at the end of the post. If you have comments, corrections, or suggestions, you can also find my contact details there and reach out directly.

In this month’s edition:

• Exchange-Rate Volatility Tests Syria’s Redenomination Process

• Stronger Agricultural Harvest Prospects Meet Fuel, Storage, and Marketing Bottlenecks

• Qamishli Protests Erupt Over Fuel, Electricity, and Living Conditions

• Foreign Interest in Syria’s Oil and Gas Sector Accelerates

• Deir Ezzor Redevelopment Push Accelerates Across Transport, Oil, Water, and Electricity

• Türkiye, Saudi Arabia, Syria, and Jordan Advance Regional Transport Corridor Plans

• Air Connectivity Expands as Syria Eyes Return to European Routes

Exchange-Rate Volatility Tests Syria’s Redenomination Process

June opened with renewed pressure on Syrian households’ purchasing power, as the Syrian pound continued to weaken during the first half of the month before partially recovering in the final week, while markets rapidly absorbed the effects of recently approved salary increases.

The executive instructions for implementing Presidential Decrees No. 67 and No. 68 of 2026, which added 50 percent to fixed salaries and wages, had barely been issued before price increases began eroding the raise. The increases, which take effect in June 2026, were poised to be diluted by exchange-rate volatility and precautionary pricing. However, the pound’s late-June rebound means the final dollar value of salaries depends on the exchange-rate benchmark used.

As prices of basic food and non-food items rose by up to 25 percent following the pound’s decline, some traders priced goods against a precautionary exchange rate of around (old) SYP 16,000 (new SYP 160) to the dollar to hedge for future inflation. This behavior reflected a broader breakdown in price visibility and led to a widening gap between official and black-market rates (see chart below).

In the final week of June, however, the Central Bank took active steps to narrow the gap between the official and black-market rates. On June 25, it raised the official dollar rate to (new) SYP 118.5 for buying and 119.5 for selling, the third official devaluation in less than two months. On June 28, the official rate was raised again to (new) SYP 121.5–122.5, while the parallel-market rate reportedly stood at around (new) SYP 128. This reduced the official-parallel gap to around 4.9 percent, while the Central Bank narrowed the permitted exchange-rate margin from 9 percent to 3 percent.

Still, volatility coincided with continued uncertainty around the currency replacement process. On June 1, Central Bank Governor Mohammed Safwat Raslan said more than 63% (then 66% on June 10) of the nationwide currency replacement process had been completed, and announced a 30-day extension, from July 1 to July 31, as a final opportunity for holders of old banknotes to exchange them. He also instructed banks, exchange companies, and money-transfer firms not to reintroduce old notes into circulation and to provide customers with only the new Syrian pound for withdrawals, exchanges, and cash payments. Raslan later clarified that the end of the exchange period through banks and exchange companies would not cancel citizens’ right to hand in old notes and receive new ones during a five-year withdrawal period, under mechanisms to be announced later.

It should be noted that implementation remained uneven, especially in northeast Syria, where Hasakah had effectively been outside the normal currency-replacement cycle due to the closure of public banks and the absence of functioning financial institutions in parts of the governorate, particularly amid the continued administrative division between Damascus and the SDF. The Central Bank moved to address this gap: on June 23, it designated 11 currency-replacement centers in Hasakah Governorate through al-Haram and Osoul exchange and transfer companies, distributed across Hasakah, Qamishli, Darbasiyah, and Amuda, with nine reportedly ready to receive citizens and two still under preparation. Two days later, the Central Bank branch in Raqqa resumed official operations for the first time since 2013, offering services including currency replacement and wheat-payment processing.

At the policy level, Raslan used the first National Conference for Dialogue with the Private Sector in early June to signal a more coordinated approach. He said the Central Bank’s next phase would rely on institutional work and planning rather than “improvised or unilateral decisions,” while acknowledging that the widening gap between official and market exchange rates affects investment decisions, depositor behavior, confidence in the financial market, banking activity, and the investment climate. The Central Bank Governor also mentioned that a study to develop Islamic financial products is forthcoming. (On Islamic finance, READ here)

Why It Matters: The exchange-rate movement fed directly into prices, but the more important issue is not only depreciation. It is volatility. A currency that weakens sharply, partially rebounds, and changes several times within the same day still undermines pricing, wage expectations, and market confidence.

In a volatile exchange-rate environment, traders price not only according to current costs but also in anticipation of future depreciation. The use of precautionary exchange rates is therefore both a response to inflation and a driver of it. It protects traders from replacement-cost risk, but it also transmits expectations of further depreciation into current prices. In this sense, the problem is not only that the pound lost value in the first half of June. It is that no single exchange-rate anchor was credible enough to guide transactions, contracts, salaries, or inventories.

The Central Bank’s late-June adjustments therefore represent a move towards defensive stabilization after months of seeming apathy in the face of the depreciating pound. By raising the official rate and narrowing the permitted margin, the Central Bank reduced (at least for now) the gap with the parallel market. It limited the space for arbitrage, speculation, and multiple pricing references. These decisions should help reduce the official-market gap, stabilize expectations, and protect government revenues priced against the official exchange rate. Still, this remains exchange-rate management, not yet a full monetary policy framework.

The redenomination process compounds this problem because the exercise is going well beyond a purely technical one. It has become a test of administrative capacity and public trust. The repeated extensions suggest that implementation has been slower and more uneven than planned due to weak logistical capacity at Central Bank branches and commercial banks, the continued appearance of old cash holdings in the market, concerns over excluding poorer and rural households, and possible shortages or distribution problems affecting the new notes.

Such limitations are especially important in northeast Syria, where Hasakah’s delayed access to replacement services revealed the territorial and institutional limits of monetary policy. If some governorates have better access to banks, exchange companies, and replacement centers than others, the redenomination can create uneven monetary conditions inside the same national economy. This risks deepening cash-market fragmentation, encouraging informal brokers, and weakening confidence in the state’s ability to administer a national currency. The subsequent designation of 11 replacement centers in Hasakah and the reopening of the Central Bank branch in Raqqa are therefore important corrective steps. Still, they also underscore how closely monetary stabilization is tied to the reintegration of state institutions across the country… and hint that redenomination might have been premature for this reason, at least.

Raslan’s emphasis on coordination with ministries, institutions, and the private sector is analytically significant for this reason. It implicitly acknowledges that the Central Bank cannot stabilize the currency through announcements alone. Exchange-rate policy, redenomination, banking access, fiscal management, customs, imports, wheat payments, salary increases, and market regulation interact. If coordination remains weak, each measure risks undermining the next: wage increases feed prices, currency replacement creates uncertainty, exchange-rate gaps encourage arbitrage, and traders hedge against future instability.

Stronger Agricultural Harvest Prospects Meet Fuel, Storage, and Marketing Bottlenecks

Key Developments: Syria’s 2026 wheat season entered June significantly stronger than in previous years, supported by improved rainfall and better crop conditions across several key producing areas. In Hasakah, the Syrian Grain Establishment (SGE) expected to receive 800,000 to 1 million tons of wheat, while preliminary estimates put total Jazira production at around 1.1–1.2 million tons. Aleppo expected a much stronger season than last year, with projected wheat production of around 571,000 tons and some estimates suggesting output could exceed 600,000 tons. The SGE prepared 20 collection centers across the Hasakah Governorate and said existing wheat stocks of 400,000–500,000 tons were being transferred to other governorates to free storage capacity for the new harvest. By June 30, Hasakah farmers had delivered 480,000 tons of wheat to government procurement centers, with the harvest nearing completion and official estimates still indicating that total provincial production would exceed 1.025 million tons.

The stronger harvest is already affecting import planning. The SGE said available wheat stocks were sufficient to meet basic ration needs and maintain stable bread and flour supplies, and that wheat imports would be temporarily paused this season pending the final harvest outcome.

However, the stronger harvest did not automatically translate into improved livelihoods for farmers or rural workers. In Raqqa, the harvest season created jobs in harvesting, transport, bagging, and grain collection centers, but rising unemployment and a larger pool of available workers pushed wages down. Workers also said weak rainfed yields in parts of the governorate reduced earnings for those paid by the quantity harvested or bagged, while local observers warned that exchange-rate volatility could erode farmers’ income once payments were made. Concerns were also raised that a potentially large injection of Syrian pounds into the market could put pressure on the exchange rate, further eroding the value of earnings (see “Exchange-Rate Volatility Tests Syria’s Redenomination Process”).

Payment uncertainty also persisted. By June 13, farmers’ grain dues had not yet begun to be paid, as the authorities were waiting for the Central Bank to transfer the required funds. Payments were still expected to be made through the Agricultural Cooperative Bank, as in the previous season.

To ease procurement bottlenecks, the government launched new administrative tools. The Ministry of Agriculture launched an electronic platform for farmers wishing to market their crops, allowing them to register and reserve delivery slots. The platform triggered pushback, however. On June 16, farmers in Tell Tamr (Hasakah) staged a sit-in in front of the Agriculture Directorate, arguing that weak rural internet access, delayed appointments, and the difficulty of using digital tools could slow wheat delivery and increase costs during a time-sensitive harvest season. In Hasakah, officials later announced measures to reduce congestion at collection centers, including accepting loose wheat in open storage areas, opening additional sites as needed, allowing wheat to be transported to other governorates at government expense, and exempting wheat trucks from axle-load penalties for loads up to 25 percent above the legal limit.

By late June, the authorities had expanded the number of receiving centers in Hasakah to around 30 after opening ten additional centers, while daily intake reportedly reached around 70,000 tons nationwide, including about 30,000 tons per day in Hasakah alone. Four new payment points were also announced in Hasakah, Qamishli, al-Malikiyah, and al-Darbasiyah, starting in early July, to reduce farmers’ travel burden and speed up invoice payments.

Still, farmers continued to raise concerns about agricultural inputs, especially fertilizers, fuel allocations, and diesel for harvesters and tractors, in addition to the need to announce strategic crop prices before the planting season. Fuel shortages, especially, remained one of the most immediate threats to the season. In rural Qamishli and Hasakah, diesel shortages and prices of up to (old) SYP 20,000 per liter halted many harvesters, leaving wheat fields at risk of grain loss and fires before the crop could be collected. These pressures overlapped with wider fuel protests in Hasakah Governorate and earlier official promises to send subsidized diesel to support farmers during the harvest season. This recent wave of protests also followed a wave of farmer protests in May 2026.

Why It Matters: The stronger 2026 harvest is good news, but it remains far from recovery. Improved rainfall has improved output prospects, yet farmers still struggle with structural challenges. While rainfall can account for better yields, farmers still rely on debt, expensive inputs, and trader/broker arrangements that can leave them selling crops below market value. This situation has led to the paradox described earlier, in which Syria may produce more wheat, yet many farmers may not feel significantly better off, as the aforementioned challenges quickly erode the benefits of a stronger harvest.

It is also worth noting that the government’s response shows how agriculture remains one of the most interventionist parts of Syria’s recovery. Despite broader rhetoric around liberalization, private investment, and a larger role for the market (recently toned down, however), Damascus remains deeply involved in wheat procurement, collection centers, payment channels, fuel allocations, crop pricing, marketing platforms, and now plans to establish an agricultural holding company. This is not surprising. Agriculture is tied to food security, rural employment, exports, and social stability, and the state cannot easily step back from a sector on which much of the country still depends. According to Agriculture Minister Basil al-Suwaidan, around 30 percent of Syria’s population relies, directly or indirectly, on agriculture for income and employment.

Still, the calculus is not necessarily a bad one, quite the contrary. Prioritizing agriculture, especially given Syria’s productive potential, could help ease several macroeconomic pressures at once. Wheat import requirements for the 2025/26 marketing year were forecast at around 3 million tons, nearly 70 percent above the five-year average, following two weak domestic production seasons. At recent global wheat prices of roughly USD 220 per ton, this implies an import bill in the high hundreds of millions of dollars. Reducing that bill through increased local production would not only support food security but also ease pressure on foreign-currency demand, the trade deficit, and, ultimately, the Syrian pound.

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Qamishli Protests Erupt Over Fuel, Electricity, and Living Conditions

Key Developments: Qamishli witnessed a continuous wave of protests in late June that began with a retirees’ mobilization over delayed pensions and expanded into broader demonstrations over fuel prices, electricity shortages, public services, and deteriorating living conditions.

On June 20, dozens of retirees held a sit-in in front of the Social Insurance branch, demanding the payment of delayed pensions and faster processing of their files. The action was organized by the newly formed Retirees’ Solidarity Gathering (تجمع تكاتف المتقاعدين). The organization later announced its formal establishment, describing itself as an independent civic initiative open to all retirees in Hasakah Governorate, focused on addressing pension delays and low pension amounts, improving the work of the local Social Insurance branch, and demanding a dedicated health insurance law for retirees. Some retirees reported they had not received pensions for around a year, while others reported delays ranging from several months to a year and a half.

The following day, a new wave of protests was sparked after fuel prices rose and service allocations were reduced. On June 21, residents and shop owners blocked roads and burned tires in central Qamishli after diesel prices reportedly rose from 55 to 75 cents per liter. Fuel allocations for bakeries, generators, and transport were also cut by more than half, forcing many private generators to reduce hours or stop operating during a period of high summer temperatures. Protesters demanded lower fuel prices, a more stable electricity supply, improved public services, and action to contain the rising costs of bread, transport, and basic goods. The protests continued into a second and third day, expanding beyond fuel alone. On June 23, protesters continued to call for basic living needs to be secured, prices to be brought under control, and services to be improved and later chanting slogans such as “the people want better living conditions,” “protest against poverty and hunger,” “we will continue until prices are reduced,” and “our daily demands are bread, peace, and freedom.”

These protests were part of a broader pattern of growing popular anger in the Hasakah Governorate. More than 40 protest events were recorded across Hasakah Governorate between June 1 and June 28 alone. The demands varied, but most centered on delayed salaries and pensions, fuel and electricity shortages, rising prices, unemployment, poor services, and the release of detainees (see table below).

Earlier in the month, the authorities had already moved to contain similar fuel-related unrest in rural Hasakah. On June 10, Deputy Governor Ahmad al-Hilali said one million liters of subsidized diesel would be sent to the governorate, with priority given to the agricultural sector during the harvest season. Hilali also linked the accumulated service challenges to the ongoing process of completing institutional integration and fully reactivating state directorates in Hasakah.

Earlier protests in al-Hol, al-Shaddadi, Tell Brak, and Ghazila had already focused on the contradiction between Hasakah’s oil resources and its shortages of fuel, water, electricity, and jobs. In several areas, residents blocked roads used by oil tankers, arguing that local communities remained underserved despite the daily movement of fuel and oil through the governorate.

This contradiction also shaped the language of the Qamishli protest movement. In a statement read on behalf of protesters on June 25, participants described the Jazira as one of Syria’s richest regions in resources but among the poorest in services, framing their demands around cheap and clean bread, electricity, drinking water, security, and an end to corruption and the extraction of local wealth. The statement also rejected narrow party agendas, presenting the mobilization as a broader social and livelihood protest.

Back to fuel, the supply shock quickly spread to transport, agriculture, and daily commerce. The regular Qamishli-Damascus bus fare rose from (old) SYP 135,000 to 290,000, while business-class bus fares increased from (old) SYP 185,000 to 400,000, and the price of the Qamishli-Hasakah route also doubled. Subsidized transport gasoline rose from (old) SYP 450 (USD 0.03)* to USD 0.55, prompting taxi and internal transport drivers to protest in front of the fuel committee (Sadcop) on June 23 and demand that the decision be reversed. The crisis also affected the wheat harvest, with fuel shortages and diesel prices of up to (old) SYP 20,000 (USD 0.7) per liter halting many harvesters in rural Qamishli and Hasakah, raising fears of crop losses and field fires.

^{(*Edited on July 3, 2026, to correct the dollar conversion of old SYP 450 from USD 0.30 to USD 0.03.)}

The protests prompted at least a limited policy response. On June 23, Energy Minister Mohammad al-Bashir issued Decision No. 822 of 2026 forming a permanent committee to determine prices for petroleum products and mineral resources. The committee includes representatives from the Energy Ministry, Finance Ministry, Economy and Industry Ministry, Central Bank, and relevant oil and mineral-resource bodies, and is tasked with reviewing petroleum prices in light of global prices, costs, the exchange rate, subsidy mechanisms, and other indicators.

On June 27, the committee held an extraordinary meeting to review pricing, supply costs, operating costs, and local and global market conditions, and raised new recommendations to the Energy Ministry. It also recommended adopting the Syrian pound as the sole currency for pricing petroleum products, a step presented as an effort to unify pricing mechanisms and strengthen the use of the national currency in the fuel sector. Later that day, the Energy Ministry approved fuel-price reductions ranging from more than 14 to 20 percent: 95-octane gasoline was cut by 20.39 percent to (new) SYP 130 per liter, 90-octane gasoline by 19.97 percent to (new) SYP 125, diesel by 14.37 percent to (new) SYP 107, domestic gas cylinders by 15.49 percent to (new) SYP 1,500, and industrial gas cylinders by 15.49 percent to (new) SYP 2,400.

Why It Matters: Beyond the immediate backlash against the fuel-price increase, the Qamishli protests represent another stress test of the state’s attempt to reintegrate northeast Syria administratively, fiscally, and economically. Fuel was the immediate trigger, but the chronology of the protests points to a broader accumulation of grievances: delayed pensions and salaries, weak services, electricity cuts, wheat-marketing problems, unemployment, detainee files, and unclear institutional responsibility. In this sense, this month of protests encapsulates the terms on which Hasakah Governorate is being brought back into the national system.

While protest movements have emerged across the country, the Hasakah Governorate is especially sensitive because the northeast is moving from years of Autonomous Administration and SDF-linked governance toward a difficult handover to Damascus. The fuel issue illustrates the tension clearly: Damascus may be trying to unify prices, reduce distortions, and regularize supply, but residents experience this as the loss or weakening of previous support systems before reliable Damascus-based state services have arrived. In an area where generators substitute for public electricity, transport depends heavily on fuel availability, and many salaries or pensions are delayed, fuel pricing is not a narrow technical matter.

The protests also carried a strong distributive message linked to historic grievances. Hasakah is one of Syria’s most resource-rich governorates, yet residents repeatedly contrasted the movement of oil and fuel through the governorate with shortages of electricity, water, jobs, and basic services. Stability in the northeast will require significant support for and development of this region (see “Deir Ezzor Redevelopment Push Accelerates Across Transport, Oil, Water, and Electricity”).

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Foreign Interest in Syria’s Oil and Gas Sector Accelerates

Key Developments: On June 10, Energy Minister Mohammad al-Bashir used the Global Energy Forum in Washington to present Syria as a potential regional energy hub linking the Gulf, Iraq, and the Eastern Mediterranean to regional and international markets. He cited cooperation with Chevron, ConocoPhillips, GE Vernova, and HKN Energy, as well as partnerships with TotalEnergies, Siemens, and Ansaldo Energia, and said that advanced discussions were also underway with Eni and other companies.

On June 16, the Syrian Petroleum Company signed a contract with ConocoPhillips and Novaterra to develop several gas fields and increase production from existing fields, with the stated aim of supporting the electricity sector and other vital sectors. The contract followed an earlier memorandum of understanding signed in November 2025 and was presented by Energy Minister Mohammad al-Bashir as a step toward raising domestic gas production, improving operational efficiency, and restoring confidence in Syria’s energy investment environment. Syria will receive a 56 percent share under the contract, with the two investing companies receiving 44 percent. The deal could increase daily gas output by around 4–5 million cubic meters within a year.

The same day, the SPC denied reports that Australia’s AXP Energy had entered Syria’s oil and gas sector or signed an agreement with the company. The denial followed AXP’s announcement that it had secured the right to earn up to 25 percent in an onshore Block 9 production-sharing contract in the Palmyra Basin through a farm-in arrangement. SPC said all official agreements and partnerships would be announced exclusively through its own channels and in accordance with the relevant legal and institutional frameworks.

Foreign interest also moved toward formal bidding. On June 18, SPC said it planned to launch an international bid round for four oil fields in Deir Ezzor in Mahash, Akissyah, East Khrata, and Qusaibeh, grouped as the “MAKK Area” (northwest of Shell’s former al-Furat Petroleum Company), with commercial bids due by July 19.

Offshore and midstream discussions also advanced. On June 23, SPC CEO Youssef Qiblawy met with a Chevron delegation to discuss converting the existing memorandum of understanding on offshore exploration in Block 1 into an executive contract. The meeting also covered the possibility of Chevron’s participation as a strategic partner in reviving the Kirkuk-Baniyas crude oil pipeline. On the same day, SPC discussed cooperation with UAE-based ENOC and Horizon Terminals to rehabilitate and develop pipelines and oil terminals.

Why It Matters: The June announcements further indicate that Syria’s energy sector is moving in a positive direction. Foreign companies are now beginning to move toward contracts, bid rounds, and more concrete discussions over upstream, offshore, and midstream assets.

Still, the announcements should be treated carefully. Signing a contract is not the same as implementation, and Syria’s oil and gas sector remains challenging: infrastructure is damaged, security risks persist, sanctions and compliance concerns have not entirely disappeared, banking channels remain weak, and the legal status of some legacy concessions remains unclear. The AXP Energy episode illustrates another issue: transparency, or the lack thereof. It raised basic questions about who owns what and how the new authorities will treat contracts or concessions originating under the Assad era. SPC’s denial was useful, but it also showed the need for clearer public rules on approval, disclosure, and contract validity.

There is also a governance issue. Oil and gas contracts concern strategic national assets, and attracting foreign companies may require generous fiscal terms, especially given Syria’s political, technical, and security risks. That may be understandable in the short term, but it increases the need for transparency and institutional oversight. Syria does not need to publish every commercial detail, but major energy contracts should be subject to some form of public or parliamentary scrutiny, clear procurement procedures, and reporting on revenue-sharing, investment obligations, production targets, environmental safeguards, and local employment. With these types of contracts, the issue is not simply who is in charge — whether a public, private, local, or foreign actor — but what terms were set. (Read: Syria Needs More Electricity. Does It Matter Who Builds It?). In that context, having international bidding rounds for various blocks and fields is a step in the right direction.

The local dimension will be just as important. Many of the assets under discussion are in or near eastern Syria, where communities have long viewed the oil and gas sector as extractive: resources leave the region while services, jobs, electricity, fuel, and water remain inadequate. The recent protests in Hasakah, including the blocking of oil trucks, show that this grievance remains politically salient (see this month’s entry on the Qamishli and Hasakah protests). Recent protests related to the closure of makeshift refineries are another wake-up call for the government not to overlook local populations. Reviving production in Deir Ezzor, Hasakah, or central Syria could support local recovery if it creates jobs, repairs infrastructure, and channels visible benefits back into producing regions. If not, energy investment could deepen social tensions… and those tensions are themselves bad for business. Recent moves by SPC to hire local workers, reinstate previously dismissed employees, and relocate parts of the upstream administration closer to Deir Ezzor suggest that the authorities have understood this risk. The same applies to the government’s wider emphasis on developing the eastern governorates.

Deir Ezzor Redevelopment Push Accelerates Across Transport, Oil, Water, and Electricity

Key Developments: Deir Ezzor saw a cluster of redevelopment announcements in June, focused on reconnecting the governorate, restoring basic services, and relocating parts of the oil-sector administration closer to production sites.

In transport infrastructure, Omar al-Hosari, head of the General Authority of Civil Aviation and Air Transport, said Deir Ezzor International Airport had entered the final stages of rehabilitation ahead of its reopening, with technical and operational readiness under review. The Ministry of Public Works and Housing also launched the reconstruction of al-Siyasiya Bridge, a key Euphrates crossing linking Deir Ezzor city with the northern countryside, with a planned implementation period of 12 months. The bridge’s destruction had forced residents to rely on ferries and temporary crossings, while recent flooding of the Euphrates further damaged makeshift routes.

The bridge project formed part of a wider transport rehabilitation package. On June 7, the Ministry of Transport discussed a plan worth more than USD 37 million to repair roads and bridges in Deir Ezzor, including USD 6.7 million for maintenance on the Deir Ezzor–Mayadin–Bukamal, Deir Ezzor–Hasakah, and Deir Ezzor–Raqqa axes, and around USD 30.5 million for strategic bridge and road projects. The package also includes the proposed Damascus–Palmyra–Deir Ezzor road, while the Finance Minister proposed building two new bridges in Deir Ezzor and Raqqa under modern engineering standards.

In oil and gas, the Syrian Petroleum Company reportedly decided to relocate a large part of the upstream exploration and production sector to Deir Ezzor, including a two-month deadline to move the main exploration and production center, rehabilitate administrative and logistical facilities, and base more engineers and technicians near the fields. The company also announced the hiring of 555 people from Deir Ezzor, including 400 security personnel, 70 engineers and technicians, and 85 field and support workers, as well as the reinstatement of 200 previously dismissed employees. Contractors were also instructed to prioritize local hiring.

READ: Protests Erupt over Closure of Makeshift Oil Refineries in Aleppo

Basic-service repairs and flood recovery continued in parallel. The Ministry of Energy carried out maintenance on the Euphrates water-conveyance project toward al-Sour, including concrete repairs to damaged sections of the channel, to sustain water delivery to nearby villages. On June 23, Deir Ezzor’s emergency response committee also formed a specialized committee to assess and compensate for damage from the recent rise in Euphrates water levels. The affected agricultural area was later reported at 22,678 dunums, up from an earlier estimate of 21,853 dunums, while 83 water stations had previously gone out of service. Electricity repairs also advanced, with the General Electricity Company announcing the rehabilitation of the 230 kV al-Taym transformer station, serving Deir Ezzor and the wider eastern region.

Why It Matters: Deir Ezzor has long sat at the center of Syria’s oil, gas, agriculture, and cross-border trade routes, but residents have often experienced that position less as an advantage than as a form of extraction. The governorate generated strategic resources while receiving limited local development, weak services, poor infrastructure, and few durable economic returns. The latest redevelopment announcements should therefore be read against this background: they respond to one of eastern Syria’s oldest grievances, namely the gap between Deir Ezzor’s national importance and the conditions in which many of its residents live.

The oil-sector decisions are especially noteworthy. Relocating part of the upstream administration and technical staff closer to Deir Ezzor’s fields would partially reverse a long-standing pattern in which the governorate hosted the resources while decision-making remained concentrated elsewhere. If implemented, this could localize jobs, improve technical oversight, and make the province feel less like a peripheral extraction zone. SPC’s decision also speaks to a sensitive social file, especially after earlier protests over the closure of informal refineries and the livelihoods tied to the local oil economy.

Beyond the oil sector, projects open for investment on the Syrian Investment Agency’s (SIA) website (see table below) point in the same direction, presenting Deir Ezzor not only as an oil province but as a broader redevelopment frontier. The listed opportunities span agriculture, livestock, hospitals, logistics, rail, energy, airport services, real estate, agro-industry, and mineral resources, with a headline value above USD 6 billion as of late June 2026. Still, the list is analytically useful because it shows the government trying to recast Deir Ezzor from an extraction zone into a recovery corridor linking oil, agriculture, services, industry, and trade with Iraq.

Overall, redevelopment in Deir Ezzor cannot be separated from reintegration and stabilization. Repairing bridges, restoring water and electricity, reopening the airport, compensating flood-affected farmers, and offering credible employment in the oil sector are all part of rebuilding state legitimacy in a region long associated with neglect, extraction, ISIS rule, SDF control, displacement, and fragmented authority. Moreover, if these projects improve daily life, they could reduce the appeal of armed groups, smuggling networks, and informal economies. If they remain symbolic or are captured by contractors and central institutions, they could reinforce the same resentment they are meant to address.

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Türkiye, Saudi Arabia, Syria, and Jordan Advance Regional Transport Corridor Plans

Key Developments: Türkiye and Saudi Arabia moved to advance plans for a regional railway and logistics corridor linking Türkiye to the Gulf through Syria and Jordan. On June 9, Turkish Transport and Infrastructure Minister Abdulkadir Uraloğlu and Saudi Transport Minister Saleh bin Nasser al-Jasser signed two memoranda of understanding on logistics services and railway cooperation, covering logistics centers, infrastructure, technology, training, and technical exchange.

Uraloğlu said Türkiye and Saudi Arabia aim to build a railway linking the two countries through Jordan and Syria within three to four years, with other Gulf states potentially joining later. He said the Saudi route to the Jordanian border is already complete, while Türkiye has completed links from Islahiye to Kilis and Gaziantep near the Syrian border. The remaining gap is around 400 km between Syria and Jordan. He also said the plan includes around USD 100 million to rebuild the rail route between Türkiye and Aleppo, creating a direct link to Damascus.

The agreement builds on earlier Syria–Jordan–Türkiye transport talks. In April, the three countries signed a trilateral memorandum in Amman to develop road, maritime, and rail connectivity, simplify border procedures, and coordinate transit movement. The new Saudi-Turkish track gives the project a broader regional frame, linking it more directly to Gulf markets and to the possible revival of north-south rail connectivity through Syria.

The railway talks coincided with a broader push for Syria–Türkiye economic integration. At the Anadolu City Economies Summit in Gaziantep, Turkish Trade Minister Ömer Bolat said bilateral trade is expected to reach USD 5 billion within two years and USD 10 billion by the early 2030s. Turkish officials also said they were ready to open the Islahiye customs gate and the Nusaybin-Qamishli crossing, while Turkish banks had reportedly reached an agreement to open branches in Syria pending central bank talks.

Why It Matters: Better rail and logistics integration with Türkiye and the Gulf would be positive for Syria in principle. In theory and in practice, lower transport costs, faster border crossings, and more reliable corridors should support trade, reconstruction supply chains, exports, and Syria’s broader ambition to become useful again as a transit country. The Saudi-Turkish framing is important because it moves the project beyond bilateral Syria–Türkiye connectivity and places Syria inside a wider north-south corridor linking Europe, Türkiye, Jordan, Saudi Arabia, and potentially other Gulf markets. This gives the proposal a stronger regional anchor and greater credibility.

But the railway plan still has many moving parts. A Syria–Türkiye rail link is probably the easier piece, especially if the priority is to rehabilitate the line toward Aleppo and reconnect it to Damascus. The harder part is the southern connection through Jordan. One of the many technical challenges is that the historic Hejaz line was built on a 1,050 mm narrow gauge, while Türkiye’s main network and most of Syria’s later railways use the 1,435 mm standard gauge. This means a modern freight corridor cannot simply be “revived” as a heritage route, but would require decisions on reconstruction standards, gauge conversion, transshipment points, rolling stock, financing, border procedures, and operating rights.

The corridor also has a political economy problem. Integration with Türkiye can help Syria restore trade, banking links, industrial inputs, and reconstruction supply chains, but it also risks reinforcing an already imbalanced trade relationship. Turkish exports to Syria reached about USD 3.5 billion in 2025, while Syrian exports to Türkiye fell to around USD 235 million. Syrian producers and economists have already warned that cheaper Turkish goods are putting pressure on local manufacturers and the trade balance. Better logistics could therefore lower costs for consumers and traders, but also intensify competition for Syrian industry if not paired with a clearer industrial policy.

Air Connectivity Expands as Syria Eyes Return to European Routes

Key Developments: Syria’s air connectivity continued to expand with several European routes announced or under negotiation. On June 25, Syrian Arab Airlines said it would launch direct Damascus-Amsterdam flights on July 2, marking its first return to Western European operations since EU measures introduced in October 2012 barred it from EU airports and from EU individuals and entities working with the carrier. The Syrian Aviation Holding Company said the route followed technical, legal, and diplomatic work aimed at restoring the national carrier’s European presence, while Omar al-Hosari, head of the General Authority of Civil Aviation and Air Transport, described Amsterdam as the first step in a broader expansion plan.

However, the operational structure of the route appears more complex than the initial announcement suggested. Dutch aviation media reported that tickets had gone on sale for Amsterdam-Damascus flights under Syrian Airlines flight numbers, with services scheduled on Mondays, Thursdays, and Saturdays. Schiphol Airport’s own flight information page listed flight RB271 from Amsterdam to Damascus, while the aircraft details for the July 2 flight showed an Airbus A320 registered LY-MAU. Flight-tracking and fleet data identify LY-MAU as an Airbus A320 operated by Lithuania’s Heston Airlines, an EU-based aircraft, crew, maintenance and insurance (ACMI) and charter carrier. This suggests that the route is being marketed under Syrian Airlines’ RB flight numbers but operated by Heston Airlines’ aircraft, rather than by Syrian Airlines’ own fleet.

Germany could follow the Netherlands, although approvals remain pending. Reports that Sundair planned to begin twice-weekly Berlin-Damascus flights from August 1 prompted the Syrian Civil Aviation and Air Transport Authority to clarify that no final operational approval had yet been granted. The authority said the route still depends on regulatory and operational approvals from the German side, as well as the completion of technical procedures, while Hosari said a final German decision was expected in the first half of July.

Aleppo also gained a new European connection. On June 19, Romania’s Dan Air announced it would begin direct scheduled flights from Bucharest to Aleppo starting July 1, adding to its existing Bucharest-Damascus service. Dan Air said it had carried more than 30,000 passengers between Bucharest and Damascus during its first year of operations in Syria, with an average load factor of 88 percent, and that it would become the only EU carrier operating scheduled flights to both Damascus and Aleppo.

These route announcements come amid a broader rebound in the use of Syrian airspace. Some 11,801 flights crossed Syrian airspace in May, more than double February’s level and around 375 percent higher than in May 2025, as regional airlines rerouted around disrupted airspace elsewhere in the Middle East.

Why It Matters: The Amsterdam route remains symbolically important, but its operational structure should be interpreted with caution. Operations by Heston Airlines under an ACMI or wet-lease-style arrangement do not necessarily mean that Syrian Airlines itself has regained full operational access to the EU market.

This distinction matters for regulatory reasons. Under EASA rules, any third-country operator intending to conduct commercial air transport into, within, or out of the EU and EFTA area must hold a Third Country Operator (TCO) authorization. EASA confirmed with The Syria Dispatch on June 26 that, as of that date, no Syrian operator held such an authorization. It also clarified that one-off notification flights are limited to humanitarian or ambulance flights in the public interest and cannot be used as a workaround for regular commercial service. As of July 2, 2026, no Syrian air carrier appears among the TCO-licensed carriers. An EU carrier such as Heston does not face that same TCO requirement when operating under its own European approvals, although the route would still require the relevant national permits, Syrian approvals, airport procedures, insurance, and security arrangements.

The Heston structure therefore makes the Amsterdam route more plausible but provides less definitive evidence of Syrian Airlines’ full return to Europe as an operator. It is closer to a commercial and diplomatic reopening than a complete regulatory normalization of Syrian civil aviation. Still, the arrangement also shows how Syria’s aviation reintegration may proceed in stages. European carriers, charter operators, and ACMI providers can reconnect Syrian airports to Europe before Syrian operators themselves clear all safety, regulatory, and insurance hurdles. That could help meet immediate demand from the Syrian diaspora, family travelers, business visitors, and possibly return-related travel, while buying time for Syrian aviation authorities and airlines to rebuild compliance capacity.

Still, the risks have not disappeared. European countries can, however, impose national restrictions, something which appears to be the current impediment to Sundair’s Berlin-Damascus route. Added to this is EASA’s wider conflict-zone guidance, which may further restrain flights to Syria. Indeed, EASA’s Syria conflict-zone bulletin, revised on May 12 and valid until October 31, continues to advise operators not to use Syrian airspace because of military activity, fragmented airspace control, air-defense risks, Israeli strikes, drones, rockets, and MANPADS.

Such guidance may also affect insurance costs. While Syria-specific premium data are not publicly available, war-risk coverage has become more expensive for some Middle East operations, and insurers are likely to approach Syria with caution given the security environment, residual compliance risks, and airport security concerns.

Demand is unlikely to be the main obstacle. Direct flights would serve Syria’s large diaspora in Europe, facilitate family travel and business links, and potentially support voluntary refugee returns, a priority for several European governments. This gives the Amsterdam route political significance, especially after the June 24 Dutch visit to Damascus, where migration, reconstruction, and refugee returns were reportedly discussed.

About the Syria Monthly Economic Digest

The Syria Monthly Economic Digest is a monthly publication by The Syria Dispatch that tracks the political and economic developments shaping Syria’s transition.

Each edition selects the developments I consider most significant over the past month; not every headline, but the ones that reveal something important about where the country is heading. These may include policy decisions, investment announcements, energy and infrastructure developments, banking and monetary reforms, trade and reconstruction dynamics, property rights disputes, public service issues, and the evolving relationship among the Syrian state, society, and external actors.

The format is simple: each entry begins with a news summary explaining what happened, followed by a “Why It Matters” section offering additional information, context, and analysis.

The digest is written for readers who want a structured, analytical overview of Syria’s transition: policymakers, researchers, journalists, diplomats, development practitioners, investors, civil society actors, and anyone trying to follow the country’s economic and political trajectory.

It is not intended to be exhaustive, and it does not replace daily news monitoring. Instead, it offers a monthly snapshot of the issues I believe deserve closer attention.

For comments, corrections, suggestions, or collaboration inquiries, please feel free to reach out.

Editor’s note: This commentary was originally commissioned and published by Levant24 on June 30, 2026. It is republished here with permission and full credit to Levant24. The text reflects Levant24’s copy-editing and editorial style guide, so some wording, spellings, and stylistic choices may differ from those usually used on The Syria Dispatch. We invite you to read the original version here.

Syria is once again trying to turn geography into strategy.

Yet before becoming a full-fledged transit hub, the strongest case for Syria’s transit ambitions rests on redundancy. In a region where maritime chokepoints, war risk, insurance costs, and political disruption have made alternative routes more valuable, and given its position, Syria does not need to prove that it can become the region’s next great hub overnight. First, it needs to show that selected routes through its territory can work.

That makes recovery the starting point. Rebuilding ports, roads, border crossings, electricity links, pipelines, and telecommunications networks is not separate from Syria’s transit ambition. It is the condition for it. If these systems become safer, cheaper, and more predictable, Syria could gradually position itself as a supplementary corridor for trade, energy, logistics, and data. Hub status, if it comes, would not emerge from geography alone.

Syria cannot replace the Suez Canal, the Strait of Hormuz, or Bab al-Mandab. Nor can it assume that it will simply displace Israel-linked routes in Western and Gulf connectivity planning. Its value lies elsewhere: offering additional options in a region where redundancy has become strategically important. The more Syria rebuilds the infrastructure it needs for its own recovery, the more it may organically become useful to others.

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An Old Idea, New Conditions

Such a vision is not new. In the late 2000s, deposed dictator Bashar al-Assad promoted a “Four Seas” vision that sought to turn Syria into a regional intersection for investment, transport, and energy linking the Mediterranean, the Gulf, the Caspian, and the Black Sea. At the time, the concept was tied to Syria’s rapprochement with Turkey and its attempt to escape isolation through infrastructure and regional connectivity. War, sanctions, institutional collapse, and political isolation threw that idea into the abyss.

Today, Damascus is trying to revive this idea under new political conditions: Syria as an economic transit hub. President Ahmad al-Sharaa has already made that pitch abroad. At the Antalya Diplomacy Forum in April, and later at an informal summit with European leaders in Cyprus, he presented the “Four Seas” and “Nine Corridors” initiative, a vision for linking the Gulf, the Mediterranean, the Caspian, and the Black Sea through Syrian territory.

Syrian diplomats in Washington are also carrying the message. Muhammad Qanatari, chargé d’affaires in Washington, recently said Syria was entering a new phase of positive relations with Iraq, focused on bilateral cooperation and regional economic connectivity. He framed Syria’s geography as a permanent strategic asset, placing the country at the intersection of the Caspian Sea, the Mediterranean, the Persian Gulf, and the Black Sea. Crucially, he also described the initiative not as a replacement for existing trade routes, but as an alternative framework to strengthen connectivity through energy networks, electricity grids, railways, and communications links.

This should be the core of Syria’s strategy: prove that specific corridors can work before claiming hub status. That is already beginning to happen through reconstruction itself.

In transport, Syria, Jordan, and Turkey have moved to strengthen north-south connectivity toward the Gulf. In logistics, CMA CGM’s Latakia port agreement and dry port plans for Adra and Aleppo, alongside DP World’s Tartous project, point toward better links between seaports and inland markets. Iraq is also testing Syria’s redundancy potential through the reopened Rabia-Yarubiyah crossing, fuel oil trucking, and discussions over the Kirkuk-Baniyas pipeline. In telecommunications, SilkLink could position Syria as a future digital corridor.

None of this makes Syria a hub yet. But it shows how rebuilding the systems Syria needs for itself could gradually make the country useful to others.

Through recovery rather than grand design, Syria is already moving toward a transit role. Gas, ports, dry ports, oil trucking, and telecom investment all respond first to Syria’s own reconstruction needs. If those systems become reliable, regional actors will have more reason to use them too. That is why the path to hub status starts at home. Syria’s long-term role cannot depend only on crisis conditions or disrupted maritime routes. It has to become commercially useful in normal times, not merely strategically useful when other corridors are under pressure.

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The Reliability Test

Still, while the direction of travel is encouraging, the path is fraught with challenges, with the main constraint being reliability at all levels. Physical reliability remains weak: much of the transport network still needs repair, from railways and roads to border facilities and port connections. Legal and operational reliability is also incomplete: customs rules, transit fees, dispute settlement, banking channels, insurance, and security guarantees also remain unclear or incomplete. For traders, logistics firms, and energy companies, a route is only useful if it is predictable.

Politics will be just as important as infrastructure. Turkey may benefit from faster access to Jordan and the Gulf. Iraq may want another route to the Mediterranean. Gulf states may want alternatives to vulnerable maritime chokepoints. Europe may value more resilient trade, energy, and data routes. But shared interests do not automatically create shared guarantees, and spoilers could easily interfere.

Israel is the clearest complication. A Syrian route can be drawn on a map as an alternative or supplement to other east-west connectivity projects, including the India-Middle East-Europe Economic Corridor. The original IMEC logic relied heavily on a route through the Gulf, Jordan, Israel, and Europe. Still, recent analysis has already raised the need for alternative or wartime redesigns of the corridor. But that does not mean it would be politically accepted. Israel would likely view any project that strengthens the Syrian state, deepens Syria’s ties with Turkey and the Gulf, and turns Syrian territory into strategic infrastructure through a security lens.

Other spoilers could come from Syria’s own partners. Gulf engagement is positive, but it is not automatically stabilizing. Saudi Arabia, the United Arab Emirates, and Qatar are all expanding their portfolios in Syria, with their approaches well-defined and sometimes conflicting, particularly regarding reconstruction, governance, and regional alignment. Competition between Gulf capitals could bring money and political attention, but it could also reproduce rival networks of influence inside Syria if investments become tied to competing interests.

The U.S. track is more encouraging, but it also raises a durability question. Under President Donald Trump, the direction of travel is clearly positive, with Washington doing all it can to support the Syrian transition. But long-term infrastructure investors will still ask whether this policy survives the next U.S. political cycle. A corridor that depends on U.S. political cover cannot be built only on today’s White House position.

At the end of the day, Syria’s transit ambitions should be measured by reliability above anything else. The Four Seas framework can help attract investment and situate Syria’s recovery within a broader regional logic, but only if it is tied to implementation, which is still lacking today. Let us first make Syria usable: open borders, predictable customs, functioning ports and dry ports, clearer investment rules, workable banking channels, and security arrangements that lower risk before declaring it a hub.

If Syria gets this right, its role as a corridor can emerge from reconstruction itself. Ports rebuilt for Syrian trade can serve neighboring markets; energy links restored for Syrian households can connect to wider networks; digital infrastructure upgraded for Syria’s economy can eventually carry regional data. Geography gives Syria an opening, but it does not move goods, finance projects, or keep routes open. Redundancy only matters if the backup route works. For Syria, the path to becoming a transit hub begins with focusing on itself.

A European delegation sent to Syria to prepare a new development financing package came back with a blunt diagnosis. Funds were available, sectors had been identified, and political willingness existed on both sides. Yet implementation was slow. European procedures were difficult to navigate. Coordination between Syrian planning bodies and implementing agencies was weak. And European instruments struggled to compete with other partners offering cheaper, simpler, and faster financing.

This assessment was not made in 2026. It dates back to 1982. But that is precisely the point: it reads as though it could have been written today. As Europe re-engages with Syria through recovery support, technical assistance, institutional capacity-building, and renewed cooperation frameworks, an old problem is returning. The extent of the European Union’s (EU) willingness to provide support is not the issue. What remains to be understood, however, is whether its instruments can be understood, absorbed, used, and accepted inside Syria’s rebuilding state.

An Old Lesson from the 1980s

In late April 1982, a joint delegation from the European Commission (EC) and the European Investment Bank (EIB) visited Syria to prepare the second financial protocol under the EEC-Syria cooperation framework. The exercise was classic European development cooperation: identifying sectors, appraising projects, defining indicative allocations, and matching financing instruments to national priorities. Agriculture, irrigation, energy, sewerage, education, telecommunications, and technical assistance all featured prominently. But the same archival record also captured something else.

Even when political willingness existed on both sides, implementation lagged. According to the European mission’s report, by mid-1982, only 20.3% of the grant element of the first financial protocol had actually been disbursed, while EIB loans remained effectively unused.1 Among the reasons, the joint delegation listed Damascus’ weak familiarity with Community procedures, poor coordination between Syrian planning bodies and implementing agencies, and a preference for cheaper or easier financing available elsewhere, such as from the Eastern Bloc (see screen captures below).

These three limitations remain relevant today, nearly half a century later.

As a result, there is a risk that Europeans may once again design instruments that are formally generous but practically difficult for Syria to absorb. The problem is therefore not only financial (Europeans can mobilize huge sums of money) but rather administrative, institutional, and competitive.

The EU has lifted most economic sanctions on Syria while retaining security- and Assad-regime-related measures, and has announced financial support of around €620 million for 2026 and 2027, including humanitarian aid, early recovery support, and bilateral support. Politically, the EU is also moving in the right direction, as shown by the organization of the EU-Syria High-Level Political Dialogue and the full restoration of the EU-Syria Cooperation Agreement.

On this latter point (and though nobody expected anything else), it can be considered that Europe is not reinventing the wheel by building a new relationship with Syria; it is reactivating an older institutional framework… whose tools were already marked by uneven implementation. Given this context, the question today is whether European support can be operationalized under the current conditions to avoid previous pitfalls.

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Damascus and the European Learning Curve

One of the less visible obstacles to EU-Syria cooperation concerns a simple but consequential issue: understanding how European support actually works.

European engagement is often discussed in terms of headline figures, funding envelopes, and political commitments. Yet behind these announcements lies a complex architecture of institutions, instruments, procedures, and funding channels that is not always easy to navigate, even for specialists. European officials acknowledged that EU mechanisms can be difficult to understand from the outside, particularly when different Directorates-General, implementing partners, financing instruments, and decision-making processes operate simultaneously.

This complexity shapes how support is received and absorbed. One EU official recalled that Syrian counterparts frequently referred to the often-cited figure of EUR 37 billion in European support to Syria and the region since 2011 (now EUR 38 billion), yet struggled to understand where this money had gone, through which channels it had been disbursed, and what portion had actually reached activities inside Syria. Explaining the architecture behind the figure reportedly proved difficult even for European officials themselves.2

The challenge is amplified by the current state of Syrian institutions. Following the collapse of the Assad regime, ministries have undergone extensive restructuring; responsibilities remain fluid; staff turnover is high; and many officials are encountering European institutions for the first time. European officials described a situation in which ministries are simultaneously attempting to rebuild internal administrative systems and learn to engage with a complex external donor ecosystem.

That complexity matters more than it may initially appear. European instruments are often presented as self-explanatory: grants, technical assistance, institutional support, trade facilitation, and de-risking mechanisms. In practice, however, none of these are automatically legible from the Syrian side, especially at a moment when the state itself is being rebuilt, responsibilities remain fluid, and technical capacity remains uneven across ministries and agencies.

The issue extends beyond financing. Discussions surrounding trade illustrate a similar pattern. A Syrian official at the Ministry of Economy and Foreign Trade expressed strong interest in expanding access to European markets, including the possible reactivation of trade provisions in existing agreements (prior to the EU-Syria Cooperation Agreement's reactivation). Yet Syria appears to make only limited use of certain preferential trade arrangements already available through European schemes. This suggests that the challenge may not always lie in the absence of instruments, but sometimes in awareness, technical understanding, or the administrative capacity required to use them effectively.

In such a context, slow uptake does not necessarily signal unwillingness. It can also reflect unfamiliarity, fragmentation, institutional transition, or simple administrative overload. The historical record from the early 1980s already pointed to this dynamic. More than four decades later, the risk appears not to have disappeared. The challenge facing European policymakers is therefore not only to mobilize resources, but also to ensure that Syrian institutions are capable of identifying, understanding, accessing, and ultimately absorbing them.

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The Coordination Problem

The second limitation concerning coordination between central planning bodies and implementing agencies also remains real today. Here too, the historical parallel is striking. But the problem today is not simply that coordination is absent. In some respects, there may be too much coordination at the center and too little operational ownership further down the chain.

The current system is built around an external engagement model routed through the Ministry of Foreign Affairs, even when projects concern sectoral ministries. Requests to meet with line ministries, discuss technical cooperation, or move forward on specific projects often must be cleared through MOFA first. Mission agendas in Syria often end up being lists of meetings “to be confirmed” until the last moment, with appointments shifting during the visit itself.3 And even when engagement concerns local or sectoral institutions, proposals are repeatedly sent back through MOFA, making the process “hyper long.”4

This centralization is partly understandable. The new authorities face a crowded field of foreign governments, donors, agencies, consultants, and companies seeking access to Syrian institutions. From Damascus’ perspective, some filtering is necessary. But central control does not automatically produce effective coordination. If every sectoral discussion must return to the same political channel, the result can be delay, duplication, and weak ministry-level ownership.

The risk is that planning and implementation become separated. MOFA may control the external interface, but it is not necessarily the institution best placed to define priorities in health, agriculture, public finance, trade facilitation, electricity, or social protection. Coordination can be controlled centrally, but sectoral content still needs to come from the relevant ministries.5 Without that division of labor, European support may be politically approved without being technically prepared.

This matters because EU instruments require prepared counterparts. Financing, technical assistance, trade facilitation, and possible future EIB engagement all depend on project pipelines, data, ministry-level planning capacity, and stable interlocutors. Yet, staff turnover, weak administrative capacity, fragmented authority, and the absence of reliable planning data on the Syrian side are obstacles to implementation.6

In this sense, the current coordination problem is not identical to that of the early 1980s, but it rhymes with it. Then, European officials worried about weak coordination between Syrian planning bodies and implementing agencies. Today, the danger is that centralized political control may again slow the translation of priorities into executable projects. For European support to be absorbed, Syria does not only need a central point of contact. It also needs empowered ministries, clear project ownership, and a functional chain between planning, approval, and implementation.

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Aid Is Also Competitive

Finally, there is a third limitation: a competitive dimension that European debates often understate. External support is never offered in a vacuum. Syrian authorities compare options, weighing speed, flexibility, visibility, and political cost. The 1982 archives already captured this logic when European officials noted Syria’s reluctance to use EIB loans because more favorable terms could be secured elsewhere. Even if the current Syrian preference is not to take on loans, the underlying point remains valid for support more broadly: when one partner can deliver faster, with fewer procedural burdens and more attractive terms, that partner is likely to gain ground over a slower and more layered European offer, however sound the latter may appear on paper.

The currency file is not a development-aid case in the narrow sense, but it offers a revealing contemporary example of the same operational logic. In March 2025, Syria received a fresh shipment of banknotes from Russia. In May 2025, there were reports that Damascus was considering shifting printing to the UAE and Germany. Yet by August 2025, Syria had finalized a deal with Russia’s Goznak to print the redesigned notes.

The sequence is instructive because when a service is urgently needed and technically straightforward, the decisive factor is often not geopolitical preference but the ability to deliver quickly, concretely, and on terms that local authorities consider more favorable. Several European companies had initially positioned themselves to print the new Syrian Pound; however, the Syrian authorities, citing limited financial resources, asked for extremely favorable terms (essentially printing at production cost, if not for free), which European companies could not align with. Russia’s Goznak could. This is a prime example of a missed opportunity for the EU, which could have offered to print Syria’s new currency for free as part of, let us say, a socio-economic support package. But it was not meant to be.

The same dynamic appears across other sectors. European officials interviewed for this research repeatedly described the EU as procedurally heavy, risk-averse, and slow-moving.7 Accountability requirements, multi-layered approval processes, and the involvement of several institutions and offices often lengthen the time between political commitment and practical delivery. By contrast, other partners can sometimes move more quickly, whether because they operate through simpler administrative systems, face fewer domestic accountability requirements, or are willing to accept higher levels of risk. For Syrian authorities confronted with urgent reconstruction needs, such differences are not abstract bureaucratic details. They shape which offers are pursued and which relationships are prioritized.

The broader lesson is simple. If Europe wants its support to matter, it must not only be available. It must also be intelligible, operationally usable, and competitive with what other partners are prepared to provide.

That does not mean abandoning safeguards or pretending that all external financing should look the same. It means recognizing that effectiveness is partly comparative. A grant or loan facility that arrives too late, requires too many internal steps, or remains too difficult to navigate may be formally available yet practically marginal.

A Few Lessons for Bilateral Engagement

None of this absolves the Syrian side of responsibility. For European support to be absorbed, the Syrian government also needs to clarify who speaks for recovery planning, which ministries own which project pipelines, how priorities are selected, and how implementation will be monitored. A highly centralized administrative chain may help approve large announcements, but it does not automatically produce technically prepared projects, credible procurement systems, or ministry-level ownership. Nor does the broader fragility of a rebuilding state help, especially when institutional contradictions, staff turnover, and uneven administrative capabilities can slow even well-intentioned engagement.

Yet the European side also faces its own challenge. While broad objectives exist—including stabilization, economic recovery, institutional strengthening, and support for an inclusive transition—these goals do not yet amount to a fully coherent framework for engagement. Recent discussions still suggest movement through overlapping instruments, partial initiatives, and ad hoc decisions rather than through a clear hierarchy of priorities. That weakens the Union’s own leverage and makes it harder to match means to ends.

The striking aspect of the 1982 mission reports is how familiar they sound. More than four decades later, Europe and Syria are once again discussing financing, technical assistance, institutional reform, and economic recovery. The obstacles are remarkably similar: a limited understanding of European mechanisms, weak coordination between planning and implementation, and competition from actors who can move faster and more easily.

Political willingness exists on both sides. The question is whether that willingness can be translated into operational cooperation. Europe’s challenge in Syria today is not primarily one of resources. It is one of absorption. Unless both sides address the institutional constraints that have repeatedly undermined cooperation, they risk rediscovering the same limitations that European officials identified nearly half a century ago.

More than fifteen years after the start of the Syrian revolution and less than two years after the fall of the Assad regime, Syria finds itself confronting a question that goes far beyond politics: how does a society rebuild after decades of authoritarian rule, war, displacement, and fragmentation? In It Started in Damascus: How the Long Syrian Revolution Reshaped Our World, Syrian writer and policy adviser Rime Allaf argues that understanding Syria’s future requires first understanding the lived experiences that shaped its past. In this interview with The Syria Dispatch, she discusses why she wrote the book, how life under the Assad regime shaped everyday behavior and social relations, the importance of memory and justice, and the opportunities—and risks—facing Syria’s post-Assad transition.

(Please note that Substack allows readers to listen to articles by clicking the “play” button in the top-right corner of the article.)

Why this book, and why now?

The Syria Dispatch: After decades of writing and commenting on Syria, what made you decide that now was the right moment to write and publish It Started in Damascus? Looking back, was there a particular moment that convinced you that Syria’s story needed to be told in this form?

Rime Allaf: The book was always in the back of my mind. Throughout the years, especially at the beginning of the revolution, a couple of people in the business approached me and asked whether it was time. But I never felt it was the right moment. At the time, I was very intellectually and emotionally involved in what was happening in Syria. I felt that, to write deeply about something like this, you needed perspective. You needed a little bit of distance.

I began thinking more seriously about the project around 2019–2020. By then, the hopes many people had held were fading. We had already gone through so much. Idlib was becoming the focus of attention, and then the pandemic happened. In some ways, that should have been the perfect opportunity to write. Everybody was sitting at home. But I still wasn’t ready.

The moment that changed everything came in May 2023. I was staying with friends in Geneva. The idea of the book was there. The concept was there. But I still hadn’t committed to writing it. Then I was watching the news and saw Bashar Assad being welcomed back into the Arab League in Saudi Arabia.

Without any doubt, that was the moment.

It felt like a dagger in my heart. It felt like an affront to the intelligence of Syrians. After everything that had happened, after all the destruction, the suffering, the displacement, the deaths, it suddenly felt as though the world was saying: “That’s enough. Let’s move on.”

And I thought: no. The story isn’t over.

People had lost interest in Syria. There were surprisingly few books being written. The country was disappearing from public debate. Yet from my perspective, the Syrian story was far from finished.

So I decided that I had to write it.

The proposal was sold a few months later, and I was supposed to deliver the manuscript in January 2025. By the end of November 2024, I was around 90 percent finished. The entire structure of the book was already there. Most of the manuscript was written.

Then the military operation began in northern Syria.

I remember writing to my agent and my publisher. At first, I simply told them that something important was happening and that we should keep an eye on it. A few days later, I wrote again and said: “They’re at the doors of Hama. I can’t write anymore.”

When the regime fell, like many Syrians, I simply stopped functioning normally. I spent days glued to multiple screens. I was crying for hours watching events unfold. Many Syrians experienced something similar.

What is important to understand, however, is that the fall of the regime did not change the book itself.

I didn’t go back and rewrite it. I didn’t suddenly turn it into a book about the collapse of Assad. The only part that changed significantly was the final chapter. The original conclusion was going to argue that Syria’s story was not over, despite the international rehabilitation of Bashar Assad. After December 2024, obviously, that chapter had to be rewritten.

But the central argument remained exactly the same.

This was never a book about the Syrian revolution itself.

It is a book about why there was a Syrian revolution.

That distinction matters enormously.

Too often, people begin their analysis of Syria in 2011. They focus on the revolution, the war, the Islamists, the foreign powers, the geopolitics. But if you do not understand what Syrians lived through under Hafez Assad and Bashar Assad, if you do not understand the restrictions, the fears, the frustrations, the hopes and disappointments that shaped everyday life, then you cannot fully understand why people rose up in 2011.

And I think that problem still exists today.

Many people have returned to discussing Syria primarily through geopolitics: Turkey, Saudi Arabia, Israel, Iran, the Islamists. But Syria is also a society. Syrians are not all the same, but they lived through many of the same structures of repression. If we don’t understand that history, we cannot understand why Syrians behave the way they do today.

“It” Started in Damascus

The Syria Dispatch: The title of the book is deceptively simple. You have said that this is not primarily a book about the revolution itself. So what exactly is the “it” that started in Damascus? Is it the revolution? A longer struggle for dignity? Or something else entirely?

Rime Allaf: Hope.

Or perhaps more precisely: the conviction that a normal life was finally possible.

You discover this very early in the book because the opening chapter begins with the death of Hafez Assad in June 2000.

What people often forget today is just how much expectation surrounded that moment.

Many observers look back and say, “Well, Bashar Assad arrived and people were naïve.” But that interpretation misses something important.

The Syrian people were exhausted.

They had lived through three decades of Hafez Assad. They had experienced a system of extraordinary control and restriction. They were not dreaming of grand political transformations. They were not expecting Western-style democracy. They were asking for something much more modest.

They wanted a normal life.

This is one of the reasons I insist that Syria cannot simply be compared to every other Arab dictatorship. Every authoritarian system is different. The Syrian experience was unique in many ways.

People today sometimes forget how restrictive everyday life could be.

For years Syrians could not import cars. Everyday goods were unavailable. People spent enormous amounts of energy trying to secure basic necessities. The state inserted itself into countless aspects of ordinary life.

When Bashar came to power, many Syrians genuinely believed that this would change.

What started in Damascus was not simply hope in an abstract sense. It was the conviction that Syria was finally beginning a journey toward normality.

People looked at neighbouring countries and thought: perhaps we can be like that. Perhaps we can have a little more freedom. A little more economic opportunity. A little more dignity.

And that conviction also explains something else that is often forgotten.

It explains why Bashar Assad initially enjoyed so much support.

People weren’t supporting him because he had already proven himself to be a reformer. They supported him because they desperately wanted to believe that change was possible. They invested enormous hopes in him because they had already waited so long.

That, ultimately, is what “started in Damascus.” It was the belief that the future could finally be different.

A Chronicle, Not a Memoir

The Syria Dispatch: The book has been described in different ways: part history, part memoir, part social chronicle. Yet you’ve pushed back against some of those labels. How do you think readers should understand the book? And how did you navigate the balance between personal experience and historical analysis?

Rime Allaf: I usually describe it as a chronicle.

People often call it part memoir because I appear in the book. I insert myself at the beginning of many chapters. I tell stories from my own life. I recount moments that I witnessed personally.

But I don’t really think of it as a memoir.

If it were a memoir, I would have written a memoir.

The reality is that I am present in the book primarily as a guide for the reader.

I often compare it to a theatre play. Sometimes a narrator steps onto the stage, explains where we are, introduces the scene, and then disappears while the story unfolds. That’s essentially my role in the book.

The focus is not on me. The focus is on Syria.

The reason I chose this approach is because I wanted the book to be accessible. I did not want to write something that felt like an academic text. I wanted someone with no prior knowledge of Syria to be able to pick it up and stay engaged.

The target audience was never specialists or historians.

It was my neighbours. My friends. People who hear about Syria, hear about Syrian refugees, hear about the war, but don’t necessarily understand how we got here.

That’s why the personal anecdotes matter.

They provide an entry point.

At the same time, they are also representative. Many of the stories I tell are not important because they happened to me. They are important because they illustrate how Syrians experienced life under the Assad system.

In fact, there is far less of me in the book than people might imagine. I left out far more than I included.

The book moves between the personal, the social, the cultural, the political, the regional and the international. It explains what the Assads did inside Syria, but also in Lebanon, Palestine, Iraq and elsewhere. It follows different themes across different decades.

That is why I call it a chronicle.

It is not a rigid history, even though it contains history. It is not a memoir, even though I appear in it. It is an attempt to tell a larger Syrian story in a way that remains accessible to ordinary readers.

I wanted readers who knew nothing about Syria to arrive at the revolution and think: “Now I understand why this happened.”

That was always the objective.

Beyond Politics: Why Everyday Life Matters

The Syria Dispatch: A review of your book by Syria in Transition argued that one of its strengths is the way it examines Assadism not only as a political system, but through the lens of everyday life and lived experience. Why was it important for you to focus on those dimensions rather than solely on institutions, ideology, or political events?

Rime Allaf: Because for decades Syria was analysed almost entirely through geopolitics.

People spoke about Syria as a strategic actor. They discussed alliances, negotiations, wars, regional balances, peace talks, and security questions. Syria was treated as a geopolitical file.

What was largely ignored was the lived experience of Syrians.

There was an assumption that Syria was simply another Arab dictatorship, that all authoritarian systems in the region functioned more or less the same way. I reject that entirely.

Even Saddam Hussein’s Iraq was different. Saddam committed terrible crimes, but he also invested in infrastructure, education, and public services at first. Syria under the Assads was a different kind of system.

One of the chapters in the book is called Banana Politics. People laugh when they hear the title, but it reflects something important. Syrians spent years dreaming of giving a banana to their children. A banana.

This was not because Syria was naturally poor. Syria was not a poor country. It was because scarcity became part of how the regime governed.

People outside Syria often don’t understand what daily life was like. They hear about intelligence services and repression, but they don’t understand the countless small restrictions that shaped ordinary existence.

For years, people struggled to obtain basic goods. You could not simply start a business. You could not move freely. You could not speak freely. You could not trust freely.

The regime wanted people focused on survival.

When you force people to spend their lives worrying about obtaining basic necessities, navigating bureaucracy, securing employment, or avoiding trouble with the authorities, you leave them with little space to think about politics.

And that is why everyday life matters.

The regime did not only control institutions. It shaped behaviour.

When children entered school, they immediately entered the Baathist system. Every morning they repeated slogans. They learned which opinions were acceptable and which were not.

The point was not necessarily ideological conviction. Most people were not committed Baathists. The point was social conditioning.

Eventually, people adapted.

They learned how to behave. They learned how to survive. They learned what could and could not be said.

That is one of the reasons I wanted to focus on daily life. Because if you don’t understand how people actually lived, you cannot understand either the revolution or what followed it.

What Remains of Assadism Today?

The Syria Dispatch: In previous interviews, you’ve spoken about how Syrians learned to “pretend” under authoritarian rule—that performance, conformity, and self-censorship eventually became second nature. Since returning to Syria after the fall of the regime, what aspects of Assadism have struck you as most persistent? What legacies do you think will be the hardest to overcome?

Rime Allaf: This is one of the most difficult questions facing Syria today.

What people often overlook is that Syrians are no longer a society that has lived through a shared experience.

We all experienced Assadism, but we did not all experience the revolution and the war in the same way.

For me, one of the most important distinctions today is not between Sunni, Alawi, Christian, Kurd, or Druze. The more important distinction is between Syrians who spent the last fourteen years in different environments.

There are Syrians who remained under regime control.

There are Syrians who rebuilt their lives in Europe, where they learned new languages, entered new institutions, and experienced different political systems.

There are Syrians who spent years in camps in Jordan, Lebanon, or along the Turkish border.

There are Syrians who lived in opposition-held areas and experienced entirely different forms of governance.

These are radically different experiences.

When people speak about rebuilding Syria, they often focus on physical infrastructure. Roads, electricity networks, housing, water systems.

But there is another infrastructure that was destroyed.

The social contract.

Trust between people.

Trust in institutions.

Trust in the future.

For decades under Assad, people learned not to trust.

They learned to be careful with what they said, whom they spoke to, and how they behaved. Then came the revolution, displacement, war, exile, and fragmentation.

Today, even Syrians who oppose the old regime often struggle to understand one another because they lived through completely different realities.

The challenge is not simply that Assadism created fear.

It is that Assadism destroyed the foundations upon which trust is built.

That is why I become frustrated when people reduce Syria’s problems to sectarianism.

Sectarian tensions exist, of course. But for me, sectarianism is often a symptom rather than the root cause.

The deeper issue is that millions of Syrians have emerged from radically different experiences and now have to rebuild a country together.

That is an enormously difficult task.

Fear, Memory, and Justice After Assad

The Syria Dispatch: Can a society stop being afraid simply because the regime that produced the fear has disappeared? More broadly, how should Syrians remember the Assad era? Is justice primarily about trials and accountability, or is it also about preserving memory and understanding how the regime shaped society?

Rime Allaf: We need both.

We need memory, and we need justice.

The stories of Syrians need to be documented and preserved. We need more Syrian voices telling what happened, because there are still too many aspects of Syrian life that remain misunderstood.

But memory alone is not enough.

There must also be accountability.

One of the things that worries me today is the sense of unresolved injustice.

Many Syrians still do not understand what is happening with former regime officials, former perpetrators, or the broader accountability process.

Part of the problem is communication.

The government may have reasons for the decisions it is making. Perhaps there are practical constraints. Perhaps there are legal constraints. But people need to understand the process.

There needs to be a vision.

There needs to be an explanation.

There needs to be a conversation with Syrians about what justice is going to look like and what is realistically possible.

Because if people feel that everything is being decided behind closed doors, resentment begins to accumulate.

And this matters because justice is not simply about punishment.

Justice is also about restoring trust.

It is about demonstrating that the rules have changed.

It is about showing people that the future will not function according to the same logic as the past.

At the moment, I think one of the government’s weaknesses is communication.

For the most part, Syrians are trying to understand major political developments through rumours, social media, Facebook posts, and word of mouth.

That is not sustainable.

Communication is not a cosmetic issue.

It is a state-building issue.

People need to understand where their country is going.

They need to understand why decisions are being made.

And they need to feel that they are part of the process.

Without that, rebuilding trust becomes much more difficult.

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Is 2026 Another 2000?

The Syria Dispatch: Many Syrians remember the optimism that accompanied Bashar Assad’s arrival in 2000. Today, after the fall of the regime, there is once again a sense of possibility. What feels different this time? And are there lessons from the disappointments of 2000 that Syrians should keep in mind today?

Rime Allaf: I actually disagree quite strongly with the comparison.

I understand why people make it. Both moments are associated with a sense of hope and the possibility of change. But I think the similarities stop there.

The Syria of 2000 had not experienced what Syrians have experienced over the last fifteen years.

The revolution, the war, the displacement, the destruction, the abandonment by much of the international community—these experiences fundamentally transformed Syrian society.

The other major difference is external.

For the first time in decades, there is broad agreement among regional and international actors that Syria needs to be stabilized.

Saudi Arabia, Turkey, Jordan, Qatar, much of the Gulf, and large parts of Europe all understand that the collapse of Syria has been enormously costly. They may not all have the same vision for the country, but they broadly agree that another collapse would be disastrous.

This was not the case in 2000.

Today, there is a much stronger support structure around Syria.

Part of that is because everyone wants refugee returns. Part of it is because everyone wants stability. Part of it is because the region has seen what happens when Syria collapses.

I also think there is a greater sense among Syrians themselves that this opportunity cannot be wasted.

The price paid over the last fifteen years has simply been too high.

That does not mean success is guaranteed. Far from it.

But I do think the circumstances today are fundamentally different from those that existed when Bashar Assad came to power.

Communication, Legitimacy, and the New Syria

The Syria Dispatch: During our conversation, you repeatedly returned to the importance of communication. Why does this matter so much for Syria’s transition?

Rime Allaf: Because communication is not simply a public relations issue.

It is part of governance.

One of the frustrations many Syrians feel today is that major decisions are being made without sufficient explanation.

People often do not understand why certain policies are being adopted, why particular individuals are being appointed, or how the government intends to address questions of justice and accountability.

That creates uncertainty.

To be fair, I think the current authorities are often listening to public reactions. We have seen examples where criticism emerges and adjustments are made.

But listening is not the same thing as communicating.

Communication means explaining decisions, outlining objectives, sharing constraints, and involving people in the process.

Many Syrians today are learning about major developments through Facebook, social media, and rumours. That is not healthy.

A government needs to talk directly to its people.

One of the reasons I commented on Ahmad al-Sharaa’s public apology after the controversy surrounding his father’s remarks was precisely because it showed another side of leadership.

The apology itself was important, but what interested me more was the willingness to acknowledge that people were offended and to address the issue publicly.

For decades, Syrians lived under a system where rulers never admitted mistakes.

That does not mean symbolic gestures are enough. Ultimately, institutions matter more than symbolism.

But symbols matter too.

Political cultures do not change overnight. Sometimes a small gesture can signal that a different relationship between rulers and citizens is possible.

The challenge is ensuring that these gestures are eventually translated into institutions and practices that endure.

Syria’s Greatest Test

The Syria Dispatch: Much of the discussion about Syria today focuses on reconstruction, sanctions, investment, governance, or geopolitics. Yet transitions often succeed or fail for reasons that are less obvious at the time. What do you think will ultimately determine whether Syria’s transition succeeds or fails?

Rime Allaf: Justice.

Not revenge. Justice.

I think Syrians need to feel that what happened to them matters and that there is a meaningful process of accountability.

That does not necessarily mean putting every perpetrator on trial. But it does mean showing people that there is a path forward and that the future will not simply reproduce the injustices of the past.

At the same time, people need something much more basic.

They need a normal life.

And this is something that connects directly back to the beginning of the book.

When Hafez Assad died in 2000, Syrians were not dreaming of grand ideological projects. They wanted normality.

Today, after everything they have endured, they want the same thing.

They want housing.

They want electricity.

They want water.

They want jobs.

They want schools.

They want to know that their children will have a future.

If Syria can provide that, then I think there is reason to be optimistic.

And I am optimistic.

Despite everything, I remain optimistic.

The circumstances are difficult, but there is also an extraordinary opportunity.

The challenge is transforming that opportunity into functioning institutions, accountability, and a social contract capable of bringing Syrians back together.

That is what will ultimately determine whether this transition succeeds.

What Does the World Still Misunderstand About Syria?

The Syria Dispatch: Throughout your book, you challenge many of the assumptions that outsiders have made about Syria and Syrians. If there is one thing you wish both Syrians and the rest of the world understood better about Syria today, what would it be?

Rime Allaf: That Syria is not a geopolitical abstraction.

Too often, Syria is discussed through the language of states, alliances, sects, armed groups, and foreign powers.

Of course those things matter.

But Syria is also a society.

The revolution did not emerge from nowhere. Nor did the transition that followed.

Both are rooted in the lived experiences of millions of Syrians.

If we want to understand where Syria is heading, we must first understand what Syrians lived through under the Assads, how those experiences differed during the years of war and displacement, and how they continue to shape the choices people make today.

That, ultimately, is what I hoped to capture in It Started in Damascus.

Because before we can understand the revolution, we have to understand why there was a revolution in the first place.

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On May 29, 2026, I presented at the European University Institute workshop “Designing Sovereignty in Post-Assad Syria”, organized by Raffaella A. Del Sarto, Théo Blanc, and Olivier Roy.

The workshop examined a central question facing Syria today: how does a post-Assad state rebuild sovereignty after almost 15 years of war, institutional fragmentation, territorial division, foreign intervention, displacement, and economic collapse?

My presentation focused on one part of that question: the different ways in which Gulf and European actors are engaging Syria after the fall of the Assad regime.

The core argument was simple: Gulf and European engagement should not be read as two versions of the same “international re-engagement.” They operate according to different political and economic logics.

The Gulf is competitive because Saudi Arabia, Qatar, and the UAE have overlapping ambitions and similar instruments. All three can offer capital, political access, infrastructure deals, energy support, logistics, real estate, and high-level state-to-state engagement. They are not only helping Syria stabilize. They are also competing to shape what stabilization means: who gets access to Damascus, which sectors become strategic, which networks matter, and which external patron becomes most useful to the new Syrian authorities.

Europe is different. It is fragmented, but not politically competitive in the same way. EU member states may compete commercially, but they do not necessarily pursue the same opportunities. Politically, they remain broadly aligned around a shared set of principles: Syrian unity, stabilization, minority protection, inclusive governance, refugee return conditions, accountability, and the avoidance of renewed war.

Below is a structured summary of the key arguments I presented.

1. Gulf and European Engagement Follow Different Logics

I began by arguing that the return of external actors to Syria is not a single process.

Syria is not simply being “re-engaged” by the international community. Different actors are entering the post-Assad landscape with different priorities, different tools, and different expectations.

For Gulf actors, Syria is a strategic arena. Stabilization matters, but so does influence. Saudi Arabia, Qatar, and the UAE all want to avoid state collapse, Iranian re-entrenchment, uncontrolled external dominance, renewed jihadist mobilization, and unmanaged refugee or security spillovers. But they also want access, leverage, and visibility.

For Europe, the logic is more institutional and procedural. The EU wants a stable Syria, but also one that meets minimum political, legal, and governance expectations. Its engagement is therefore slower, more conditional, and more tied to questions of sanctions relief, assistance programming, accountability, minority protection, refugee return conditions, and institutional reform.

This difference matters because Damascus does not experience these actors in the same way.

The Gulf can offer political recognition, money, energy, infrastructure projects, high-level visits, and visible announcements. Europe can offer sanctions relief, aid, technical assistance, trade frameworks, institutional support, and eventual financial normalization, but usually through slower channels and with more conditions attached.

In practical terms, the Gulf is more immediately attractive to the Syrian government. Europe may be more important for long-term normalization, but it is less able to provide quick wins.

2. The Gulf: Collective Stabilization Language, Competitive Practice

Immediately after Assad’s fall, Gulf states broadly agreed on the need to prevent Syria from becoming another unmanaged regional vacuum.

At the collective level, Gulf and Arab messaging emphasized Syria’s unity, sovereignty, territorial integrity, stability, sanctions relief, and the preservation of state institutions. But beneath this shared language, different national strategies quickly emerged.

Saudi Arabia positioned itself as the central diplomatic broker. Riyadh sought to place itself at the heart of Syria’s regional reintegration, linking political legitimacy, Arab coordination, sanctions relief, and future reconstruction.

Qatar moved from a position of pre-existing political legitimacy. Unlike Abu Dhabi, Doha was less deterred by the Islamist origins of the new rulers, had long-standing links with Syrian opposition networks, and could engage quickly through political, humanitarian, and operational channels.

The UAE moved more cautiously at first. Its skepticism toward Islamist movements shaped its initial hesitation. But over time, Abu Dhabi began to engage more pragmatically, especially through business channels, infrastructure, ports, logistics, real estate, and state-linked investment opportunities.

The result is what I described as competitive stabilization.

This competition is especially visible because Saudi Arabia, Qatar, and the UAE are not occupying clearly separated niches. They repeatedly appear in the same strategic sectors: energy, transport, airports, logistics, ports, real estate, tourism, finance, industrial zones, and investment platforms. If each Gulf actor were operating in a different sector, we might simply describe their engagement as complementary. But when they compete over similar sectors and similar forms of access, stabilization itself becomes a field of influence.

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3. Europe: Not Commercially Competitive and Politically United

The EU, the Commission, the European External Action Service, member states, development agencies, humanitarian actors, banks, and private firms do not all move at the same speed or with the same priorities. Economically, countries such as France, Germany, Italy, Greece, Cyprus, and others may see different opportunities in energy, ports, trade, finance, development, or reconstruction.

But politically, Europe is less competitive than the Gulf.

European states are broadly aligned around the same principles: Syrian unity, stabilization, minority protection, inclusive governance, safe and voluntary refugee returns, accountability, and the avoidance of renewed war.

There are differences, of course. Some European actors may prioritize engagement more than others. Some may focus more on the Kurds, decentralization, minority protection, Israel, Türkiye, Russia, migration, counterterrorism, or commercial opportunities. But these are differences of emphasis and risk tolerance, not fundamentally competing visions for Syria’s political alignment.

Europe’s challenge is therefore different. It is not primarily a problem of internal geopolitical competition, but a problem of translation: how to convert broad political principles, sanctions relief, aid pledges, and institutional frameworks into visible, practical support for Syria’s recovery.

That is much harder than making a statement or hosting a dialogue.

4. Why the Gulf Moves Faster Than Europe

Beyond political will, the difference between Gulf and European engagement also lies in their institutional capacity and decision-making style.

Gulf states can move quickly because they often operate through centralized decision-making, state-linked companies, sovereign funds, high-level political channels, and direct relationships with the Syrian presidency and key ministries. When a Gulf actor wants to explore a port, airport, power plant, real estate project, or logistics corridor, it can often do so quickly and visibly.

Europe, by contrast, is structurally slower. European engagement has to navigate EU institutions, member-state coordination, legal constraints, procurement procedures, sanctions compliance, risk assessments, partner selection, monitoring frameworks, and political conditionality. European banks and firms are also cautious, even after sanctions relief, due to concerns about compliance, reputational risk, payment channels, dispute resolution, property rights, and political uncertainty.

Gulf actors are also constrained by some of these limitations. Gulf MoUs, for instance, have not always materialized quickly, partly due to operational constraints within Syria. But their ability to mobilize capital and provide support is much less constrained by bureaucratic hurdles. Qatar and Saudi Arabia, for example, cleared Syria’s World Bank arrears and provided support for public-sector salaries, while the EU is still struggling to spend its 2025 financial envelope for Syria’s socio-economic development.

All of this makes Europe less attractive to Damascus in the short term, especially because the new government is under pressure to show results quickly.

That does not mean Europe is irrelevant. On the contrary, Europe remains essential for long-term recovery. It can support institutional reform, trade normalization, humanitarian and development assistance, financial reintegration, technical assistance, and, eventually, private-sector confidence.

But these forms of support are slower and less visible than a Gulf-backed energy deal, an airport concession, a port announcement, or an investment forum.

5. Damascus Is More Interested in the Gulf But Cannot Choose Only One Patron

A central part of my argument was that the Syrian government is not a passive recipient of external engagement. Quite the contrary. President Ahmad al-Sharaa’s pragmatism has long been noted, and the new authorities are actively managing, sequencing, and balancing between different partners.

Damascus needs Gulf support because it needs quick wins. It needs electricity, fuel, political recognition, investment announcements, infrastructure projects, and visible signs that the country is no longer isolated. Gulf engagement helps the government project an image of sovereignty and recovery.

But Damascus cannot fully align with any one Gulf actor without risking the frustration of others.

If it leans too strongly toward Saudi Arabia, Qatar, and the UAE may feel sidelined.
If it privileges Qatar too openly, Saudi Arabia and the UAE may worry about Doha’s influence and Türkiye’s proximity.
If it gives too much space to the UAE, Qatar, and others, they may see their earlier political investment diluted.

This gives Damascus room to maneuver, but it also creates risks.

The Syrian government’s strategy appears to be one of maximizing optionality. It wants to keep all major Gulf actors engaged, extract support from each, and avoid becoming dependent on any single patron. This is understandable. But it can also cause frustration if Gulf actors feel their support is not translating into privileged access, thereby creating potential risks.

The first is duplication. If multiple actors compete over similar sectors without coordination, Syria may end up with overlapping announcements, fragmented planning, and projects that are not integrated into a coherent national recovery strategy.

The second is opacity. Large infrastructure, energy, port, airport, and real estate deals can create long-term fiscal and regulatory consequences. If their terms are not public, it becomes difficult to assess pricing, guarantees, revenue-sharing, procurement standards, or contingent liabilities. I warned against this in my piece on Qatar-backed UCC Holding’s electricity projects.

The Syria Dispatch

Syria Needs More Electricity. Does It Matter Who Builds It?

Executive Summary…

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a month ago · 2 likes · Benjamin Fève

The third is political capture. Competitive stabilization can strengthen networks that control access to the state rather than institutions that transparently regulate investment. This matters especially in a context where Syria is rebuilding state capacity from a very low base.

The fourth is uneven recovery. Gulf-backed projects may concentrate in sectors and locations that generate returns, visibility, or strategic leverage: ports, airports, energy, logistics, tourism, real estate, and high-value urban development. These sectors matter, but they do not automatically improve living conditions for most Syrians.

6. Europe’s Risk Is Becoming Too Slow to Matter

With Europe, the risks are different.

If European support remains too slow, too fragmented, or too difficult to absorb, it may lose relevance in the eyes of Damascus. The Syrian government may continue to engage Europe diplomatically while looking elsewhere for the resources it actually needs.

This would be a mistake for both sides.

For Europe, Syria is not only a humanitarian issue. It is connected to regional stability, migration, energy, trade, counterterrorism, refugee returns, and the future of the Eastern Mediterranean. If Europe wants influence, it needs to move beyond statements and conditionality alone.

For Syria, Europe offers something the Gulf cannot easily provide: long-term institutional support, regulatory credibility, technical expertise, development funding, trade normalization, and eventual financial reintegration. These may be less visible than Gulf-backed projects, but they are essential if Syria wants a recovery process that is more than a series of deals.

The challenge is to make European engagement more operational without abandoning political principles.

That means clearer priorities, faster project preparation, better coordination with Syrian ministries, stronger banking channels, and more realistic sequencing between humanitarian aid, early recovery, development support, and private-sector engagement.

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8. Two Questions/Comments from the Discussion

During the Q&A, two questions helped clarify the broader stakes of the argument.

The first (not really a question but rather a comment) concerned whether Syria marks the end of the European Union’s ambition to support democratic nation-state building in its neighborhood.

While I did not have time to write a proper, fully-fledged reflection at the time, I would argue today that in the Syrian case, I would tend to agree and say that I do not really see the EU approaching engagement through the language of democratic state-building anymore—at least not in the way it might have claimed to do in earlier moments of Euro-Mediterranean policy.

This does not mean that European officials no longer care about governance, minority protection, accountability, inclusion, or the rule of law (and, broadly speaking, ‘democracy’). These issues remain present in European rhetoric and programming. But the hierarchy of priorities appears different.

In Syria today, the EU is primarily interested in helping produce a state that is more stable, safer, more functional, and less likely to generate insecurity for Europe. That may be understandable, albeit somewhat cynical. A major part of the European interest in Syria’s recovery is linked to migration, refugee returns, border security, counterterrorism, and the desire to prevent Syria from remaining a permanent source of instability. In that sense, Syria fits into a broader European pattern of externalizing security and migration management to its southern and eastern neighborhood.

This is interesting because Syria is not Egypt, Libya, Tunisia, or Lebanon. The EU is not engaging an existing authoritarian state, a collapsed transition, or a fragmented political order with inherited institutions. It is engaging a post-regime context in which the state itself is being reassembled (maybe something for academics to look into!).

If democracy is no longer the organizing objective, then the question becomes: what kind of state is Europe actually helping to build?

My reading is that the answer is a functional, unified, internationally legible Syrian state, and preferably inclusive and not overtly repressive, but above all stable enough to manage borders, refugees, security risks, aid flows, and economic recovery.

The second question/comment concerned the impact of the current regional war environment on Gulf investment in Syria.

Here, my answer was more cautious. Since it is still difficult to assess the impact, as many Gulf-related MoUs, investment announcements, and framework agreements signed before the latest escalation have not yet fully materialized, and implementation was already slow, we need to be careful before attributing forthcoming delays solely to the war.

The better indicators to watch are not only headline announcements, but the pace of official visits, business delegations, technical follow-up meetings, due diligence missions, financing structures, and so on. If these slow down significantly, then we can begin to speak of a more direct effect.

The war will almost certainly constrain political bandwidth. Gulf governments, investors, and state-linked companies have limited attention, and Syria is not their only priority (especially compared to their own countries). Regional escalation raises risk perceptions, complicates planning, and may delay decision-making.

But at the financial level, the picture is more nuanced.

The amounts discussed in Syria, even when they reach hundreds of millions or several billion dollars, remain relatively small compared to the financial capacity of Gulf states and their sovereign investment ecosystems. For Saudi Arabia, Qatar, and the UAE, Syria is not financially impossible, even if they now have to allocate even greater amounts to their own reconstruction.

In short, my answer was that the war may slow Gulf engagement, particularly in terms of attention, logistics, and investor confidence. But I would not assume that it fundamentally changes Gulf capacity to invest in Syria.

I would like to thank Raffaella A. Del Sarto, Théo Blanc, Olivier Roy, and the European University Institute for the invitation, as well as the other participants, for such a rich discussion on Syria’s post-Assad transition.

This is not meant to be an exhaustive news roundup. The aim is to track the developments that reveal where the country is heading — from reconstruction and investment to banking, energy, public services, property rights, and the evolving relationship between the state and society.

This month’s digest covers nine developments across four broad themes: Syria’s external re-engagement with Europe and the Gulf; energy, electricity, and regional connectivity; financial and banking reform; and the domestic social tensions emerging around wheat procurement, makeshift oil refineries, and Decree 66-linked reconstruction projects.

You can read more about The Syria Dispatch and the purpose of this publication at the end of the post. If you have comments, corrections, or suggestions, you can also find my contact details there and reach out directly.

Syria’s External Re-Entry: Diplomacy, Gulf Capital, and Strategic Positioning

Business Delegation Signals UAE Investment Push as Alabbar Floats Multi-Billion-Dollar Projects

Key Developments: Syria–UAE economic engagement accelerated in May with the first Syrian–Emirati Investment Forum in Damascus and a high-level UAE business delegation led by UAE Minister of Foreign Trade Thani al-Zeyoudi. The delegation met President Ahmad al-Sharaa and included more than 120 Emirati companies and institutions. The visit coincided with renewed Emirati interest in Syria following an earlier visit by Emaar Properties founder Mohamed Alabbar, who said he was assessing investments worth up to USD 18 billion, including USD 5–7 billion on the Syrian coast and up to USD 11 billion in Damascus and its surroundings. It was also reported that Alabbar-linked Eagle Hills is studying two much larger master-planned projects in Dummar and Latakia, with a combined development cost exceeding USD 50 billion, though the projects remain in the early stages of discussion.

While Syrian officials used the forum to promote investment incentives and regulatory reforms, some Emirati investors raised concerns over exchange-rate stability, banking and transfer mechanisms, sovereign guarantees, and the need for clearer regulatory frameworks. Despite the scale of the projects discussed, no signed investment agreements or memoranda of understanding were publicly announced, although it was reported that the two sides had reached preliminary agreements on several investment tracks.

UAE Foreign Trade Minister Al-Zeyoudi said bilateral non-oil trade reached USD 1.4 billion in 2025, up more than 130% year-on-year, while discussions focused on industry, agriculture, renewable energy, logistics, the digital economy, tourism, aviation, and private-sector partnerships. Separately, the UAE announced support for the restoration of the Umayyad Mosque in Damascus, adding a cultural dimension to renewed bilateral engagement.

Why It Matters: The Syria–UAE forum marks a genuine Emirati rapprochement, but one likely to remain cautious, transactional, and step-by-step. Abu Dhabi moved more slowly than Qatar and Saudi Arabia after Assad’s fall, partly because of its long-standing hostility to Islamist movements, its unease with HTS’s links to Türkiye and Qatar, and its previous rapprochement with the Assad regime. The UAE is therefore not simply “returning” to Syria; it is testing the new authorities through trade, investment, heritage diplomacy, and high-level business channels. Sharaa’s visit to Abu Dhabi earlier in April and his public solidarity with the UAE helped accelerate this opening, while the UAE officials also publicly noted Syria’s support. Still, the relationship carries a trust deficit on both sides.

The visit also needs to be read through the lens of Gulf competition. Both Qatar and Saudi Arabia are much better positioned in Syria, and the UAE does not want the post-Assad transition to become an arena shaped only by these players, including Turkiye. Abu Dhabi wants a stake in the emerging economic order, especially in real estate, ports, logistics, aviation, tourism, digital services, and urban development. But the large figures attached to Alabbar and Eagle Hills should be treated as positioning rather than implementation, especially given the difficulties most prospective investors face in moving from signing to implementation of their investments.

The Israel angle is also important, though it should not be reduced to a formal precondition for normalization. The UAE may continue to engage Syria without waiting for a Syria–Israel agreement, but Abu Dhabi could also serve as an additional channel for indirect contact between the two sides. It was previously reported that the UAE had facilitated secret indirect talks between Syria and Israel. From an investment perspective, it is difficult to imagine large-scale Emirati capital flowing into Syria while the risk of Israeli escalation remains high, or while Israel may view Emirati investment as strengthening a state it still treats as an adversary. A formal Syria–Israel normalization deal may not be required, but some form of security understanding, de-escalation mechanism, or tacit Israeli acceptance would likely be more conducive to UAE–Syria rapprochement and investment.

EU–Syria Dialogue Marks Shift from Isolation to Structured Re-Engagement

Key Developments: On May 11, Syria and the EU held their first High-Level Political Dialogue in Brussels, co-chaired by Syrian Foreign Minister Asaad al-Shaibani and EU High Representative Kaja Kallas. The meeting focused on EU–Syria relations, regional stability, Syria’s inclusive political transition, socio-economic recovery, and reconstruction. It took place alongside the Syria Partnership Coordination Forum, co-chaired by al-Shaibani and EU Commissioner for the Mediterranean Dubravka Šuica, with EU Member States, G7 countries, Arab states, the UN, and major financial institutions in attendance.

The EU announced work on a EUR 15 million Technical Assistance Hub to support Syrian institutions, a EUR 14 million contribution to rehabilitate Al-Rastan Hospital in Homs, and preparations for the additional EUR 280 million in socio-economic support for 2026–2027. The dialogue also coincided with a major legal step: the EU Council restored the full application of the 1977 EU–Syria Cooperation Agreement, ending the partial suspension imposed in 2011 and reopening the agreement’s trade and economic-cooperation framework.

The month also showed that Syria’s re-engagement with Europe is expanding beyond Brussels. Syrian President Ahmad Al-Sharaa had joined a European Council summit with regional partners in Cyprus in late April, where discussions focused on the Middle East, the EU’s southern neighborhood, and regional security. Sources say he used the meeting to present plans for Syria to become a regional transit and energy corridor, an argument Damascus is expected to repeat in upcoming G7 discussions, which Syria will attend as a guest nation.

At the same time, the EU maintained its conditional approach. Syrian activists and MEPs urged Brussels to link deeper engagement to human rights, accountability, minority protection, and an inclusive transition. On May 25, the EU Delegation to Syria also published its updated Roadmap for Engagement with Civil Society, stressing the need for adaptive and sustained support to Syrian civil society, which it described as central to community resilience, advocacy, dialogue, and participation. Separately, the EU renewed targeted sanctions against individuals and entities linked to the former Assad regime until June 1, 2027, while delisting seven entities, including the Ministries of Defense and Interior.

Why It Matters: The High-Level Political Dialogue confirms that EU policy toward Syria is moving from containment to structured re-engagement, but not to unconditional normalization. Restoring the Cooperation Agreement and launching formal political dialogue reopen channels that had largely collapsed after 2011. Yet the renewal of targeted sanctions and the publication of the civil society roadmap show that Brussels still wants engagement to remain tied to inclusion, accountability, and institutional reform.

For Damascus, the stakes are practical. Europe offers technical assistance, reconstruction financing, trade normalization, regulatory support, and political legitimacy. Syria is also trying to reposition itself not only as a recovery file, but as a strategic connector between the Gulf, Iraq, Turkey, the Mediterranean, and Europe. The transit-hub argument is useful because it gives European governments a reason to see Syria as part of their energy, logistics, and supply-chain calculations, not only as a source of refugees or instability. But it remains more a strategic pitch than a delivered reality: pipelines, ports, borders, electricity links, customs systems, security guarantees, and financing all still need to be made functional.

For the EU, Syria is now tied to migration management, refugee returns, counterterrorism, regional stability, energy security, and influence in the Eastern Mediterranean. This gives Damascus leverage, but also puts it under assessment. The coming test is whether both sides can move from political signaling to operational cooperation: credible institutions on the Syrian side, usable instruments on the EU side, and enough delivery on services, infrastructure, civil society participation, and economic governance to make re-engagement visible beyond diplomatic meetings.

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Energy and Connectivity: From Resource Recovery to Transit Ambitions

Offshore Exploration Deals and Iraqi Oil Transit Seek to Revive Syria’s Energy Sector

Key Developments: On May 11, Syria identified an offshore block for its first deep-water oil and gas exploration project with Chevron and Qatar’s UCC Holding, paving the way for final contracts and technical operations to begin in the summer. One day later, the Syrian Petroleum Company signed a memorandum of understanding with ConocoPhillips, TotalEnergies, and QatarEnergy to conduct technical studies, prepare a work program, and draft an exploration contract for offshore oil and gas exploration in Block 3 near Latakia. Separately, INA Croatia and MOL Group (Hungary) held talks with Syrian counterparts over a possible restart of projects suspended since 2012.

Onshore, the Syrian Petroleum Company continued efforts to restore production in eastern Syria. In Deir Ezzor, SPC restarted wells 110 and 116 at the al-Tanak field, adding around 800 barrels per day to the current output. The company said al-Tanak had produced 50,000–60,000 barrels per day before 2011, but that 90–95% of its infrastructure had been damaged, leaving current production at around 3,000–5,000 barrels per day. Still, amid constrained oil supplies, it was reported that Russia had become Syria’s dominant crude supplier after Assad’s fall, with shipments rising by 75% to around 60,000 barrels per day in 2026.

Iraqi oil also became an increasingly important part of Syria’s energy and transit picture. Iraq sent its first crude shipment to Syria through the reopened Rabia–al-Yarubiyah crossing in early May, with an initial 70 tanker trucks, while the Syrian Petroleum Company raised daily unloading capacity for Iraqi oil at Baniyas refinery to around 500 tankers, up from 300. Iraq’s Oil Ministry also discussed opening an Iraqi shipping office at Baniyas port and reviving the Iraqi–Syrian oil pipeline, while Baghdad separately announced plans for a 700-kilometre Basra–Haditha pipeline with a planned capacity of 2.5 million barrels per day and possible export routes toward Baniyas, Ceyhan, and Aqaba. At the same time, SPC said recent increases in domestic petroleum-product prices were driven by higher supply, transport, production, storage, maintenance, insurance, and global fuel costs, and were intended to maintain stable distribution across governorates.

Why it Matters: The return of the main eastern oil fields to government control is economically significant, but it should not be mistaken for a rapid return to pre-war production. Syria’s oil output had already been declining long before 2011, after peaking in the 1980s, and the war then accelerated the collapse through infrastructure destruction, sanctions, underinvestment, primitive refining, smuggling, and repeated changes in control. This does not mean recovery is impossible. New drilling, reservoir management, digital monitoring, enhanced oil recovery, horizontal wells, and better seismic interpretation could make some previously marginal fields or old discoveries more viable today than they were 15 years ago.

But Syria is not, and has never been, a major oil power capable of living off hydrocarbons without major discoveries. Even at its historic peak, its output was modest by regional standards, and much of the known onshore base is mature, damaged, or under-assessed. But that is why offshore exploration, albeit speculative, still matters: it offers upside that the mature eastern fields may not. It should be noted, however, that Syria has not yet made a commercial offshore discovery, and Lebanon’s nearby offshore campaigns have so far failed to produce a positive discovery.

This makes the more ambitious targets floated by SPC leadership. SPC Director Youssef Qiblawi said current output had reached around 133,000 bpd, projected roughly 300,000–350,000 bpd by end-2027, and repeated a target of around 800,000 bpd by late 2029 or early 2030. His explanation relied on a combination of rehabilitating damaged fields such as al-Omar and al-Tanak, expanding Rmeilan, and drilling new onshore blocks. While these targets are politically important because they signal confidence to investors and the public, they remain highly ambitious given the state of infrastructure, reservoir damage, financing needs, and operational risks.

Nevertheless, offshore exploration is technically complex, and that is precisely why it matters. A single exploration or delineation well can cost close to USD 100 million before any production is guaranteed, so any move toward drilling involves mobilizing substantial capital, personnel, and technical capacity in Syria. For now, however, the sector’s near-term significance lies in credibility, capital inflows, and energy security. Agreements involving Chevron, TotalEnergies, ConocoPhillips, QatarEnergy, and UCC can bring technical studies, seismic work, drilling commitments, service contracts, and foreign capital even before production begins. Onshore investment will remain more constrained and will depend, among other things, on investors’ ability to price political, legal, insurance, and operational risks and move capital into Syria.

Electricity Supply Improves Unevenly as Syria Moves to Restore Regional Power Links

Key Developments: Syria’s electricity sector continues to see localized improvements, although supply remains uneven across regions. In Aleppo, electricity returned gradually to parts of the eastern city after around nine years of interruption, following the opening of four transformer centers in al-Shaar, benefiting roughly 15,000 residents. The Ministry of Energy also said it had carried out transmission, distribution, and maintenance works across several regions, including restoring electricity to Hurran in rural Maarat al-Numan after 13 years, raising supply in 286 villages around Qamishli from one hour to more than eight hours per day, and bringing electricity back to 35% of Qamishli city after a two-year outage. Separately, the Jandar power plant in Homs reportedly reached full production capacity for the first time in nearly a decade, rising from around 200 MW before the transition to 825 MW after maintenance works.

Regional electricity interconnection also returned to the policy agenda. In Amman, the Syrian, Jordanian, and Lebanese energy ministers discussed advancing electricity interconnection and related technical work, with Syrian Energy Minister Mohammad al-Bashir saying Syria was working to rehabilitate power links with Jordan and Lebanon. Syria plans to restore transmission lines with Jordan and maintain four interconnection lines with Lebanon, which officials described as technically ready on both sides. Furthermore, Lebanon’s energy minister later said Beirut was considering buying electricity directly from Syria, while work continues on the wider Jordan–Syria–Lebanon interconnection, which he said could take around one year to rehabilitate.

Despite these improvements, electricity remained a source of pressure for households and industry. In Aleppo, industrialists reported electricity bills reaching millions of Syrian pounds after industrial tariffs rose to SYP 1,700 per kWh (+/- USD 0.13) for factories requiring continuous supply, while some industrial areas still received only around 12 hours of power per day. Separately, legal challenges against the October 2025 tariff increase continued in Syrian courts, with hearings delayed into June. In Idlib, local sources also reported new tariff increases by the Turkish private company Green Energy, alongside recurring evening outages.

Why It Matters: The Syria–Jordan–Lebanon electricity track reopens an old regional interconnection file that had long been technically plausible but politically difficult. Jordan and Syria have been linked through a 400 kV transmission line since 2001, but suspended in 2012. The 2022 plan to transmit Jordanian electricity to Lebanon via Syria stalled over financing, infrastructure damage, and sanctions-related complications. With Syria now re-engaging diplomatically, sanctions barriers reduced, and Lebanon still facing severe power shortages, using Syria as an electricity corridor has become more practical again.

Domestically, supply is improving from a very low base. Better electricity in Damascus, Aleppo, Qamishli, Raqqa, Deir Ezzor, and other areas matters because power remains one of the main constraints on recovery. A more reliable supply reduces dependence on private generators, lowers operating uncertainty, and allows households, workshops, and factories to operate for longer hours. Politically, restoring electricity to long-neglected areas and places only recently brought under central government control also helps the state reassert itself through service delivery, especially in eastern and northeastern regions where authority and infrastructure were fragmented during the war.

The risk is that improved availability is being paired with higher tariffs before reliability is fully restored. The recent tariff reform may help reduce subsidy pressures and improve sector finances, but it also raises production costs for manufacturers, food processors, textile producers, metal workshops, and other energy-intensive activities. If firms pass these costs on, consumers face higher prices; if they cannot, margins narrow and production remains constrained, with the labor market also potentially being affected.

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Financial Normalization: Central Bank, Currency, and Public Banks

Central Bank Unveils New Strategy as Raslan Replaces Husrieh

Key Developments: On May 15, President Ahmad al-Sharaa appointed Mohammed Safwat Raslan as Governor of the Central Bank of Syria, replacing Abdulkader Husrieh, who was subsequently appointed Syria’s ambassador to Canada. Shortly before his departure, Husrieh had announced the Central Bank’s 2026–2030 strategy, which focuses on monetary stability, exchange-rate management, banking-sector integrity, digital payments, financial inclusion, and reintegration into the global financial system.

The Central Bank also formally launched a sector-wide gap assessment with consultancy firm Oliver Wyman covering both the Central Bank and the wider financial sector. Separately, reports indicated preparations for a Damascus Foreign Exchange and Gold Market intended to provide a centralized platform for foreign-exchange trading and price formation.

High on the Central Bank’s agenda, currency replacement remained a central policy priority throughout the month. On May 1, the Central Bank extended the exchange period for old banknotes until June 30, while Husrieh reported that 56% of the old monetary mass had already been replaced. By the end of May, Raslan extended the deadline again until July 30 and announced that replacement rates had exceeded 63% nationwide. Throughout the month, the Syrian pound traded at roughly SYP 13,500–14,000 per USD ((new) SYP 135-140) in the parallel market, remaining significantly weaker than the official exchange rate.

Why It Matters: The replacement of Abdulkader Husrieh with Safwat Raslan came at a sensitive moment for Syria’s monetary transition. Husrieh had overseen several key post-Assad initiatives, including the currency replacement process, the 2026–2030 strategy, and the Oliver Wyman gap assessment, and was at the forefront of efforts to reconnect Syria’s financial system with international institutions. Husrieh’s sudden reassignment, therefore, sends mixed signals, especially given the lack of public criticism against him: it may reflect an effort to bring in a younger, more implementation-oriented figure with experience in private banking, governance, and digital transformation, but it also raises questions about policy continuity and the degree of autonomy granted to the Central Bank, especially given reports of competing influence within the institution itself.

At the policy level, the new strategy broadly targets Syria’s main financial weaknesses: low confidence in the pound, a fragmented foreign-exchange market, weak banking intermediation, limited digital payments, and the need to reconnect with global financial channels. As for the currency replacement process, it shows progress, but the repeated extensions and the recent decision to reopen exchanges through exchange and transfer companies also suggest that the Central Bank is still adapting the rollout to administrative bottlenecks, weak banking coverage, and the realities of a cash-based economy. Reopening the process to exchange and transfer companies matters because bank-branch coverage remains uneven, especially outside major cities, while money-transfer networks have long been central to Syrian cash circulation.

Public Banks Enter Reform Push as Debt Relief, Lending, and Governance Issues Advance

Key Developments: Syria’s public banking sector saw several reform-related developments in May. Oliver Wyman reportedly completed the first phase of its review of Syria’s six state-owned banks, with options under discussion including restructuring, privatization, or strategic partnerships. Separately, Finance Minister Mohammad Yisr Barnieh met with directors of public banks to discuss the implementation of Presidential Decree No. 70 of 2026 on distressed loans, while the Ministry of Finance later issued executive instructions covering exemptions, rescheduling, and settlement mechanisms for borrowers at government banks.

Several public banks also announced operational measures. The Agricultural Cooperative Bank prepared its branch network to pay farmers’ grain dues during the wheat season, and issued instructions for settling farmers’ distressed loans under Presidential Decree No. 70 of 2026. The Popular Credit Bank resumed limited-income loans with a ceiling of (new) SYP 100,000 (+/- USD 720), though debate later emerged over loan interest rates following an earlier Court of Cassation ruling on usurious interest. The Industrial Bank and the Ministry of Finance also discussed launching a Sharia-compliant banking window and financing tools to support the repair of damaged industrial facilities.

Governance and integrity concerns remained visible. Oversight reporting raised allegations of embezzlement linked to Saving Bank offices. Separately, the Ministry of Finance announced disciplinary and anti-corruption measures against 256 employees and accountants, adding that future lists would include employees in government banks.

Why It Matters: Public-sector banks were cornerstones of Syria’s development in previous decades because they served as the primary financial channels through which Syria allocated credit to specific social and productive groups. The Agricultural Cooperative Bank is designed to finance rural communities and agricultural activities; the Industrial Bank to support industrial projects; the Popular Credit Bank to serve low-income borrowers and small productive activities; and the Real Estate Bank to finance housing and construction.

This makes the reform debate politically sensitive. The Oliver Wyman review, therefore, raises a central policy question: should Syria modernize its public banks, privatize them, or preserve them as development-oriented institutions? Given the government’s broader shift toward a more liberal economic agenda, including discussions around the privatization of state-owned enterprises, which has yet to be settled, such a move would not be surprising. Yet a reform agenda focused mainly on profitability could weaken the banks’ development role, especially if institutions originally designed to serve farmers, industrialists, small borrowers, and housing finance are pushed toward purely commercial lending.

The resumption of lending is one of the most important signals in the public banking sector because formal credit had virtually disappeared during the conflict. In 2020, Syrian authorities ordered public and private banks to stop granting credit facilities, including at the Real Estate and Agricultural banks, and Syria’s broader banking collapse severely weakened access to credit for businesses and households. Against that backdrop, Presidential Decree No. 70 of 2026 and the reopening of Popular Credit Bank lending could prove significant. Presidential Decree No. 70 of 2026 is designed to clean up non-performing loans through interest waivers, penalty exemptions, and rescheduling, while the Popular Credit Bank’s return to personal lending gives limited-income public-sector employees access to formal credit again.

The Islamic finance debate adds another layer. Syria already has an Islamic finance base: Islamic banks greatly outperformed traditional banks throughout the conflict, with rising demand for Islamic tools such as murabaha and Islamic bank assets growing from SYP 18.2 trillion to SYP 25 trillion. The government is also exploring sukuk: Finance Minister Mohammad Yisr Barnieh said Syria was working on the legal, regulatory, and technical framework for the country’s first sovereign sukuk issuance, while debate has emerged over whether such instruments should finance productive projects or simply cover budget gaps. The debate over the use of sovereign sukuk issuance is not new, as the Ministry of Finance was reportedly already finalizing a draft regulation to legislate such financial instruments in 2024.

Taken together with the Popular Credit Bank’s return to interest-based lending, the proposal to allow Islamic banking windows, and the renewed public debate over bank interest, these developments raise broader questions about the government’s financial direction. The issue is not Islamic finance itself, which can broaden participation and attract savers or borrowers who avoid conventional interest-based products, and which has proved to be extremely popular. The risk is that debates over “usurious interest” could narrow the space for ordinary credit precisely when Syria needs multiple financing channels. There is also a question of sequencing. Given the state’s limited legislative and administrative bandwidth, prioritizing new Islamic-finance frameworks while existing financial tools remain underused could slow more urgent reforms.

Finally, this debate also intersects with uncertainty about the government’s willingness to take on loans. Observers continue to ask whether the reluctance reflects a preference for interest-free or Sharia-compliant financing, concerns over already mounting public debt, or simply the difficulty of accessing affordable external credit. It remains to be seen whether will be whether Syria builds a plural financial system (conventional, Islamic, development-oriented, and donor-backed) or whether ideological and fiscal constraints limit the range of tools available for broad-based economic recovery and reconstruction.

The Domestic Social Contract: Wheat, Property, and Livelihoods

Wheat Price Protests Force Bonus as Stronger Harvest Season Tests Grain Procurement

Key Developments: Syria’s 2026 wheat season became a major policy issue after the Ministry of Economy and Industry set the purchase price for first-grade durum wheat at (new) SYP 46,000 per ton (+/- USD 333), triggering farmer protests in several wheat-producing areas. Farmers and residents protested in Raqqa, Deir Ezzor, Hasakah, Hama, and other agricultural areas, arguing that the price did not reflect higher costs for fuel, seeds, fertilizers, harvesting, transport, and sacks. Al-Modon also reported that some farmers threatened to withhold deliveries to state institutions if the price was not revised. In reaction, President Ahmad al-Sharaa issued, on May 21, Presidential Decree No. 120 of 2026, granting wheat farmers an additional (new) SYP 9,000 per ton (+/- USD 65) delivered to the Syrian Grain Establishment, on top of the official purchase price. This raised the effective state purchase price to (new) SYP 55,000 per ton.

The government also moved to prepare procurement and payment channels for the harvest. The Syrian Grain Establishment said it had raised storage capacity to around 1 million tons, was preparing 15 new sites in Hasakah, Raqqa, and Deir Ezzor, and planned to expand its marketing and intake centers to nearly 80. The Agricultural Cooperative Bank separately said that 106 branches were being prepared to pay farmers’ grain dues, except for 24 branches in Hasakah and Raqqa, where payments would be redirected to nearby operational branches.

The season unfolded against a mixed agricultural backdrop. Heavy rainfall improved vegetation and water availability after a significant drought during the preceding season, but also caused flooding, damage to farmland, and disruption to infrastructure in several areas.

Why It Matters: Syria relies on a state-led foodgrains procurement model in which the government buys wheat from farmers through official grain institutions to secure flour supplies, bread availability, and strategic reserves. The stakes were especially high after two weak seasons and a severe drought. The FAO had forecast Syria’s wheat import requirement for the 2025/26 marketing year at around 3 million tonnes, nearly 70 percent above the five-year average, while it was previously reported that domestic production had fallen far below national consumption needs in 2025.

These protests are noteworthy for their scale, their status as a nationwide mobilizing issue, and for showing that farmers potentially represent a significant bargaining force in the post-Assad transition. The initial price increases triggered demonstrations in half of Syria’s governorates, with some farmers threatening to withhold grain from state institutions. The controversy also highlighted a consultation problem: farmers’ representatives argued that the price had been set without sufficient participation by farmers’ unions or local producers, despite sharp regional cost differences.

This controversy is indicative of a broader problem in the local production-cost structure. Farmers argued that fertilizer, diesel, pesticides, harvesting, sacks, and transport costs had risen sharply, with some inputs effectively priced in dollars while the state purchase price was set in Syrian pounds. Farmers pointed to high costs for diesel, fertilizer, irrigation, harvesting, and transport, while others noted a discrepancy between the state’s wheat seed price of around USD 500 per ton and the initial crop purchase price of about USD 330 per ton. Farmers also explained that a single national procurement price also fails to reflect regional differences, especially in eastern governorates, where irrigation costs can be structurally higher than in rain-fed or better-served areas.

Protests Erupt over Closure of Makeshift Oil Refineries in Aleppo

Key Developments: The Syrian Petroleum Company’s (SPC) decision to close primitive oil refineries/burners, known locally as “harraqat”, in Tarhin near al-Bab in rural Aleppo, triggered protests by owners, workers, and traders in late May. Protesters argued that the facilities had operated for years under previous local arrangements, supplied fuel to northwestern Syria during the conflict, and supported thousands of direct and indirect livelihoods. Internal security forces prevented demonstrators from reaching Saadallah al-Jabiri Square in Aleppo on May 20, while other reports said tensions escalated in Tarhin as security forces moved to enforce the dismantling.

SPC and the Ministry of Energy defended the closures on legal, health, environmental, and technical grounds, saying the haraqaat were illegal, unsafe, highly polluting, and produced fuel that did not meet Syrian specifications. The SPC gave owners two options: sell the metal structures to the company at “incentive” prices or keep them, provided they signed a pledge not to use them again in any oil-related activity. The company also began interviews to place haraqaat workers at formal oil facilities and to settle outstanding financial dues owed to owners, while SPC later welcomed a pledge by Hemco Minerals and Fuels to remove its own primitive refineries in Aleppo.

Why It Matters: The makeshift oil refineries emerged because the formal fuel supply collapsed during the conflict, and in places such as Tarhin, they became a full local economy: supplying diesel to generators, bakeries, water pumps, agriculture, and transport, while providing work for displaced families with few alternatives. This is why the closure is socially sensitive. The government’s argument is rational: primitive refining is unsafe, polluting, technically inefficient, and outside formal fuel regulation. Still, the sector had been tolerated, taxed, organized, or indirectly managed by successive local authorities for years, creating expectations of recognition, compensation, or gradual transition.

Shutting down the haraqaat is part of a necessary post-war normalization of the oil sector: centralizing crude flows, ending low-quality refining, reducing waste, improving safety, and returning fuel processing to formal infrastructure. But if the state closes these facilities without a credible livelihood plan, the risk of social unrest is real, as seen in these early demonstrations.

Similar tensions to those in Aleppo appeared earlier in Deir Ezzor. In February 2026, Damascus ordered the closure of informal refineries, and workers protested almost immediately, arguing that the decision threatened surrounding livelihoods. While the SPC seems to be keen on absorbing workers into formal oil facilities, workers said the job offers lacked clarity on salaries, contracts, locations, and guarantees.

Damascus Offers Marota and Basilia Compensation Package, but Decree 66 Dispute Deepens

Key Developments: In May, Damascus Governorate took steps to address long-standing grievances related to Legislative Decree No. 66 of 2012, the framework governing Marota City and Basilia City. Officials presented the measures as an effort to correct past injustices while continuing the two projects, which cover parts of Mazzeh, Kafr Sousa, Daraya, Qadam, Nahr Aisha, and the southern ring-road area. The governorate said it had received 1,606 grievance requests, resolved 1,122, increased owners’ allocated floor area by 13.9%, raised rent allowances for alternative-housing beneficiaries by 35 times, restored rights to more than 1,000 previously excluded families, and allocated funding to build 54 alternative-housing towers over three years. It later began paying rent allowances to eligible beneficiaries in Marota City.

Yet, the package did not settle the dispute. Affected owners and rights advocates argued that Decree 66 had converted direct property ownership into shares inside a governorate-managed project, while the Association to Repeal Decree 66 and Restore Rights demanded cancellation of the decree and return of confiscated property. Affected groups say more than 12,000 homes were demolished in Marota-linked areas and more than 20,000 homes in Basilia-linked areas, with tens of thousands displaced.

The controversy also took on a political and rights dimension following the arrest of activists. Affected residents had organized repeated protests demanding the repeal of Decree 66, while Hashtag Syria reported that two representatives of affected owners, Ibrahim Sheikh al-Shabab and Yasser Abbas, were detained after Damascus Governor Maher Idlibi filed a complaint with the cybercrime branch regarding their media and protest activities. Critics said the compensation measures remain insufficient because the file concerns not only urban planning, but also property rights, forced displacement, investor accountability, and transitional justice.

Why It Matters: Grievances linked to Legislative Decree No. 66 of 2012 are long-standing and extend far beyond questions of compensation. For many affected residents, the issue concerns displacement, the loss of community ties, uncertainty surrounding alternative housing, and the conversion of direct property ownership into shares whose value and future remained unclear. Residents repeatedly argued that the project converted homes and land into regulatory shares of uncertain value, while years of delays, low rental allowances, and a lack of clarity about alternative housing forced many families to sell their rights at heavily discounted prices. Others argued that ownership requirements failed to account for families whose documents had been lost, destroyed, or left behind during years of displacement.

Following the collapse of the Assad regime, affected and advocacy groups saw an opportunity to reopen a file that had long been politically untouchable. Residents’ committees and activists have pushed not only for higher compensation, but also for greater transparency, recognition of past grievances, and, in some cases, revisions to the master plans themselves.

The new authorities are attempting to address some of the decree’s consequences without abandoning the framework altogether. While the compensation package is significant, it remains a corrective measure within the existing system rather than a full legal reset. Many affected owners argue that the problem is not only inadequate compensation, but the original conversion of property rights into shares in a governorate-managed project. For many residents, the issue is also one of return, with alternative housing elsewhere seen as an insufficient substitute for homes and communities lost in areas such as Mazzeh, Kafr Sousa, Qadam, and al-Assali.

At the same time, a full reversal would be difficult after more than a decade of accumulated contracts, shares, and property transactions. The broader debate over Jobar, Qaboun, and Tishreen suggests that Marota could set a precedent for reconstruction across Syria. How the government handles this file may ultimately determine whether reconstruction strengthens confidence in property rights or becomes an early legitimacy crisis of the transition.

About the Syria Monthly Economic Digest

The Syria Monthly Economic Digest is a monthly publication by The Syria Dispatch that tracks the political and economic developments shaping Syria’s transition.

Each edition selects the developments I consider most significant over the past month; not every headline, but the ones that reveal something important about where the country is heading. These may include policy decisions, investment announcements, energy and infrastructure developments, banking and monetary reforms, trade and reconstruction dynamics, property rights disputes, public service issues, and the evolving relationship among the Syrian state, society, and external actors.

The format is simple: each entry begins with a news summary explaining what happened, followed by a “Why It Matters” section offering additional information, context, and analysis.

The digest is written for readers who want a structured, analytical overview of Syria’s transition: policymakers, researchers, journalists, diplomats, development practitioners, investors, civil society actors, and anyone trying to follow the country’s economic and political trajectory.

It is not intended to be exhaustive, and it does not replace daily news monitoring. Instead, it offers a monthly snapshot of the issues I believe deserve closer attention.

For comments, corrections, suggestions, or collaboration inquiries, please feel free to reach out.

On May 22, 2026, I joined Umutcan Yüksel on the first episode of PRISM Insights: The Future of Syria: Economic Recovery and EU–Syria Relations for a wide-ranging discussion on Syria’s economic recovery, reconstruction prospects, energy politics, refugee returns, and evolving relations with the European Union.

The conversation took place roughly 15 months after the collapse of the Assad regime, at a moment when Syria was no longer in outright economic freefall, but still far from genuine recovery. Inflation has eased, investor and consumer sentiment have improved, electricity provision has expanded in parts of the country, and regional engagement has accelerated. Yet the daily economic reality for most Syrians remains extremely difficult.

Below is a structured readout of the key arguments I made during the discussion.

1. From Collapse to Partial Stabilization

I began by arguing that Syria’s economy is best understood as being in a phase of fragile stabilization, not reconstruction.

Over the past months, Syria has seen some improvements in macroeconomic indicators. Inflation has come down from extreme levels (but is picking up again), regional economic ties are reopening (but promises fail to materialize), refugees and IDPs are returning (to sometimes poor living conditions), and electricity provision has improved in parts of the country (unequally, and with prices increasing significantly). But these improvements start from an exceptionally low base.

The structural picture remains extremely fragile. GDP is still only a fraction of its pre-war level. Public institutions are overstretched. The banking system remains weak and disconnected, both from Syrians inside the country and from the international financial system. Purchasing power remains low, and investment announcements are still running ahead of actual implementation.

For that reason, I described Syria as moving:

This distinction matters because, while stabilization can mean that the worst forms of collapse have slowed, it does not necessarily mean that households are better off, that businesses can operate normally, or that people feel a material improvement in their daily lives.

During my most recent trip to Syria in early May, what struck me most was the scale of frustration with the economic situation, including in Damascus. This is important because if people are struggling in Damascus, the situation is likely even more difficult in Aleppo, Idlib, the northeast, the coast, and other areas further away from the political and administrative center. This was confirmed to me by contacts on the ground and reporters who have made the trip to Northern Syria.

I also emphasized that it would be unfair to blame all of this on the current authorities. Syria is emerging from near-total economic collapse, institutional fragmentation, sanctions, destruction, and massive capital flight. Recovery was always going to be slow.

Still, several policy choices have increased pressure on vulnerable households. The gradual lifting of subsidies on bread, fuel, and electricity has weighed heavily on Syrians who were already economically insecure. Discussions around greater privatization in sectors such as healthcare have also generated anxiety.

One central challenge today, therefore, is the tension between macroeconomic stabilization and social protection.

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2. Energy as the First Condition of Recovery

A major part of the discussion focused on energy. My main argument was rather straightforward: electricity is a condition for almost every form of recovery, not just one sector among others.

Electricity affects factory production, irrigation, cold storage, hospitals, schools, water pumping, telecoms, household welfare, and the ability of local markets to function. Where the lights are on, people are more likely to return, businesses are more likely to restart, and local economies are more likely to recover.

This is why recent energy arrangements are so important. Qatar has provided gas through Jordan. Azerbaijan has provided gas through Turkey to Aleppo. MOUs have been signed for new power plants. The government has also sought to regain control over oil and gas resources in the northeast.

Yet energy recovery also involves a difficult balancing act. Emergency gas and fuel support can improve electricity supply quickly, but new power plants, offshore exploration, oil and gas development, and grid rehabilitation are much longer-term projects.

The government, therefore, needs to ensure that short- and medium-term support from countries such as Qatar, Turkey, Azerbaijan, Saudi Arabia, Jordan, and Egypt remains durable enough to allow time for deeper rehabilitation.

I also warned that energy recovery can create an uneven geography of reconstruction. Areas connected to gas supply, generation, or transmission improvements will recover faster. Areas outside those networks may lag, even if they are politically important or resource-rich.

3. EU–Syria Normalization: Politically Significant, Economically Slow

We then turned to EU–Syria relations. I argued that the improvement in relations between the European Union and Syria is politically significant, but its immediate economic impact should not be overstated.

The EU lifted most economic sanctions in 2025 and moved to restore the full application of the 1978 EU–Syria Cooperation Agreement. This marks a major political normalization after years of rupture. But it does not mean that European companies or banks will quickly return to Syria.

Sanctions relief changes the legal environment, but it does not automatically solve Syria’s operational constraints. Banks remain cautious. Companies still face uncertainty. Payment channels are weak. The investment climate remains difficult.

The same applies to European aid and socio-economic support. The EU has pledged substantial funding since Assad’s fall, but implementation remains slow. It is difficult to find reliable partners on the ground, difficult to move money into Syria, and difficult to align European and Syrian priorities around reconstruction and recovery.

Moving from an emergency humanitarian framework toward development assistance and socio-economic recovery takes time. For that reason, I argued that EU–Syria normalization is very important politically, but will require time before it becomes economically meaningful.

This is not only true for Europe. Gulf countries, Turkey, and other partners have also promised significant support and investment. But in many cases, announcements have moved faster than implementation.

4. Aid, Investment, and the Limits of the “We Want Investment, Not Aid” Narrative

Another central tension in Syria’s recovery is the government’s insistence that it wants investment, not aid.

Politically, this makes sense. No postwar government wants its legitimacy to rest solely on humanitarian dependency. The new Syrian authorities want to project sovereignty, normality, and economic revival. They want power plants, industrial projects, tourism, ports, logistics, and private investment, not only aid convoys and emergency relief.

But economically, aid and investment solve different problems.

Private investment will not replace humanitarian support in areas where people are poor, services are weak, and markets are not functioning. With millions of Syrians still requiring assistance and the humanitarian response facing major funding gaps, Syria cannot simply substitute aid with investment.

At the same time, I understand why the government wants to move beyond the emergency framework. If people only continue to see humanitarian trucks and aid deliveries, while officials announce large investments abroad, frustration will grow. Syrians need to see recovery materialize in visible and practical ways: better electricity, functioning services, jobs, and local economic activity.

The challenge is therefore not to choose between aid and investment, but rather to manage both.

The government should give international organizations and NGOs enough room to operate, while also pursuing investment in sectors that can restart economic life. Excessive centralization of aid and recovery processes risks slowing delivery and alienating donors.

As I put it in the discussion, the government cannot simply refuse aid. It still needs billions of dollars per year in external support. The more constructive approach would be to frame aid, development support, and investment as complementary parts of the same recovery process.

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5. Syria, Lebanon, Turkey, and the Political Economy of Refugee Returns

We also discussed Syria’s economic relationship with neighboring countries, especially Lebanon and Turkey.

On Lebanon, I argued that Syria and Lebanon are deeply economically interdependent. Their relationship has long involved labor, trade, informal finance, smuggling networks, refugee flows, and transport corridors. If Syria stabilizes, Lebanon could benefit through voluntary returns, renewed trade, transport activity, tourism, and cross-border commerce.

But Lebanon’s own collapse limits its ability to play the role it once did. Lebanese banks are damaged, the state is weak, and border infrastructure remains vulnerable.

I made the point (maybe somewhat bluntly and controversially) that:

This is because Syria is Lebanon’s only viable land gateway to the Arab hinterland. Beirut needs Damascus for overland trade, transit routes, potential electricity interconnection, and possibly future energy flows.

At the same time, refugee returns should not be celebrated too quickly. Large-scale returns could reduce pressure on Lebanese housing and services, but they could also reduce humanitarian funding flows into Lebanon and shrink parts of the low-wage labor force.

The same applies, in different ways, to Turkey. Syrians in Turkey are relatively well integrated compared to Syrians in Lebanon, Jordan, Egypt, or Iraq. They are active in the Turkish economy, including in sectors that depend on low-wage labor. A large-scale return of Syrians would therefore have economic consequences for Turkey as well.

More broadly, I argued that European and regional expectations around returns remain too simplistic. Many assumed that once Assad fell, Syrians would return quickly. But return is not just a question of permission or safety.

That means housing, electricity, schools, water, healthcare, documentation, security, and livelihoods. Without these, return risks becoming a transfer of vulnerability: Syrians who were vulnerable in Turkey, Lebanon, Jordan, Iraq, Egypt, or Europe may simply become vulnerable inside Syria.

Some Syrians will return. Many already have. But others will not, especially those with citizenship, residency, jobs, family ties, and social networks in host countries. European and regional policymakers need to accept that some Syrians will stay abroad, and that this is not necessarily a bad thing.

6. What Gives Me Hope and What Worries Me

The final question was more personal: what gives me hope, and what worries me?

What gives me hope is the ability of Syrians to rebuild economic and social life from almost nothing.

In Syria, this is visible everywhere: small businesses reopening after years of destruction, families returning despite uncertainty, traders reconnecting supply chains, young people launching projects, and communities trying to restore some form of normality after more than a decade of war and displacement.

There is also an international and regional opening today that did not exist before. Syria is no longer isolated diplomatically or economically. Regional actors, international organizations, investors, the IMF, and the World Bank are all engaging in ways that would have been unimaginable only a few years ago.

But what worries me is the possibility that reconstruction becomes too narrow politically and economically.

There is a risk that recovery becomes too centralized, too opaque, and too focused on large headline investments. Syria could end up with announcements, luxury projects, diplomatic meetings, and reconstruction contracts — but without meaningful improvements in the daily lives of most Syrians.

I also worry about expectations. Many Syrians expected the fall of the Assad regime to quickly translate into better living conditions, more dignity, and greater economic opportunity. But recovery after this level of destruction will be long, uneven, and painful. If the gap between expectations and lived reality becomes too wide, frustration could grow quickly.

At the end of the day, Syria does not just need capital or reconstruction contracts.

It needs trust, functioning institutions, credible rules, social protection, and a recovery process that people can actually feel in their daily lives.

We are not there yet. But with enough support, engagement, pressure, and institutional learning, Syria can still move from partial stabilization toward a recovery that is not only visible in macroeconomic indicators but felt by ordinary Syrians.

I would like to thank Umutcan Yüksel and PRISM Insights for the invitation and for launching the podcast series with such a substantive discussion.

You can listen to the full episode here:
👉 https://www.prismonitor.eu/insights/the-future-of-syria-economic-recovery-and-eu-syria-relations

The episode runs for 42 minutes and covers Syria’s economic recovery, energy constraints, EU–Syria relations, aid and investment, refugee returns, regional interdependence, and the challenge of turning political normalization into material recovery.

Read the report from my previous podcast appearance, “Centralization First: Syria’s Emerging Political Economy,” based on my discussion with Colin Powers and Richard Solomon on Sultat al Mal, where we explored reconstruction, Gulf capital, sovereign debt, and the risks of managed access.

Executive Summary

Syria’s electricity sector is entering a new phase in which private investors may participate in the construction and operation of power plants. This development has sparked public concern that the introduction of private generation could lead to higher electricity prices or allow private firms to exercise excessive market power.

This policy paper argues that private participation in electricity generation does not inherently lead to higher prices. On the contrary, if new plants operate more efficiently than existing facilities, their introduction can reduce the overall cost of electricity generation and improve supply reliability. Such benefits, however, depend on the strength of the regulatory and procurement framework. Transparent dispatch rules, well-designed power purchase agreements, and effective oversight are essential to ensure that private participation helps expand electricity supply without increasing costs.

As such, the central policy question for Syria is not whether electricity generation should be public or private, but whether the institutional framework governing the sector ensures that all generators, whether public or private, operate efficiently and in the public interest.

Syria’s Electricity Crisis and the Need for Investment

Syria’s electricity sector has experienced a severe deterioration in generation capacity since 2011, driven by infrastructure damage, fuel shortages, aging power plants, and limited maintenance. Over more than a decade of conflict, large portions of the country’s power infrastructure were damaged or destroyed. Current generation capacity went from 9,838 MW in 2011 to 5,403 MW in 2023. This loss in generation capacity is broken down into about 1,771 MW (18% of 2011 capacity) being totally destroyed, and many other plants requiring major repair.1 Still, fuel constraints have reduced the country’s available generation capacity to around 1,800 MW in 2024, less than one-fifth (18%) of the capacity in 2011.

As a result, national electricity generation has declined dramatically. Total electricity production fell from approximately 49,260 gigawatt-hours (GWh) in 20112 to around 16,454 GWh in 2024 (-67%).3 At the same time, technical losses in the network increased, going from about 26% in 2011 to 33% today. These losses reflect both physical damage to the transmission and distribution system and operational challenges, including maintenance deficits and electricity theft.

This state of play has left Syrians with only a few hours of electricity per day, pushing households and businesses to resort to alternative coping mechanisms, generally involving expensive off-grid solutions, such as privately operated diesel generators. These generators supply electricity through neighborhood micro-grids at extremely high prices, sometimes reaching ten times the estimated grid supply cost.

The relevant consumer comparison is therefore not only between state-owned and privately financed grid generation. In much of Syria, households and businesses already rely on private diesel generators, solar systems, batteries, and other off-grid solutions. These are often far more expensive than formal grid electricity. If private investment helps restore a reliable grid supply and displaces informal diesel generation, households may experience lower effective electricity costs even if official grid tariffs rise from their historically subsidized levels.

Recognizing electricity as a cornerstone of economic recovery, Syria’s interim authorities have prioritized the rehabilitation of the power sector, combining short-term fuel supply arrangements with longer-term infrastructure investment.

In the short term, authorities have sought to increase generation by securing natural gas imports from regional partners, including Qatar and Türkiye. Qatar had agreed to supply gas through Jordan to fuel the Deir Ali power plant, potentially generating about 400 MW of additional electricity, while Türkiye had arranged deliveries of roughly 6 million cubic meters of gas per day, enough to generate around 1,200 MW in Syrian power plants. These fuel imports were intended to temporarily raise generation and extend daily electricity supply, although they remain insufficient to restore pre-war output given the destruction of infrastructure and the limited operational capacity of many plants.

At the same time, the government is attempting to address the structural supply gap through large-scale investment projects. The most prominent initiative is a USD 7 billion memorandum of understanding signed in May 2025 with an international consortium led by Qatar’s UCC Holding, alongside Türkiye’s Kalyon Enerji and Cengiz Enerji, and supported by U.S.-based Power International Holding (PIH). The agreement initially outlined the construction of four combined-cycle gas turbine (CCGT) power plants with a total capacity of around 4,000 MW, together with a 1,000 MW solar project. In November 2025, the Syrian Ministry of Energy and the consortium signed the final concession agreements, allowing the projects to move toward implementation. The contracts provide for the construction of four large natural-gas-fired combined-cycle plants located in North Aleppo (1,200 MW), Deir Ez-Zor (1,000 MW), Zeyzoun (1,000 MW), and Mhardeh (800 MW), as well as four solar projects totaling 1,000 MW distributed across several regions.

It should be noted, however, that the contractual structure and pricing arrangements of these projects remain unclear. This has led to speculation about the future of the country’s electricity sector, with the emergence of private investment sparking public debate.

Even if new private plants produce electricity cheaply, their effect on consumer supply will remain limited unless transmission and distribution bottlenecks are addressed. Syria’s electricity crisis is therefore not only a generation crisis, but it is also a grid crisis. Damaged transmission lines, substations, distribution losses, theft, and limited system control can prevent low-cost generation from reaching consumers. In that context, generation investment and grid rehabilitation must be treated as complementary, not interchangeable.

Historically, Syria’s electricity system has been organized around vertically integrated public entities responsible for generation, transmission, and distribution. Electricity dispatch is coordinated centrally through the national control center, while the Public Establishment for Transmission and Distribution of Electricity (PETDE) acts as the system operator and effectively functions as a single buyer procuring electricity from generators and supplying it to distribution networks and major consumers, as per Legislative Decree No. 9 of 2020.

In such a system, concerns about generator pricing power are limited when generation assets are entirely state-owned. However, as privately owned power plants enter the system, questions may arise about how electricity will be priced and how potential market power will be regulated. It should be noted that although private participation in electricity generation is now becoming politically and commercially more significant, the legal opening is not entirely new. Law No. 32 of 2010 already allowed domestic and foreign private investment in generation and distribution. What is new is the scale, urgency, and strategic importance of private generation in the post-2024 recovery context.

Understanding whether these concerns are economically justified requires examining how electricity costs are actually determined within power systems. In practice, the cost of supplying electricity is primarily driven by generation costs and dispatch decisions, rather than by whether generation assets are publicly or privately owned. In systems where electricity is procured through centralized dispatch or long-term Power Purchase Agreements (PPAs), the relevant comparison is between the cost of electricity supplied by different power plants within the generation fleet. This distinction is central to assessing the potential impact of new private investments in Syria’s electricity sector.

Understanding Electricity Pricing: Marginal Cost and the Merit Order

Even in centrally dispatched electricity systems such as Syria’s, system operators typically schedule power plants according to their operating costs. In practice, plants with lower operating costs are dispatched first, while higher-cost plants are brought online only when demand exceeds the capacity of cheaper generators.

This operational logic is commonly referred to as the merit order. Under the merit order, generators are ranked from lowest to highest marginal cost of production, meaning the cost of producing one additional unit of electricity. As electricity demand rises, the system operator progressively dispatches plants along this cost curve until total supply meets demand.

In Syria’s electricity sector, new private generators are likely to sell electricity to the state through long-term PPAs with the PETDE. Under such arrangements, the state commits to purchasing electricity at a predetermined tariff, typically expressed in USD/MWh.4 The economic impact of such contracts depends largely on how the PPA tariff compares to the marginal cost of existing power plants in the national generation fleet.

To illustrate this principle, consider three hypothetical power plants that generate the same amount of electricity with marginal production costs of $40, $60, and $80 per MWh. If electricity demand is high enough that all three plants must operate, the system operator must dispatch the most expensive plant in order to meet demand. In that case, the state’s average electricity generation cost would be $60/MWh. During periods of lower demand, however, the system may only require the two cheaper plants. In that situation, the average cost of electricity generation falls to $50/MWh, since the $80 plant is no longer needed.

The fiscal implications are straightforward. If electricity tariffs are set below the actual cost of production, the government absorbs the difference through subsidies. The more expensive the plants that must be dispatched to meet demand, the higher the average cost of electricity generation and, therefore, the greater the fiscal burden on the state. Conversely, if electricity tariffs reflect production costs, as seems to be the current government’s aim, a lower generation cost will translate into lower electricity bills for consumers.

Now consider adding a new, more efficient power plant that can produce electricity at $20/MWh under a long-term Power Purchase Agreement (PPA) with the state. Because this plant produces electricity at a lower cost than the existing generators, it would be dispatched first. As a result, more expensive plants would be pushed further down the merit order, and the $80/MWh plant might no longer be required to operate during periods of high demand. In that case, electricity would be generated by the $20, $40, and $60 plants, bringing the average electricity generation cost down to $40/MWh. By reducing the need to run the most expensive generators, the new plant would lower the overall cost of electricity supply and reduce the government’s fiscal burden and consumers’ electricity bills.

Illustrative electricity supply and demand curves. The addition of large-scale, efficient generation shifts the supply curve outward, lowering generation costs at a given level of demand. In this example, at a demand level of 4,000 MW, the introduction of a new power plant reduces the market price from P1 to P0. At a demand level of 7,000 MW, the price would also fall significantly, as power plants producing at price levels P1 and P2 would no longer need to be dispatched.

Of course, the magnitude of these savings ultimately depends on the terms of the PPA and the efficiency of the new plant, which determine whether the contracted tariff is actually lower than the cost of existing generation.

Building a more efficient plant should not be difficult in Syria, as the country’s generation fleet is largely composed of aging thermal power plants with widely varying efficiency levels. Indeed, older steam units and simple-cycle gas turbines, which account for a large share of Syria’s installed thermal capacity (see table above), consume significantly more fuel per unit of electricity than modern CCGT plants, the technology planned for the new facilities to be developed by the consortium.

Risks and Opportunities: Market Power and Regulatory Oversight

In the context of electricity sector reform, there may be concerns about private generators, given the possibility that a dominant firm could abuse its market position to raise electricity prices.

Indeed, electricity systems are often considered vulnerable to market power: firms can influence prices because demand is relatively inelastic in the short term, supply must match demand at all times, and generation capacity may be limited during peak periods. In fully liberalized electricity markets, these characteristics can allow generators to influence prices by withholding capacity or strategically bidding above their marginal costs.

However, Syria’s electricity system is unlikely to operate as a competitive wholesale electricity market in the near term. Instead, electricity from privately financed plants will most likely be procured by the state through long-term PPAs within a centralized single-buyer system.

In such systems, the primary risk is not real-time price manipulation but rather the possibility that electricity procurement contracts are poorly structured or negotiated at excessively high tariffs. If governments sign PPAs with prices that exceed the cost of existing or alternative generation options, the overall cost of electricity supply might not be as low as it could be, even if the private plants themselves operate efficiently.

These risks can take several forms:

• capacity payments: Many PPAs include payments for availability or capacity, not only for the electricity actually generated. The state may therefore pay even when the plant is not fully dispatched.

• take-or-pay obligations: The public buyer may be required to pay for a minimum quantity of electricity or plant availability regardless of actual system demand.

• currency risk: If the PPA is denominated in USD while consumers pay in Syrian pounds, the government carries exchange-rate risk.

• sovereign guarantees: Investors may require state guarantees if PETDE or the relevant public utility is not considered sufficiently creditworthy.

For this reason, the key policy challenge is to maintain a robust regulatory and procurement framework governing the sector. Governments typically rely on several mechanisms to ensure that private participation remains aligned with the public interest:

• transparent procurement processes, such as competitive tenders, which allow governments to benchmark electricity prices and select the most cost-effective projects;

• contractual performance obligations, including availability requirements and penalties for unjustified outages;

• regulatory oversight and monitoring, allowing authorities to review generator performance and ensure compliance with contractual obligations.

• well-designed PPAs, which define tariff formulas, payment structures, and operational responsibilities.

Under such conditions, private participation is most likely to lead to an expansion of generation capacity without necessarily increasing electricity supply costs.

In the Syrian context, new privately financed power plants could reduce electricity generation costs, particularly if they introduce, as promised, newer, more efficient technologies than those currently operating in the public generation fleet. Still, the economics of new gas-fired generation will depend heavily on fuel availability and pricing. Modern CCGT plants can reduce generation costs only if they have reliable access to gas at predictable prices. If gas must be imported, financed externally, or purchased in foreign currency, the apparent efficiency gains of new plants may be partly offset by fuel-price and exchange-rate exposure.

Today, much of Syria’s existing thermal generation capacity consists of aging power plants built between the late 1970s and early 2000s. Many of these facilities suffer from outdated turbine technology, low thermal efficiency, high fuel consumption per unit of electricity generated, and significant maintenance constraints after years of conflict and limited investment. As a result, the marginal cost of producing electricity at several existing plants is relatively high.

By contrast, modern CCGT plants generate electricity more efficiently by using both gas and steam turbines to extract additional energy from the same fuel input. This significantly reduces fuel consumption per unit of electricity produced, lowering generation costs. If new projects introduce such technologies under reasonably priced PPAs, they are likely to be dispatched before older, less efficient plants, thereby reducing the overall cost of electricity supply.

However, this outcome is not automatic. The potential cost benefits of private generation depend heavily on how investment projects are structured, negotiated, and procured. If electricity purchase agreements are signed at tariffs that exceed the marginal cost of alternative generation options, the introduction of private plants could increase the overall cost of electricity supply even if the plants themselves are technically efficient.

This risk is particularly relevant in contexts of institutional transition and urgent reconstruction needs. When governments face severe electricity shortages and strong pressure to rapidly expand generation capacity, large energy agreements may sometimes be negotiated quickly and with limited competitive procurement or regulatory scrutiny. In such circumstances, the absence of transparent tenders or benchmarking against comparable projects can make it difficult to ensure that electricity tariffs reflect the lowest achievable cost.

For this reason, the economic impact of private generation ultimately depends on the quality of procurement processes, contract design, and regulatory oversight, rather than the ownership structure of power plants. Transparent bidding procedures, cost benchmarking, and robust institutional review mechanisms are essential to ensure that private investment contributes to expanding electricity supply while keeping generation costs as low as possible.

Policy Implications for Syria

The debate over private participation in electricity generation should focus less on ownership and more on the institutional framework governing procurement, contracts, and system oversight. Private investment can help expand generation capacity and introduce more efficient technologies, but the economic outcome depends heavily on how projects are selected, negotiated, and regulated.

For this reason, strengthening governance and transparency in electricity procurement should be a central priority of Syria’s reconstruction strategy. Key priorities include:

Competitive and Transparent Procurement: Electricity generation projects should be awarded through transparent and competitive processes, such as international tenders. The Ministry of Energy has already issued dozens of tenders open to international bidders, mostly to procure energy resources, while tenders for infrastructure projects have been extremely limited. Competitive bidding via infrastructure-related tenders allows governments to benchmark electricity tariffs against comparable projects and select proposals offering the lowest cost of supply, reducing the risk of overpriced contracts. Going forward, encouraging multiple independent power producers and diversifying generation sources can prevent excessive reliance on individual suppliers, strengthen the government’s bargaining position in future procurement processes, and contribute to a more resilient and cost-efficient electricity system over time.

Careful Structuring of PPAs: PPAs should include clear tariff formulas, transparent indexation mechanisms for fuel costs and inflation, and well-defined performance obligations. Properly structured contracts can ensure that electricity tariffs reflect the actual cost of generation while protecting the public sector from excessive long-term financial commitments. Such contracts are frequent, and the Syrian government, especially the Directorate for Contracts and Loans at the PEEG, should refer to international best practices supported by international organizations.

International Technical Support and Benchmarking: Syria may benefit from technical assistance from international financial institutions such as the World Bank, the International Monetary Fund, and regional development banks to design procurement frameworks, benchmark electricity tariffs, and review major infrastructure contracts. Such cooperation can help ensure that new generation projects follow international best practices and remain financially sustainable.

Strengthening Regulatory and Institutional Oversight: A technically capable, independent regulatory framework is essential for supervising generator performance and monitoring contract compliance. Establishing or strengthening an independent electricity regulatory authority, or encouraging external audits, could play an important role in enhancing transparency and investor confidence. In that regard, support should be provided to the PEEG and PETDE in the lead-up to the implementation of large-scale private generation projects.

Parliamentary and Public Oversight of Major Energy Contracts: Given the long-term fiscal implications of large electricity projects, major PPAs and energy infrastructure agreements should be subject to appropriate parliamentary review, scrutiny, and oversight. Greater transparency in contract approval processes can strengthen public accountability and help build confidence that electricity investments serve the national interest.

Conclusion

The entry of private investors into Syria’s electricity generation sector does not inherently imply higher electricity prices. Electricity supply costs are determined primarily by generation efficiency and dispatch decisions, rather than by whether power plants are publicly or privately owned. As such, if new private plants operate at lower marginal costs than existing state-owned facilities, their introduction can reduce overall system costs while improving the reliability of electricity supply.

The key determinant of outcomes will be the strength of regulatory oversight. Transparent dispatch rules, effective cost monitoring, and well-structured contractual frameworks are essential to ensure that private participation helps expand electricity supply without increasing costs. Ultimately, the central policy challenge lies in establishing governance mechanisms capable of ensuring that all generators—public or private—operate in the public interest, not in the presence of private investors.

A Decade Marked by Two Phases

Between the signing of the EU-Syria cooperation agreement in 1977 and the early 1990s, only minimal amendments were made to the bilateral cooperation framework. Beyond the adoption of the Second Financial Protocol (1982–1986),1 the only technical amendment made to the cooperation framework before the launch of the Barcelona Process in 1995 was introduced on June 16, 1988. This amendment formalized the establishment of a Euro-Syrian Economic and Commercial Cooperation Committee to facilitate information exchange between the two parties, and also integrated Greece, Spain, and Portugal into the EEC-Syria agreement following their accession to the European Economic Community (EEC).2

During the early 1980s, EEC-Syria relations were stable and expanding, though largely one-sided, with Brussels steadily increasing its financial support for Damascus. This period of engagement culminated in the signing of the Second Financial Protocol in June 1982, reinforcing the EEC’s commitment to Syria’s economic development.3

However, this era of growing bilateral cooperation came to a sudden halt in April 1986. The Abu Nidal Organization (ANO),4 which operated with Syrian support, had intensified its attacks against European targets and interests in the meantime, leading to a sharp deterioration in relations. The fallout from ANO-linked terrorism, particularly a failed bombing in London, triggered an abrupt but short-lived diplomatic rupture between the EEC and Syria, marking the most severe crisis in their relations since they were first established back in 1964.

Bilateral Cooperation Flourishes

In April 1982, a joint delegation from the European Commission and the European Investment Bank (EIB) visited Syria to prepare the second financial protocol under the EEC-Syria cooperation framework. Led on the Community side by Maurice Foley, Christopher Lethbridge, and Ernest Lamers, and on the Syrian side by Vice-Minister for Planning Hamid Merei, the mission reached agreement on an indicative programme for future financing.5 The Community’s own programming paper made clear that its priorities in Syria were agriculture, small- and medium-industry, energy, infrastructure, and technical assistance.6

It is worth noting that the archival records of the time are strikingly technocratic and frame Syria almost entirely in terms of development needs, project pipelines, and implementation capacity. European diplomats make no mention of the security developments that unfolded throughout the late 1970s, culminating in the Hama Massacre of February 1982.7 While it can be understood that the mission was economic in nature, previous such economic missions did mention periods of turmoil and instability within the country, at least through an economic prism.

This omission can be understood within the broader geopolitical context of the time. Given the Iranian Revolution’s profound impact on Western policymakers, the dominant Western discourse shifted toward combating Islamism,8 leading to muted reactions to events like Hama. Likewise, Syria’s military intervention in Lebanon in 1976—which neither the EEC nor, more importantly, the United States actively opposed9—did not deter the EEC from maintaining its economic engagement with Damascus.

At the economic level, then, the joint Commission-EIB delegation painted a mixed picture of Syria’s economy and its needs. The delegation recognized Syria’s significant untapped potential in agriculture, industry, energy, and infrastructure, but also highlighted structural inefficiencies, poor planning, and weak coordination between government agencies and project execution bodies.10 While modernization efforts—particularly in agriculture and industrial development—were emphasized to reduce Syria’s dependence on foreign capital and increase employment, bureaucratic hurdles and mismanagement hindered the effective implementation of reforms.11

Without substantial external support and strategic reforms, Syria’s economy risked stagnation. In agriculture, the gap between food consumption and local production was widening, exacerbated by rapid population growth (3.3% per year12) and low irrigation levels, which leave the sector vulnerable to climate fluctuations and droughts. Meanwhile, the energy sector faced an impending crisis, as projections indicated that the electricity supply would become insufficient by 1985, unable to keep up with rising industrial, agricultural, and domestic demands.13

European officials also expressed frustration over the sluggish implementation of previously funded projects. Many investments, particularly in infrastructure and industry—both central to Syria’s import-substitution strategy aimed at fostering industrial development, modernization, and private-sector growth—had yet to yield tangible results due to delays in fund allocation, poor project execution, and a lack of financial discipline.14 Additionally, Syrian authorities hesitated to utilize EIB loans, preferring alternative financing options with more favorable interest rates.

Indeed, instead of fully engaging with European financial mechanisms, the Syrian government increasingly turned to Arab and international lenders offering more favorable terms. For example, through the Arab Fund for Economic and Social Development (AFESD), Syria secured approximately USD 65 million in loans on highly preferential terms.15 This reluctance, combined with weak institutional capacity and administrative inefficiencies, created an environment where funding commitments often failed to translate into meaningful economic progress.

For instance, the first financial protocol signed between the EEC and Syria, which was supposed to cover the four-year period from 1977 to 1981, had been implemented only partially by June 1982. Despite a total allocation of ECU 60 million, only a small fraction of the funds had been effectively disbursed, with bureaucratic inefficiencies, delays in project execution, and reluctance to use EIB loans cited as major obstacles.16

By mid-1982, only 20.3% of the non-repayable grants had been disbursed, while EIB loans remained largely untouched. Some projects, such as the Tall Tamir-Tall Alo Road construction, were approved but had not yet received any funding. Others, such as the industrial study and dairy farm projects, suffered delays due to administrative bottlenecks and poor coordination between planning authorities and executing bodies.17

The Second Financial Protocol between the EEC and Syria, signed in 1982 for a period covering 1982 to 1986, aimed to address the shortcomings of the First Protocol while continuing financial cooperation in key sectors. With a proposed allocation of ECU 97 million, split among ECU 64 million in the form of EIB loans, and, from the Commission, ECU 22 million in the form of grants and ECU 11 million in the form of loans on special terms; that is, repayable over 40 years at an interest rate of 1% per annum, with a 10-year grace period on interest.18

Throughout the second protocol’s negotiations, the EEC emphasized the need to modernize Syria’s economy, including expanding irrigation, increasing livestock production, improving energy infrastructure, and upgrading telecommunications and education facilities.19 However, European institutions were reluctant to commit to funding specific projects without clearer guarantees of improved execution and oversight. European officials stressed the need for stronger financial discipline, arguing that many of the delays in the First Protocol stemmed from poor project planning and coordination between Syrian authorities and European donors.20

The early 1980s revealed the structural limits of the EEC-Syria relationship, which had been formalized since 1977. On paper, the cooperation framework appeared stable, institutionalised, and increasingly ambitious; in practice, however, it remained narrow, technocratic, and weakly transformative. European institutions approached Syria primarily through the language of projects, sectors, and implementation capacity, even as political violence, regional intervention, and domestic repression were reshaping the Syrian regime’s position. At the same time, Damascus viewed the Community as a useful but ultimately secondary partner: a source of finance, equipment, and technical expertise, but not one to which it was willing to adapt its broader strategic behaviour. The result was a relationship resilient enough to survive weak implementation, yet too shallow to withstand a major political-security shock.

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Short-Lived Severance of Ties

In that sense, the 1986 crisis did not simply interrupt an otherwise successful trajectory; it exposed the underlying contradiction of the relationship. The Community’s Mediterranean approach was built above all on economic instruments, with limited capacity to integrate hard political and security questions into its external action. Syria, for its part, had been able to compartmentalise its relations with Europe, benefiting from economic cooperation while pursuing regional policies that rested on very different calculations. Once terrorism entered the bilateral equation directly, that compartmentalisation became untenable for the Europeans, and the limits of the cooperation framework were suddenly laid bare.

It was in this context that EEC-Syria relations entered their deepest crisis to date. This rupture was all the more striking because it interrupted a relationship that, only a few years earlier, had been institutionalized through the 1982 Financial Protocol and a joint Commission-European Investment Bank mission.

The immediate trigger for the crisis was the attempted bombing of an El Al aircraft at London’s Heathrow Airport on 17 April 1986. The attack, carried out by the Jordanian national Nizar Hindawi, was widely understood in Western capitals as having involved Syrian official complicity.21

Indeed, although the ANO was responsible for a series of terrorist attacks across Europe—including in the United Kingdom, France, and Italy—the EEC targeted Syria because of Damascus’ well-documented support for the ANO’s activities.22 Syrian intelligence services had long provided operational backing to militant groups, and in the Hindawi Affair, direct Syrian involvement was deemed irrefutable. In response, the United Kingdom severed diplomatic ties with Syria, while the United States and Canada recalled their ambassadors from Damascus.23 Furthermore, the “Hindawi Affair,” as it became known, prompted the Twelve to adopt restrictive measures against Syria on 10 November 1986, shortly after Hindawi’s conviction by a British court.24 These measures included a ban on new arms sales to Syria, while allowing existing contracts to be honored; the suspension of high-level diplomatic visits; a review of Syrian diplomatic and consular activities in member states, with possible countermeasures; and tighter security measures for Syrian Arab Airlines operations within the Community.25

Yet the 1986 measures stopped short of a complete diplomatic rupture. The Community’s response was severe in symbolic and political terms, but limited in substance. The measures did not affect existing arms deliveries, and Syria primarily sourced its military equipment from the Soviet Union rather than from European suppliers.26 Even within the EEC, Greek officials openly questioned the effectiveness of the sanctions, with Deputy Foreign Minister Kostas Zouraris dismissing them as “three symbolic measures that mean nothing, plus a statement on arms sales.”27

However, Syria’s diplomatic isolation proved short-lived. By June 1987, just six months after the European measures were imposed, Damascus was able to re-engage with the international community following the closure of the ANO offices on its territory.28 Consequently, sentiment in Brussels shifted, and the European Commission, after several diplomatic exchanges (including contacts in Syria), proposed reviving negotiations for the Third Financial Protocol.29 Still, the United Kingdom remained firmly opposed, arguing that Syria’s involvement in terrorism had not changed. Given that financial protocols required unanimous approval, the Commission was unable to move forward with negotiations.30

Politically and diplomatically, EEC–Syria relations were effectively restored in the early 1990s. This normalization prompted the European Commission to reflect on the trajectory of the relationship. On May 24, 1991, in response to a written question posed a month earlier by a European Parliament member regarding the re-establishment of ties between Brussels and Damascus, the Commission outlined three key justifications for maintaining engagement with Syria.31

While acknowledging Syria’s shortcomings in human rights and democratic governance, the Commission argued that maintaining a framework for dialogue, information exchange, and vigilance was preferable to severing ties. Moreover, concerning Syria’s presence in Lebanon, the Commission emphasized the importance of avoiding Syria’s isolation, given its strategic influence in broader Middle Eastern conflicts. Finally, the Commission recognized that it could not unilaterally isolate Damascus, particularly when the United States and other Western powers had already begun to normalize relations in the context of the Gulf War.32

Conclusion

The 1980s marked the moment when EEC-Syria relations were tested against their own limits. The Second Financial Protocol (1982–1986) reinforced European financial support, but bureaucratic inefficiencies, weak implementation capacity, and Syria’s preference for more concessional external financing limited its practical impact. More fundamentally, the decade showed that the relationship remained politically shallow: substantial enough to sustain economic cooperation, but not deep enough to absorb a serious security crisis. The Hindawi Affair in 1986, therefore, not only triggered the first EEC-imposed sanctions on Syria; it also exposed the fragility of a partnership built on technocratic engagement and strategic ambiguity.

Yet Syria’s isolation proved short-lived. By 1987, Damascus had taken steps to restore ties with Europe, and by the early 1990s, bilateral engagement was resuming. The approval of two new financial protocols in 1992 and 1993, followed by Syria’s participation in the Barcelona Process in 1995, signalled a return to structured cooperation and set the stage for a more pragmatic, though still complex, relationship in the decade that followed.

This paper is the third of a series of six papers examining the relationship between the European Union (including its earlier institutional incarnations) and Syria. Drawing on diplomatic archives, grey literature, trade statistics, and contemporaneous policy documents, the series seeks to shed light on a scarcely documented relationship that has oscillated between strategic pragmatism and political estrangement.

By tracing the evolution of diplomatic contacts, trade flows, aid conditionality, and cooperation frameworks, the series aims to unpack how economic interdependence often preceded political alignment and how mutual caution repeatedly constrained deeper integration.

You can read Part 1, on the 1960s and the first diplomatic ties between Syria and the EEC, here, and Part 2, on the 1970s and the EEC-Syria Cooperation Agreement, here.

Launching the Global Mediterranean Policy

In the early 1970s, the European Economic Community (EEC) embarked on its so-called ‘Global Mediterranean Policy’ to unify the policies it had used to address its Southern neighbourhood to that point. While the bloc had already signed various agreements with some Southern European and Mediterranean countries, these agreements did not represent a unified approach. These case-by-case agreements resembled ‘uncoordinated responses to external stimuli’ rather than a coherent policy.1

To make up for this lack of unified policy, then, the Commission launched, in 1972, the ‘Global Mediterranean Policy’. At the time, several factors made such a policy necessary.

First, superpower rivalry in the Mediterranean pushed the EEC to assert a more coherent presence in what it increasingly viewed as its immediate strategic environment. Second, Western Europeans sought to secure their oil supplies, with about 18.5% of their oil coming from Mediterranean countries. Third, the Commission sought to preserve and expand access to Mediterranean markets, which already absorbed a significant share of Community exports. In addition, the Commission also had other economic factors in mind when devising this policy, such as investment opportunities and migrant labour–the former outbound, while the latter inbound.2

Within this context, in a communication to the EEC member states, the European Commission stressed that increased cooperation with Syria and the provision of additional financial support would be ‘beneficial for the Community itself, as it would facilitate the provision of capital goods, expertise, and the necessary technology for the implementation of the projects being financed.’3

Within the context of the Israeli-Arab conflict, the Global Mediterranean Policy also had a political dimension. The EEC sought to position itself as a mediator in the region, promoting stability through economic cooperation while gradually asserting a more independent role from the United States. This was particularly relevant following the 1973 Yom Kippur War and the ensuing oil crisis, which underscored Europe’s vulnerability to Middle Eastern geopolitics. By strengthening ties with Arab Mediterranean states, the EEC aimed to balance its relations with both Israel and the Arab world while ensuring continued access to vital energy resources.

Whether this ‘Global Mediterranean Policy’ was successful is not the argument of this research; however, it is within this context that the EEC would seek to develop its relations with Syria by signing a cooperation agreement.

While Syria had established diplomatic ties with the EEC in the 1960s (Read ‘The Relationship Between the EU and Syria (1) — The 1960s’), its engagement remained limited and primarily economic. Content with strengthening its ties with the USSR and wary of deeper Western alignment, Damascus had shown little enthusiasm for significantly expanding its relationship with Brussels until the mid-1970s, when political and economic pressures made cooperation with the EEC more attractive. Despite its closeness to Moscow, Syria’s alignment with the USSR was not blind nor absolute. A key moment illustrating this diplomatic flexibility came in August 1972, when Syria participated in the Georgetown Conference of the Non-Aligned Movement (NAM), sending a delegation led by Foreign Minister Abdel Halim Khaddam. French observers interpreted Syria’s increased involvement in the NAM as a sign of its desire to avoid exclusive dependence on the Soviet Union.4

Damascus’ diplomatic flexibility also shone on March 26 and 27, 1974, during a series of meetings between the European and Syrian delegations in Damascus. At the time, the Syrians expressed their interest in opening negotiations with Brussels to deepen their diplomatic and commercial relations, something which greatly surprised Europeans diplomats, who, in a communication from the Commission to the Council, stated that Syria “has always shown a clear reservation in the past” regarding its desire to further its cooperation with the EEC.5

Damascus’s interest in deepening its ties with the EEC in early 1974 was not, however, especially surprising. Historically aligned with the Soviet Union and cautious in its dealings with Western entities, Syria began actively pursuing negotiations with the EEC as part of a broader strategy to balance its international relations, diversify its economy, and reduce its over-reliance on a single ally. The aftermath of the October War had placed a significant strain on Syria’s economy, and the rising cost of imports from Western countries, exacerbated by the 1970s energy crisis, further worsened the country’s trade balance. As a result, faced with these economic pressures, Syria sought engagement with the EEC to access new markets, secure financial aid, and obtain technological support, thereby addressing immediate economic concerns while maintaining its sovereignty and strategic interests.

In 1973, bilateral trade with the EEC accounted for 32.9% of Syria’s total foreign trade, and the following year reached EUA 231.1 million.6 Syria’s following year to reach EUA 231.1 million. The EEC’s favourable position as a supplier was primarily due to the high technical level of its industrial production, which aligned with Syrians' equipment needs. However, Syrian products’ limited reach in the markets of Community countries was due to the mediocre quality of many local industrial products and Syria’s delivery commitments to certain Eastern European countries under previous barter agreements.7

As a result, the growing economic difficulties due to an unfavourable trade balance meant that the Syrian government was doubtful that it could reach the objectives of this fourth five-year plan spanning (1976-1980)8–which most notably entailed the doubling of the country’s gross domestic product (GDP) over the next seven years–without support from the EEC.

On February 4, 1976, the then Deputy Minister of the Syrian Ministry of Economy and Trade Ammar Jamal explained that “it is understood that Syria, besides the efforts it has to make to reach [its] objectives, must, on the one hand, count on cooperation and aid from friendly countries and, on the other hand, must revise its position regarding its commercial exchanges.”9 “Undoubtedly, as you know, our trade balance with the EEC is in deficit,” declared Mr. Jamal, who continued by arguing that “this deficit has increased very rapidly in recent years. It was around 126.8 million SYP in 1970; it rose to 885.7 million SYP in 1974. The deficit will undoubtedly exceed this figure in 1975.” At the same time, Mr. Jamal argued that reducing the deficit required a significant increase in Syrian exports, which in turn demanded investment to boost production, something the EEC could help finance10

In fact, the period during which the cooperation agreement between the EEC and Syria was negotiated was marked by other attempts by Damascus to address its trade balance. In the first nine months of 1974, Syria signed more than a dozen bilateral agreements with Western and Eastern countries, including several trade agreements.11

In parallel, 1974 was marked by Damascus’ significant opening vis-à-vis the West, as shown by growing trade flows and the resumption of ties with major Western Powers, including the United States in June and the Federal Republic of Germany in August. This thaw in the relationship between Damascus and Washington following the October War also enabled a significant American loan of 75,000 tonnes of wheat flour and 25,000 tonnes of rice, repayable over 20 years.12

In addition to these factors, the launch of the ‘Global Mediterranean Policy’ led the EEC to open negotiations on January 23, 1975, with four Mashreq countries—Syria, Egypt, Lebanon, 13 and Jordan.14 On February 4 and 5, 1976, the first bilateral negotiations between the EEC and Syria took place and were concluded in October of the same year.15

More broadly, the mid-1970s revealed a convergence of interests rather than a true political rapprochement. For Damascus, cooperation with the EEC offered a way to diversify external partnerships, ease mounting trade pressures, and secure capital, technology, and market access without abandoning its broader strategic posture. For the Community, Syria fit into a wider Mediterranean framework in which economic cooperation was expected to generate stability, interdependence, and influence. The result was the gradual institutionalisation of a relationship that remained pragmatic on both sides: more structured than before, but still largely confined to the economic sphere.

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The Cooperation Agreement

Once negotiations had been completed with Syria and the other Arab countries, except Lebanon, European officials again stressed the significance of the agreement, noting how sharply it contrasted with Syria’s reserved attitude toward the Community only a few years earlier.16 Moreover, the nature of the agreement was also considered a significant win for the European diplomats, who argued that, since the cooperation agreement was signed for an unlimited period, it fostered a common vision for long-term cooperation among the two parties.

Besides their unlimited nature, these agreements included two other “essential characteristics”: their comprehensiveness and their evolutionary nature, and provided for the establishment of common institutions.17

Summary of the EEC-Syria Cooperation Agreement

The main object of the agreement between Syria and the EEC signed in Brussels on 18 January 1977 is to establish a wide area of cooperation between the two sides and to promote Syria’s economic and social development. The agreement covers trade, economic and technical cooperation as well as financial aid totalling 60 million European units of account (1ua = 4.45 sp ).

As the agreement is for an unlimited period it provides a stable contractual framework for making long term planning decisions. Projects giving far reaching benefits e.g. investment in basic infrastructure such as roads and power supplies, can be implemented.

The agreement is also dynamic in the sense that it is capable of continuous improvement based on the principles of interdependence, equality and joint management. It is managed by a cooperation council which may set up specialist committees as required. A timetable has been set for examining the results of the agreement and introducing improvements. The first review will take place in 1979 and the second in 1984.

By virtue of its globality, the agreement provides for cooperation in the economic, financial, and commercial sectors. Economic cooperation encompasses infrastructure development and cooperation in industry, science, technology, environmental protection, research, and development, while financial cooperation relates to the bilateral financial protocol covering the period 1977-1981, granting Syria various loans from the European Investment Bank (EIB) and non-reimbursable aid of 60 million EAU, equivalent to 267 million SYP.18 As for trade cooperation, the cooperation agreement enshrines a most-favoured-nation clause between the bloc and Syria and ultimately aims to achieve the total and gradual abolition of customs duties between the European and Syrian markets.19

The evolutionary nature of the cooperation agreement is reflected in a general review clause that allows the agreement to be revised and improved, if necessary, on dates previously agreed by the parties. Regarding the monitoring of the agreements, a Cooperation Council was established, composed of representatives of both parties, responsible for ensuring compliance with and the proper functioning of the agreements and, as necessary, proposing certain reorientations.20

On January 18, 1977, the EEC and Syria signed a cooperation agreement that has served as the basis for relations between Brussels and Damascus to this day (when the context allows). This agreement serves as the primary channel for the bilateral relationship, encouraging dialogue, cooperation, and assistance between the two parties.

It should be noted, however, that this agreement concerns only trade, the economy, and technical cooperation and, in fact, does not include any provision for political dialogue. For this, we will have to wait for the “Barcelona Declaration” of November 1995, adopted by Syria jointly with the European Union, its fifteen Member States at the time21, and eleven other Mediterranean countries.22

But this limitation was not incidental, however. It reflected both the strengths and the constraints of the EEC’s Mediterranean approach in the 1970s. The Community had developed a more coherent framework for engaging Southern Mediterranean states, but it still lacked the tools and, in many respects, the unity to translate economic cooperation into a fuller political relationship. In Syria’s case, the result was a durable but bounded arrangement: broad enough to support trade, aid, and technical cooperation, yet too narrow to anchor sustained political convergence.

Conclusion

The 1970s marked the decisive institutional turn in EEC-Syria relations. The 1977 Cooperation Agreement transformed what had previously been a limited and uneven relationship into a structured framework for trade, financial assistance, and technical cooperation. Yet this deepening was driven less by political convergence than by a convergence of interests: Syria sought markets, capital, and technology amid mounting economic pressure, while the Community sought to fold Syria into a broader Mediterranean strategy centered on stability, access, and interdependence.

For that reason, the new framework was both significant and limited. It gave the bilateral relationship a stable contractual basis and created institutions intended to sustain long-term cooperation, but it remained overwhelmingly economic in character. The agreement broadened the scope of engagement without resolving its underlying narrowness: it institutionalised cooperation, but did not produce a genuinely political partnership.

As Syria entered the 1980s, relations with the EEC continued under the same cooperation framework, with few substantial changes. A second financial protocol (1982–1986) provided further economic support, yet diplomatic tensions continued to surface. The Hindawi Affair in 1986, in which Syrian intelligence was implicated in an attempted terrorist attack, led the EEC to impose sanctions on Damascus. Though largely symbolic, these measures revealed the vulnerability of a relationship whose institutional foundations were stronger in the economic sphere than in the political one.

This paper is the second of a series of six papers examining the relationship between the European Union (including its earlier institutional incarnations) and Syria. Drawing on diplomatic archives, grey literature, trade statistics, and contemporaneous policy documents, the series seeks to shed light on a scarcely documented relationship that has oscillated between strategic pragmatism and political estrangement.

By tracing the evolution of diplomatic contacts, trade flows, aid conditionality, and cooperation frameworks, the series aims to unpack how economic interdependence often preceded political alignment and how mutual caution repeatedly constrained deeper integration.

You can read Part 1, on the 1960s and the first diplomatic ties between Syria and the EEC, here, and Part 2, on the 1970s and the EEC-Syria Cooperation Agreement, here.

Nearly three months later, many of the structural questions we discussed remain highly relevant: the centralization of authority under the new institutional setup, the rise of sovereign and development funds, the growing reliance on PPPs, evolving state–capital relations, Gulf capital’s expanding role, and the unresolved questions surrounding sovereign debt and financial reform.

The conversation took place at an early but decisive moment in Syria’s post-Assad transition—when institutions were still being consolidated, major MOUs were being signed, and the contours of the new political economy were beginning to take shape. Below is a structured readout of the key arguments I made during the discussion.

1. Centralization and the “Project State” Model

In the first part of the program, I argued that the new institutional setup signals a clear hierarchy of priorities: centralization first, investment facilitation second, and accountability third—for now. The Constitutional Declaration concentrates authority in the presidency, while newly created or revamped bodies, including the Supreme Council for Economic Development, the Syrian Investment Authority, and the Syrian Sovereign and Development Funds, largely report upward rather than outward.

I characterized the emerging model as a “project state”, where reconstruction is fast-tracked through sovereign/development vehicles and public-private partnerships, with the presidency acting as the central hub. At the same time, a technocratic layer built atop a factional inheritance, with governing instincts shaped by Idlib’s wartime political economy: tight control, selective inclusion, and speed. This can produce early wins (e.g., ports and energy MOUs) but risks institutionalizing opacity.

A year after the collapse of the Assad regime, I emphasized that this remains an early post-regime phase. The Constitutional Declaration was drafted quickly to balance domestic and international audiences during a period when the new authorities were still consolidating power. The rules of the game are not yet fully set a d that Parliament’s ability to legislate and exercise oversight will be a key test of whether meaningful checks on executive and economic power emerge.

2. State–Capital Relations: Managed Access, Not Open Competition

There are obviously clear continuities between Idlib and Damascus in the structure of state–capital relations, as I described the current pattern as:

• Centralized bargaining rather than rules-based policymaking, with deals routed through committees and funds with limited public disclosure.

• “Managed access” rather than “free access”, where businesspeople operate through proximity and sponsorship networks.

“We have first centralized bargaining rather than rules-based policymaking.”

In my view, this is unsurprising for several reasons: (1) many formerly wealthy elites were tied to Assad and are now sidelined or cautious; (2) authorities must move quickly, and personal networks accelerate decisions; (3) investors close to the current leadership are more willing to move in Syria’s high-risk environment; (4) there is a strong supply-and-demand dynamic, with many investors eager to enter; thereby, limiting their leverage to impose conditions.

As a result, early beneficiaries are likely to be firms positioned to win concessions and PPPs, along with intermediaries who possess security-bureaucratic access. Broader households, given that roughly 90% of the population lives under the poverty line, will only benefit if deals translate into tangible improvements in electricity, water, jobs, and price stability.

Obviously, there is a risk for these patterns to become entrenched. However, two potential counterweights should be considered:

• Donors and international partners, if they coordinate around transparency, procurement standards, and audit safeguards;

• Parliament, if it gains the capacity to legislate and oversee executive economic decisions meaningfully.

3. Gulf Capital: Necessary but Risky

In my opinion, Syria’s outreach to the Gulf reflects limited alternatives. Yet, the state is effectively swapping long-term revenue streams for short-term capital expenditure, fuel, and legitimacy. While Gulf engagement may be one of the only viable sources of large-scale financing, it risks rent leakage, weak domestic value capture, and longer-term fiscal vulnerabilities, especially if PPP structures generate implicit or contingent liabilities.

Parliamentary oversight will be key.

Still, details surrounding various deals, including the UCC Holding BOO electricity deal, for which I mentioned that key contractual terms (pricing, indexation, guarantees) have not been made public, making firm conclusions impossible.

4. Banking Sector Constraints

Then, I discussed plans to expand Syria’s banking sector, possibly by doubling the number of banks, as per a previous statement from the Central Bank Governor. I argued that the most realistic path would involve foreign banks (particularly Gulf institutions) opening affiliates or recapitalizing existing Syrian banks.

However, I see several major bottlenecks:

• Lack of correspondent banking relationships;

• Persistent compliance caution despite sanctions easing;

• Snapback risks;

• AML/CFT vulnerabilities and heavy cash usage;

• Weak capitalization and non-performing loan exposure in domestic banks.

Indeed, only a small share of liquidity is in the formal banking system, and meaningful normalization will take time.

5. Debt to Iran, the EU, and Future Borrowing

On the topic of debt, I expressed some skepticism vis-a-vis the various figures put forward. Syrian authorities have cited approximately $30 billion owed to Iran and Russia, while leaked Iranian documents have suggested up to $50 billion owed to Tehran alone. This is because much of this debt was opaque and did not follow proper parliamentary procedures.

As a result, the most likely path is selective contestation, particularly framing Iranian claims as “odious” or non-enforceable. In fact, I highly doubt that Syria will repay substantial portions of that debt.

I also highlighted Syria’s outstanding obligations to the European Union (approximately €640–700 million), suggesting that restructuring or forgiveness is more plausible than repayment.

Regarding new borrowing, although Syria is now eligible for World Bank operations after Gulf states cleared arrears, officials have publicly signaled reluctance to borrow externally. However, I am still quite skeptical about a strategy relying primarily on donations and PPP-style investment, noting that “free money” is rarely free and often carries political or economic strings.

I would like to sincerely thank Colin Powers for the invitation and for hosting such a thoughtful and substantive discussion on Sultat al Mal – The Power of Money. It was a real pleasure to exchange views with both Colin and Richard Solomon at such an important moment in Syria’s transition.

If you would like to listen to the full episode (Episode 9: Ahmed al-Sharaa’s Syria – A Political Economy, Part 1), you can find it here:
👉 https://podcast.ausha.co/sultat-al-mal-the-power-of-money/9-ahmed-al-sharaa-s-syria-a-political-economy-part-1

The episode runs for 55 minutes and covers institutional restructuring, state–capital relations, Gulf financing, sovereign debt, and the outlook for Syria’s financial sector in greater depth.

And of course, I would also encourage you to listen to Part 2 of the conversation (Episode 10 – Ahmed al-Sharaa’s Syria: A Political Economy, Part 2): https://podcast.ausha.co/sultat-al-mal-the-power-of-money/10-ahmed-al-sharaa-s-syria-a-political-economy-part-2

First Diplomatic Ties

In the late 1950s and early 1960s, Syria had no relationship with the European Economic Community (EEC). Leading up to the establishment of the EEC in 1957, Syria’s ties with the soon-to-be member states were tepid. In November 1956, Syria severed all ties with France, its most important partner in Western Europe, following the Suez Crisis.1 At the same time, hostility towards Israel, growing ties with the Soviet Union (USSR), and the short-lived union with Egypt distanced Syria from the Western bloc and limited the scope for any early engagement with the newly created EEC.

Following the coup d’état that brought the leftist Ba’ath Party to power in Syria in 1963, Syria’s ties with the USSR grew stronger. Yet, early Ba’athism also advocated some form of neutrality between the two blocs, meaning that, ultimately, Damascus’ refusal to be tied to any foreign state, at least symbolically, allowed it to maintain ties with the West until the Six-Day War.

In the meantime, Damascus and Paris had mended their relationship, with Syria viewing rapprochement with Gaullist France, and by extension with the EEC, as a way to diversify its Western ties without falling into dependence on the United States, while also benefiting from access to the European common market. 2

While Syria had already engaged with EEC member states,3 the first official contact with the EEC occurred in February 1964, when Syria expressed concern about the conclusion of a trade agreement between the EEC and Israel, ultimately resulting in the Syrian government summoning the Six’s representatives to Damascus.4 This was noteworthy: Syria’s first formal engagement with the Community emerged not through alignment, but through objection, underscoring how political distance and economic relevance coexisted from the outset.

Still, the first demand to establish an official diplomatic relationship between the EEC and Syria came on April 10, 1964. On this date, the Syrian embassy in Brussels conveyed, by verbal note, Damascus’s wish to establish a diplomatic mission to the EEC.5 On May 25, 1964, the EEC’s Council of Ministers approved the opening of the Syrian diplomatic mission. The small office remained mostly inactive in the years that followed. Syria did not appoint a Chargé d’Affaires, Selim Al-Yafi, until January 11, 1967—three years after the Commission approved the Syrian mission.6

Initially, the establishment of diplomatic ties failed to materialize into anything concrete. Syria’s involvement in the Six-Day War in 1967 strained its newly established relationship with the EEC, and the Syrian authorities would then wait three years—until June 23, 1970—to send a full-fledged head of mission, Adib Daoudy, to the EEC.7 Alongside sending Mr. Daoudy, Damascus expressed its desire to strengthen its diplomatic ties with the European Communities by extending the Syrian diplomatic mission to the EEC to include the European Coal and Steel Community (ECSC) and the European Atomic Energy Community (EAEC).8 The Council of Ministers approved the expansion of diplomatic ties with these two communities on July 20 and August 18, 1970, respectively.9

This marked an important milestone in the bilateral relationship and gave real substance to what had until then remained a mostly nominal diplomatic connection. Up to that point, chronic instability within Syria, together with its image in European eyes as a disruptive regional actor, had made the Community cautious about deepening engagement with Damascus.

Shortly after strengthening ties with Brussels, Damascus seized the opportunity to request food aid from the EEC, amounting to 80,000 tonnes of wheat, on July 20, 1970.10 This demand came at a time when the Syrian agricultural sector had suffered from neglect and political instability.11 The nationalization of most of the country’s economic sectors, which led to stagnation in the agricultural sector and rapid population growth (+40 percent between 1960 and 1970), also increased food needs.12 This, coupled with the fact that most of the country’s agriculture was rainfed and thus subject to potentially significant annual fluctuations, allowed food aid to act as a buffer against extreme weather events.

Two years later, the EEC acceded to this request and granted Syria food aid, albeit under conditions. On April 11, 1972, the two parties signed the “agreement between the EEC and the Syrian Arab Republic on the supply of common wheat as food aid,” ultimately equivalent to 7,500 tonnes of wheat. Provided under strict conditions, the agreement stipulated, among other things, that the profits linked to the sale of the European food aid—in case Damascus acquired food aid that was not needed to meet the Syrian population’s needs at the time—were exclusively deposited in a specific account intended to cover Syria’s expenses in terms of financing development projects.13 In subsequent food aid agreements, the Europeans reinforced this conditionality by requiring that any development projects financed through the proceeds of these sales receive prior approval from the European Commission.14

Fluctuating Trade Relations

Despite the lack of significant diplomatic and political ties, EEC-Syria trade ties were important for Damascus. Before 1957, Western Europe was Syria’s most significant trading partner. Afterward, the situation evolved so that the largest purchasers of Syrian goods were no longer the largest suppliers (Western Europe at the time). Arab and ‘communist countries’, particularly China, became significant buyers of Syrian goods, such as cotton. Still, Western European countries, specifically those within the EEC, remained Syria’s primary suppliers. According to European trade data (see table below),15 Syria’s imports from EEC countries accounted for about one-third of its total imports, while about one-fifth to one-quarter of its total exports went to the EEC.16

Although these percentages were already significant, the potential for bilateral trade was much higher. Despite the general non-discrimination in trade regulations between EEC member states and Syria, Western exporters faced difficulties due to delays in currency transfers from Syrian importers. At the time, the lack of a bilateral payment agreement between the EEC and Syria meant that Syrian importers had to wait longer to secure export currency. Thus, Syrian importers were inclined toward countries with which Syria had signed such agreements, such as China and Eastern European nations, to circumvent currency issues. This delay in currency transfers led to Western products being more expensive, as importers had to secure currency through the parallel monetary market (black market), where foreign currency was about 8 percent more expensive.17

At the same time, the USSR had seized the opportunity offered by the Syrian coup of February 1966 to strengthen its ties with Syria,18 thereby leading to a significant increase in trade between the two countries. Between 1965 and 1967, Syrian imports from the USSR multiplied by four, while exports to the USSR increased by 15 percent.

Overall, the 1960s revealed a structural feature that would long shape relations between Damascus and Brussels: political hesitation coexisted with economic interdependence. Syria remained wary of closer alignment with Western Europe and continued to deepen its strategic ties with the Soviet bloc, yet the EEC and its member states retained a central place in Syria’s external economic relations, particularly as suppliers of industrial goods and, increasingly, as a potential source of development support. In that sense, the first decade of EEC-Syria relations did not produce a full-fledged partnership, but it did establish the basic pattern on which later cooperation would rest: political caution on both sides, combined with a persistent Syrian need for European markets, technology, and finance.

The start of the 1970s, marked by Hafez al-Assad’s consolidation of power and the beginning of a relative economic and political opening (infitah) in Syria, seemed to have facilitated a diplomatic rapprochement with Western powers. Relations with the West, hitherto fluctuating due to various conflicts with Israel, thus seemed to warm up from 1974 onward.

A delegation from the EEC was sent to Damascus on 26 and 27 March 1974 to discuss the possibilities of cooperation between Syria and the EEC.19 Around the same time, Syria had signed two agreements with France in July and November 1974,20 and resumed diplomatic relations with the United Kingdom in May 1973, the United States in June 1974, and with the Federal Republic of Germany (FRG) the following month.21

The development of trade relations between the EEC and Syria mirrored this apparent political rapprochement. The EEC once again became Syria’s largest trading partner, accounting for 32.9 percent of Syria’s total foreign trade, compared with 26.7 percent for the Eastern Bloc.

Compared to the Eastern Bloc, the EEC benefited from technological and industrial advances, enabling it to produce goods essential to Syria’s development plans that were not available domestically or in neighboring regions at the required quality and scale. While it is true that Syria benefited from significant development aid from the socialist bloc, such as roads, dams, and ports, under conditions that were difficult for Western Europeans to compete with, the long construction times and limited profitability still made it necessary for Syrians to seek equipment elsewhere in the short term. Syrian imports from the EEC included high-tech industrial goods, machinery, and equipment needed to develop Syria’s infrastructure and industrial base.22

Thus, the share of Syria’s imports coming from the EEC rose from roughly one-quarter in 1970 to nearly 40 percent in 1974. As for exports, Syria primarily exported raw materials and agricultural products, which were in less demand in EEC countries (see table below).23 Moreover, the quality of Syrian industrial products was often not competitive enough for the demanding European markets, which limited their attractiveness as imports in the EEC. As a result, only one-fifth of Syria’s total exports reached the EEC markets.

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In the early 1970s, the main goal of Syrian economic policy was to improve the “terms of trade” by enhancing the quality and finishing of local industrial productions, aiming to reduce the export of raw materials in favor of finished and semi-finished goods.24 It was with this objective in mind—which could be accomplished with European development aid—that Damascus would seek to expedite the signing of a bilateral cooperation agreement.

Showing its willingness to develop deeper ties with its European counterparts, the Syrian government would even use the ‘trade argument’, among others, to push for the conclusion of a cooperation agreement between Damascus and Brussels, which would eventually come into effect in 1977.

During the first session of negotiations on a cooperation agreement between the EEC and Syria, the Syrian delegation presented this expansion in trade not as a passive trend, but as the result of a deliberate political choice by Damascus. Ammar Jamal, then Deputy Minister of the Syrian Ministry of Economy and Trade, declared that:

Syria, under the presidency of Mister Hafez Al-Assad, has shown its goodwill towards the Common Market25 by considerably increasing the volume of our trade with the Member States of the E.E.C. Our imports from the E.E.C. constituted in 1970, 26.6 percent of our total imports; this percentage rose to 39.2 percent in 1974.26

Conclusion

The 1960s marked the beginning of Syria’s engagement with the EEC, yet this relationship remained tentative and largely driven by economic pragmatism rather than political alignment. While Syria was deepening its ties with the Soviet Union, it also saw the EEC as a potential economic partner, particularly as a source of trade and development support. However, the diplomatic engagement was hesitant—Damascus took years to fully establish its mission to the EEC, and political instability in Syria, coupled with its role in regional conflicts, made European policymakers wary of deepening ties.

Despite these limitations, the decade laid an essential foundation for future cooperation. Syria’s uneven trade relationship with the EEC highlighted the country’s dependence on European markets for imports, while the challenges it faced, including currency transfer delays and reliance on food aid, underscored the economic vulnerabilities that would later shape its approach to European partners.

More fundamentally, the 1960s revealed a pattern that would endure for decades: political caution coexisted with economic relevance. Syria did not move closer to the EEC in strategic or ideological terms, yet the Community was already becoming an important economic interlocutor, as a supplier of industrial goods, a potential source of development support, and eventually a diplomatic channel worth cultivating. As Syria entered the 1970s, these limited openings gradually evolved into a more structured framework for cooperation, culminating in the 1977 Cooperation Agreement. While political convergence remained limited, the foundations laid during this earlier period helped shape the trajectory of EEC-Syria relations for the decades that followed.

This paper is the first of a series of six papers examining the relationship between the European Union (including its earlier institutional incarnations) and Syria. Drawing on diplomatic archives, grey literature, trade statistics, and contemporaneous policy documents, the series seeks to shed light on a scarcely documented relationship that has oscillated between strategic pragmatism and political estrangement.

By tracing the evolution of diplomatic contacts, trade flows, aid conditionality, and cooperation frameworks, the series aims to unpack how economic interdependence often preceded political alignment and how mutual caution repeatedly constrained deeper integration.

You can read Part 1, on the 1960s and the first diplomatic ties between Syria and the EEC, here, and Part 2, on the 1970s and the EEC-Syria Cooperation Agreement, here.