Key Developments: Syria and Lebanon took several steps to place their bilateral relationship on a more formal, state-to-state footing, with immediate priorities identified as being electricity interconnection, trade, transport, and easier movement of people and goods.

These developments started in early July, during Syrian Foreign Minister Asaad al-Shaibani’s visit to Beirut on July 2, when the two governments established a new Syrian-Lebanese Higher Committee (SLHC) intended to coordinate cooperation across economic, political, security, infrastructure, energy, water, telecommunications, and social affairs. The visit also included the inaugural meeting of a new Lebanese-Syrian Business Council.

The SLHC will review more than 40 agreements and memoranda inherited from the Assad period, including frameworks governing investment, taxation, visas, and other aspects of commercial relations, with the process eventually leading to a broader bilateral trade agreement, although revising the existing framework is expected to take several months.

At the economic level, relations advanced further during a two-day visit to Damascus by a Lebanese delegation headed by Economy and Trade Minister Amer Bisat on July 14 and 15. Bisat met President Ahmad al-Sharaa and Syrian Economy and Industry Minister Nidal al-Shaar and participated in a joint roundtable bringing together officials, chambers of commerce, investors, and business representatives. The discussions covered trade facilitation, investment, customs and transport barriers, business mobility, and mechanisms for improving the exchange of economic and commercial information. On commercial ties, Bisat argued that trade could eventually reach several billion dollars, given the two countries’ geographical and commercial interdependence.

The meetings also produced new private-sector cooperation arrangements. The Federation of Syrian Chambers of Commerce and the Beirut and Mount Lebanon Chamber of Commerce, Industry and Agriculture signed a memorandum covering information exchange, commercial opportunities, joint economic events, and support for concluding transactions between businesses. A separate memorandum between the Syrian-Lebanese and Lebanese-Syrian business councils sought to create a permanent institutional channel to address barriers to trade and investment and expand direct contact between companies in both countries.

Agricultural cooperation also advanced on July 27, when the two countries agreed to prepare a protocol regulating cross-border trade in vegetables and other agricultural products. The proposed framework is intended to reduce congestion during peak seasons, harmonize laboratory testing, and strengthen coordination on plant health, livestock, food processing, and agricultural policy.

Energy cooperation also moved beyond general statements of intent. Earlier trilateral discussions with Jordan had identified gas transit through Syria and the reactivation of Syrian-Lebanese electricity interconnections as priorities. On July 22, Lebanese Energy Minister Joe Saddi said Türkiye had proposed either an electricity-swap arrangement under which Türkiye would supply Syria and Damascus would provide an equivalent amount to Lebanon or a new cable running through the Syrian coast toward Tripoli.

Transport and border infrastructure were another major focus. Lebanese Public Works and Transport Minister Fayez Rassamny and Syrian border and customs officials discussed upgrading shared crossings, reducing truck delays, coordinating customs procedures, and improving freight and transit flows. Lebanon also proposed a new facility at Masnaa closer to the Syrian border post.

Syria separately announced that the al-Dabousiyeh crossing would reopen in early September following bridge repairs, restoring a direct route between the Port of Tripoli and central and northern Syria and easing pressure on the main Damascus–Beirut corridor. The Lebanese government had launched a tender in May to study and modernize a railway from the Port of Tripoli to al-Abboudieh on the Syrian border. Technical studies were expected to take six months, although implementation would depend on feasibility and financing.

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Why It Matters: These developments matter less for their immediate economic impact than for what they signal: an attempt to define what a ‘normal’ relationship between Syria and Lebanon should look like. Economic ties between the two countries have always been unusually dense, but the institutional framework governing them developed under decades of Syrian political and security dominance in Lebanon and often depended on informal networks, discretionary decisions, and unequal treatment.

Customs valuation, tariffs, certificates of origin, truck access, transloading, transit guarantees, passenger rules, informal crossings, and security coordination all need workable agreements before this counts as normalization. Tariff treatment is also unequal: Bisat said Lebanese exporters currently face a tariff that does not apply to their Syrian counterparts, an imbalance that any broader trade agreement will have to address.

February’s abrupt restrictions on foreign trucks showed the costs of getting this wrong, producing congestion, protests, repeated handling of goods, and higher import costs. Both Syria and Lebanon have a strong incentive to move quickly: Lebanon depends on Syrian territory for access to Jordan, Iraq, and the Gulf, giving Damascus an opportunity to collect transit revenues, while Syrian exporters still benefit from access to Lebanese ports and services.

The scope for commercial complementarity is nevertheless considerable. Lebanese contractors, engineers, logistics companies, tourism operators, professional-services firms, and diaspora investors possess skills, networks, and, in some cases, capital that could support Syria’s recovery. Lebanon’s banking collapse means it can no longer automatically resume its former role as Syria’s financial gateway, but its private sector still retains experience in sectors where Syrian capacity has been severely weakened. Syria, meanwhile, could regain a substantial nearby market and help improve its trade balance by supplying the Lebanese market with agricultural goods, food products, construction materials, and manufactured inputs while using Lebanese services and ports where they remain competitive.

Throughout most of the 2000s, Syria consistently recorded a trade surplus with Lebanon, with exports peaking at around USD 340 million in 2010 against imports of USD 221 million. Since the conflict, however, that pattern has largely reversed, with Syria recording persistent trade deficits in most years after 2012. Although bilateral trade recovered modestly to a total of nearly USD 300 million in 2025, it remains well below its pre-war trajectory, illustrating the significant scope for renewed commercial integration.

Energy could again become an important part of the relationship: Beirut says an electricity-import contract with Damascus, separately from the Turkish proposal, is nearly ready, while the Arab Gas Pipeline would also make Syria an essential transit country for supplies reaching Lebanon. Tourism also offers a faster source of hard currency. Syria received 8.5 million visitors, among 20% Lebanese according to Syrian Planning and Statistics Commission data viewed by The Syria Dispatch, and generated an estimated USD 8.4 billion from tourism in 2010. While most Lebanese came on day-trips, easier and more welcoming entries for Lebanese visitors could quickly revive business travel, family visits, weekends, restaurants, hotels, and transport services, thereby bringing significant foreign currency even if they “do not spend much.”

Still, historic and mutual distrust, continued insecurity in Lebanon, smuggling networks, weak enforcement, and the collapse of Lebanon’s banking system will limit how quickly trade and investment recover. Reducing Syrian fuel and commodity subsidies should narrow some of the price gaps that encourage smuggling, but formal trade will only displace informal networks if customs duties, transport costs, and payment channels become competitive.

Saudi Arabia’s earlier restrictions on Lebanese imports followed repeated drug-smuggling cases, and their removal came only after renewed efforts to strengthen state control. That regional precedent is one thing Syria should note as it works to keep smuggling networks from undermining formal trade.

But Lebanon also offers a more direct warning for Syrian reconstruction itself. Its post-war model concentrated heavily on finance and high-end real estate, and the Solidere experience remains associated with contested expropriations, elite capture, and the exclusion of former residents and small businesses. Lebanese expertise can support Syria’s recovery, but Syria should draw on that expertise without reproducing the same model: housing, infrastructure, productive sectors, and local employment should come before speculative redevelopment.

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Key Developments: On July 17, the Syrian Petroleum Company (SPC) and Iraq’s Basra Oil Company signed a memorandum of understanding at the US Chamber of Commerce in Washington to rehabilitate the Haditha–Baniyas pipeline, historically associated with the Kirkuk–Baniyas route. A second memorandum, signed with a consortium comprising Chevron, UCC Holding, and TI Capital, provides for technical and financial studies and the preparation of an implementation framework.

The historic Kirkuk–Baniyas pipeline, which previously carried around 300,000 barrels per day, could reach an operational capacity of one million barrels per day by 2029 and two million barrels per day by 2030. The proposed line should follow the historic route for approximately 1,520 kilometers, with a preliminary diameter of 52 inches and planned capacity of up to two million barrels per day. Because the old pipeline is heavily damaged and considered beyond repair, the project would largely involve replacing it with a new line. Construction is estimated to take around 30 months after the completion of studies and the signature of a final implementation contract.

The US State Department welcomed (and backed) the agreement as a priority infrastructure project and supported the involvement of a US-led international consortium, as Washington seeks to develop alternatives to the Strait of Hormuz.

The agreement builds on an export corridor that is already operating on a smaller scale following the closure of the Hormuz Strait, though Iraqi and Syrian officials have said that they intend to retain the corridor even if normal traffic through the Strait resumes.

Iraqi fuel oil has been transported by road to Baniyas since the spring, with daily traffic rising from around 10 tanker trucks in April to approximately 1,000 by late July. By July 28, SPC officials said that some 2.1 million tons had crossed Syria for export through Baniyas, with one maritime cargo leaving approximately every seven to ten days. Between June and July, three Aframax tankers loaded approximately 1.42 million barrels of Iraqi fuel oil at Baniyas for delivery to the Bahamas, Texas, and the wider US Gulf Coast, representing the first such shipments from Syria to the United States. Cargoes exported through Baniyas have also reached Spain and Egypt.

More generally, foreign interest in Syria’s own oil and gas sector endured, although it remains to be seen at a large scale. TotalEnergies Chief Executive Patrick Pouyanné said during President Emmanuel Macron’s visit that the company would discuss moving from its May offshore exploration memorandum towards a formal contract. He nevertheless stressed that insecurity continued to rule out a return to onshore operations and identified the restoration of Iraqi oil-transit routes through Syria as the more immediate priority.

Still, some previously announced foreign partnerships nevertheless began moving towards implementation. On July 3, the SPC began executing its project with Saudi Arabia’s ADES to develop gas fields in central Syria. The project aims to raise production from the covered fields by 25% during the first six months and by 50% by mid-2027, bringing their combined output to approximately four million cubic meters per day, primarily to support electricity generation. In Hasakah, Gulfsands prepared an investment plan covering the rehabilitation of existing wells and the drilling of new ones operated by Dijla Petroleum, while HKN assumed operational responsibilities at the Remilan fields.

Only around 40% of the country’s oil and gas wells are currently operating, producing approximately 130,000 barrels of oil and 6.3 million cubic meters of gas per day, according to SPC official Ayman al-Marai. Conditions varied considerably between individual fields. Al-Omar is reportedly producing around 5,000 barrels per day, compared with approximately 40,000 previously, while the Conoco gas field remained destroyed and out of service. Only around 15% of wells at the Jabsa fields are operational, although officials expected the proportion to rise to 60% within two months, whereas the Rmeilan fields were described as being in comparatively better condition.

As for refining, Syria is preparing for a temporary reduction in capacity. An official at the Syrian Petroleum Company said that the Baniyas refinery would close for approximately four months from the end of July or the beginning of August for extensive rehabilitation. The work is intended to raise its capacity from around 90,000 to 130,000 barrels per day, while an import plan was prepared to cover domestic requirements during the shutdown. The company previously issued a tender for a proposed 210,000-barrel-per-day refinery at Furqlus in Homs and announced plans for a 70,000-barrel-per-day refinery in Deir Ezzor.

Yet, regional and investment developments contrasted sharply with renewed disruption in Syria’s domestic fuel market. A reduction of between 14% and 20% in fuel prices at the end of June was followed by long queues and temporary closures at filling stations. Energy Minister Mohammad al-Bashir attributed the disruption to the rejection of a substandard petrol shipment, reduced orders by station operators anticipating the price cut, consumers delaying purchases, and the sudden release of accumulated demand once the new prices took effect. He apologized for the crisis, while the ministry dispatched more than 25 million liters of petrol (9.77 million liters) and diesel (15.34 million liters) to filling stations and storage facilities. The Minister later ordered inspections of fuel quality across filling stations following complaints about petrol specifications. On July 27, two tankers also arrived at Baniyas carrying 64,324 tons of diesel and 5,620 tons of liquefied gas.

Against this backdrop, filling station operators, however, argued that the disruption also reflected poor coordination around the price reduction, noting that stations had purchased fuel at the previous, higher prices without any compensation mechanism to cover subsequent losses. According to the head of the filling-station owners’ union in Damascus and Rural Damascus, some stations lost more than old SYP 60 million, prompting operators to reduce orders or delay sales, while black-market petrol reportedly sold for between old SYP 20,000 and old SYP 25,000 per liter, about 60% to 100% higher than official prices. Meanwhile, the government raised fuel prices twice during July, bringing the price of 90-octane petrol to old SYP 14,500 per liter, 95-octane petrol to old SYP 14,900, and diesel to old SYP 12,100. Compared with the June 30 prices, these represented increases of 16%, nearly 15%, and around 13%, respectively, in less than one month.

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Why It Matters: The emerging Iraq–Syria corridor is strategically significant, but the existing truck-based route should be understood as an emergency workaround rather than a commercially mature alternative to the Strait of Hormuz. Moving Iraqi fuel oil across the border in hundreds of tanker trucks before reloading it at Baniyas adds transport, handling, insurance, and border costs, while the cargoes are intended primarily for re-export rather than for supplying Syrian motorists. Its commercial rationale could therefore weaken once Gulf shipping normalizes. A functioning pipeline would alter that calculation, but its long-term value would rest principally on providing Iraq with redundancy and greater export security, not necessarily on being the cheapest route under normal market conditions.

The corridor will also require greater mutual confidence between Baghdad and Damascus. In July, Iraqi tanker drivers complained of attacks and insecurity on Syrian roads, as at least two trucks were attacked by unknown assailants in April and June, and others were detained in July. At the same time, Syrian authorities announced several anti-smuggling operations involving cargoes arriving from Iraq, including the seizure of weapons allegedly destined for Lebanon’s Hezbollah.

The lack of security guarantees was also highlighted by Patrick Pouyanné, thereby reinforcing a point repeatedly made in previous editions: Syria’s geographical position and hydrocarbon potential are insufficient by themselves to attract investment. Over the past months, several attacks were carried out by the Islamic State near oil fields, including al-Omar, one of Syria’s largest (February, May).

On a positive note, UN Comtrade mirror data (see table below) nevertheless show that Syria recorded around USD 110.8 million in crude and refined-product exports between July 2025 and March 2026, equivalent to approximately 1.58 million barrels, destined for Germany, the Netherlands, Italy, and Bulgaria. This represents a meaningful, if still episodic, return to international oil trade. It should not, however, be confused with a broad recovery in production or domestic energy security, particularly when most wells remain inactive, and Syria continues to rely heavily on imported petroleum products.

The domestic fuel crisis, meanwhile, provided an early test of the government’s more market-oriented pricing system, especially following the launch of a permanent committee to determine the prices of petroleum products and mineral resources. Linking retail prices more closely to international costs may help limit subsidies and protect the continuity of imports, but it also transfers much greater global price volatility to Syrian consumers and distributors. Still, the July developments demonstrated how abrupt adjustments, weak communication, and the absence of a mechanism for compensating stations holding higher-priced inventories can turn a pricing decision into queues, reduced orders, and black-market activity.

The contrast is striking but not contradictory: Syria can earn transit and port revenues by re-exporting Iraqi fuel oil while still struggling to provide sufficient and affordable petrol and diesel domestically, since these involve different products and supply chains. A credible market-based system will therefore require a transparent pricing formula, advance notice, arrangements for existing inventories, and targeted protection for households and transport-dependent sectors.

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Key Developments: On July 8, President Donald Trump notified Congress of his intention to rescind Syria’s designation as a State Sponsor of Terrorism, beginning the statutory 45-day process required before the decision takes effect. Syria has remained on the list since 1979. The designation entails restrictions on US foreign assistance, defense exports, certain dual-use goods, and financial transactions. A week later, Representative Joe Wilson said that Under Secretary of Commerce Jeffrey Kessler had also committed to accelerating revisions to Syria-related export regulations, potentially facilitating greater access to US equipment and technology for civilian sectors.

Syrian officials welcomed the announcement. President Ahmad al-Sharaa described the decision as a major achievement and credited the shift in US policy, alongside support from Türkiye and Gulf states, with helping Syria unify the country and move towards recovery. Finance Minister Yisr Barnieh called it a “historic moment” that could accelerate investment and economic recovery, while Central Bank Governor Safwat Raslan described it as a positive turning point that would strengthen confidence and support Syria’s reintegration into the global financial system. Qatar, Jordan, the United Arab Emirates, Bahrain, and the Gulf Cooperation Council also welcomed the announcement.

Meanwhile, congressional scrutiny continued to focus on the Syrian government’s counterterrorism cooperation, protection of minorities, treatment of foreign fighters, governance record, and commitments regarding regional security.

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Why It Matters: Removing Syria from the State Sponsors of Terrorism list matters for considerably more than the country’s international reputation. Although Washington had already dismantled most comprehensive sanctions in 2025, the designation continued to create a separate layer of legal risk.

Under the terrorism exception to the US Foreign Sovereign Immunities Act (28 U.S.C. § 1605A), eligible claimants can sue designated states for specified acts of terrorism, while Section 201 of the Terrorism Risk Insurance Act allows holders of qualifying judgments to attach and execute against the blocked assets of a designated state or its agencies and instrumentalities in order to satisfy compensatory damages.

This risk is concrete. In Foley v. Union de Banques Arabes et Françaises (UBAF), holders of terrorism-related judgments against Syria pursued Syrian government-controlled funds held by UBAF in Paris. In March 2026, a federal court in New York granted partial summary judgment in their favor on the turnover claims, finding that approximately USD 50 million in Syrian government-controlled assets held by the French bank were subject to turnover. The decision showed that Syrian assets did not necessarily have to be held directly in the United States to become exposed: a US court could, under certain circumstances, order a foreign bank subject to its jurisdiction to bring Syrian assets into New York for execution.

Banks were therefore not automatically liable merely for holding Syrian money, but they could be drawn into discovery, restraint, attachment, and turnover proceedings. Institutions accused of routing or concealing Syrian transactions could also face separate sanctions-enforcement and litigation risks; something integrated with banks’ internal risk policies. It is estimated that US courts have already entered more than USD 31 billion in judgments against Syria since 2011, while at least 186 additional cases remain pending.

Delisting will not erase existing judgments against Syria or necessarily prevent litigation arising from conduct committed while the country was designated. Its effect on existing claims may therefore remain limited, though the extent to which this can be chilling for international financial institutions is unclear. It should, however, reduce uncertainty surrounding future Syrian state assets and transactions, particularly if accompanied by the removal of remaining blocking measures. This could lessen the litigation and compliance risks that have discouraged international banks from processing Syrian government-related payments or rebuilding correspondent relationships.

Recent developments already point in that direction. On July 15, the Central Bank organized a technical workshop with Citibank, attended by representatives of the Ministry of Finance, covering correspondent-banking relationships, US-dollar clearing, cross-border payments, and the infrastructure required for international financial settlement. While presented as a capacity-building exercise rather than the establishment of a new correspondent-banking relationship, the workshop illustrated the practical work now underway to reconnect Syria’s financial institutions to global payment networks. Two weeks later, the Central Bank of Syria and the Central Bank of the Republic of Türkiye signed an agreement allowing the Syrian central bank to open a Turkish-lira deposit account at its Turkish counterpart and held technical discussions on payment systems, financial infrastructure, digitalization, and banking-system interoperability.

While these developments cannot be attributed solely to the SST decision, they would have been considerably more difficult while the designation remained in force. The risk that Syrian state funds could be restrained or attached to satisfy terrorism judgments created a powerful deterrent for institutions considering correspondent banking, dollar clearing, or the custody of Syrian assets. Delisting does not eliminate legacy claims, but it materially improves the legal environment for new accounts and future transactions.

More broadly, the decision reinforces a clear shift in US policy from merely permitting economic engagement with Syria towards actively facilitating it. It follows the termination of the comprehensive sanctions program, the repeal of the Caesar Act, the publication of a US State Department-funded investor handbook and sector guides, and increasingly direct support for American commercial participation. US companies have since entered agreements covering gas-field development and offshore exploration, while Washington has backed efforts to revive the Kirkuk–Baniyas pipeline, with Chevron linked to the prospective consortium. The political breadth of this shift was illustrated by late Senator Lindsey Graham, previously one of the most skeptical voices regarding Syria’s new leadership, who said after meeting Ahmad al-Sharaa that working with him was in the US national interest and that he represented the best chance for a functioning and united Syria.

Still, the transactional nature of President Donald Trump’s foreign policy could eventually create friction if economic engagement becomes increasingly tied to US regional security priorities. President Trump has repeatedly suggested that Syria could play a role in confronting Hezbollah in Lebanon, whereas President Ahmad al-Sharaa has consistently stated that Damascus has no intention of intervening militarily there. Syria undoubtedly has an interest in securing its border, limiting arms trafficking, and preventing Hezbollah from destabilizing Syrian territory (Read this month’s Syria-Lebanon relations article). However, direct involvement in Lebanon would carry significant political and sectarian risks while diverting scarce state capacity away from domestic consolidation and reconstruction.

Secretary of State Marco Rubio’s subsequent emphasis on Syria addressing its own internal challenges and securing the border suggests a more restrained approach, but the difference remains important: the present positive trajectory could be tested if continued US economic support becomes tied to regional security demands that Damascus considers either destabilizing or beyond its capabilities.

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Update (August 2, 2026): On August 2, 2026, the Central Bank of Syria announced that old banknotes could be exchanged for new ones at all public and private banks and Syrian Post branches across the country for one week following the end of the main replacement process—that is, until August 6, 2026. The Central Bank also updated its estimate of the old monetary mass replaced to more than 95%.

Key Developments: Following up on the currency redenomination and replacement process, the Central Bank reported in July that around 80% of the old monetary mass had been replaced, up from 63% at the beginning of June, as the nationwide currency-replacement process approached its final deadline. The Central Bank re-explained that, following July 30, old banknotes are no longer considered legal tender and have ceased to be accepted for ordinary payments. The Central Bank nevertheless clarified that holders would retain the right to exchange old notes directly through the Central Bank in Damascus for another five years.

Populations in eastern Syria remain unhappy about the implementation of this process, however, as it remains highly uneven and potentially regressive. Residents of Hasakah called for another extension, arguing that the limited number of authorised centres made it impossible for many people to complete the process before the deadline, despite the 11 currency-replacement centres designated in late June. Local residents claimed that old notes still represented more than 90% of liquidity circulating in the governorate, while some money changers reportedly imposed commissions or applied different exchange rates to transactions involving old and new banknotes.

Hasakah residents also pointed to the refusal of some petrol stations and businesses to accept old notes, despite their continued legal-tender status, which added to the pressure. Damascus and Rural Damascus have also witnessed such a phenomenon. Similar difficulties were reported in Raqqa, where currency replacement was concentrated in the central post office and a small number of additional locations, leading to long queues, shortages of personnel and equipment, and cases in which exchange offices reportedly charged additional fees reaching around 15% of the amount exchanged. In the final days of the replacement period, the Commercial Bank of Syria extended branch opening hours until 5 p.m. on July 28 and 29, and both the Commercial Bank and Real Estate Bank remained open until 8 p.m. on July 30 exclusively for currency exchanges, reflecting the heavy last-minute demand and congestion at replacement centers, but did not resolve the uneven geographical access to those centers.

Early in the month, the Central Bank continued to expand its physical presence in areas that had lacked normal banking services during the conflict. Its Idlib branch reopened on July 1, followed by the Hasakah branch reopening on July 2, following the earlier restoration of operations in Raqqa and the designation of additional exchange points in the northeast. Following the re-opening of the Idlib branch, Central Bank Governor Safwat Raslan announced preparations to gradually withdraw the Turkish lira from circulation there, beginning with an agreement to stop additional Turkish currency from entering the Syrian market and encouraging residents and businesses to return to the Syrian pound.

The end of the currency-replacement process coincided with a broader shift in the Central Bank’s policy messaging. On July 13, Raslan said the bank was implementing a new monetary policy aimed at stabilizing the exchange rate in coordination with the Ministry of Finance, while stressing that the exchange rate should not be treated as the sole measure of monetary-policy performance. He said the Central Bank was revising the laws and regulations governing the banking sector, expanding cooperation with domestic and international financial institutions, and implementing short-, medium-, and long-term plans to modernize the financial system, while continuing work on its national anti-money-laundering and counterterrorist-financing strategy. The Central Bank is also reportedly preparing a regulatory framework for licensing electronic wallets and digital-payment services.

At the fiscal-policy level, the Ministry of Finance began preparing a framework for Syria’s first sovereign sukuk issuance. Finance Minister Yisr Barnieh reviewed a draft strategy covering government securities, including Treasury bills, Treasury bonds, and sovereign sukuk. Sukuks are Sharia-compliant instruments whose returns are linked to an underlying asset, project, or economic activity rather than conventional interest-bearing government debt. The ministry said the instruments were intended to provide “real, non-inflationary” financing for the state budget, establish a benchmark yield curve for pricing financial assets and services, and provide the Central Bank with securities that could eventually be used for liquidity management and open-market operations. The 2026 state budget had already identified sukuk as a principal means of financing the projected deficit. In that context, Barnieh met a delegation from Jordan’s Ministry of Finance and Central Bank to examine Jordan’s experience with sovereign sukuk and discuss support for Syria’s first issuance.

An International Monetary Fund mission also concluded consultations in Damascus in late July, meeting the Ministry of Finance, Central Bank, Planning and Statistics Commission, Energy Ministry, Syrian Petroleum Company, border and customs authority, and the Syrian sovereign fund. The discussions covered economic recovery, fiscal performance, financial- and banking-sector reforms, domestic financing instruments—including sovereign sukuk—and preparations for the 2027 budget. The mission also worked with the authorities on a medium-term macroeconomic and fiscal framework, improved economic data, and stronger coordination between state institutions.

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Why It Matters: The currency exchange process is likely to reproduce inequalities that the government seems unable to offset between the western and eastern parts of the country. Indeed, requiring holders of old notes to travel to the Central Bank’s headquarters in Damascus, present at least 100 banknotes, and receive the equivalent through a bank account creates obvious barriers for people outside the capital, particularly in eastern Syria, where formal banking access remains limited and travel to the capital can be costly… or unsafe. The recent devastating incident on the Damascus-Deir Ezzor highway is again highlighting such risks and inequalities, with residents of the locality where the incident happened calling on President Ahmad Al-Sharaa to intervene to relieve their city, and more generally, within the context of the incident, local feelings of marginalization, residents of Deir Ezzor are protesting the marginalization and the lack of services.

Discontent regarding the end of the currency replacement process intensified on the final day of the exchange period. Hundreds reportedly queued outside banks and post offices across Hasakah, Raqqa, and Deir Ezzor, while protests in Dhiban included road closures and burning tires. Residents in parts of Hasakah said they had to travel to Hasakah city or Qamishli because no exchange center operated locally, while intermediaries reportedly bought old notes at discounts of up to 15 percent.

Back to the currency replacement process, the post-July 30 setup is especially difficult to justify now that Central Bank branches have reopened in most governorates. In practice, many people who cannot meet these conditions may continue to rely on brokers and money changers, leaving them exposed to discounts, commissions, and other forms of exploitation.

The closer coordination between the Central Bank and the Ministry of Finance is, nevertheless, a positive development. Syria’s fiscal and monetary problems cannot be managed separately or arbitrarily, as was the case over the past decade. Deficit financing, liquidity, exchange-rate stability, government borrowing, and banking-sector reform are closely connected. The proposed issuance of Treasury bills, bonds, and sovereign sukuk suggests that the government is trying to move away from financing the budget primarily through direct monetary expansion. If these instruments mobilize existing savings rather than newly created money, they could provide a less inflationary source of financing while also giving the Central Bank securities that can eventually be used for open-market operations and more active liquidity management.

The 2026 budget projects a deficit of around USD 1.8 billion, equivalent to roughly 5 percent of GDP, which the government plans to finance mainly through bonds and sovereign sukuk. This marks a break with Assad-era practice: between 2011 and 2019, fiscal deficits averaged around 12 percent of GDP and were financed largely through Central Bank borrowing, contributing to inflation and currency depreciation; even in 2024, the deficit was estimated at 8 percent of GDP and was expected to be financed primarily by the Central Bank. By contrast, the government recorded a small budget surplus in 2025 while refraining from monetary financing.

The impact of sovereign sukuk will, however, depend on how they are structured and who buys them. Syria’s banking system already provides very little credit to businesses, and government securities could crowd out private-sector lending if banks prefer relatively safe sovereign instruments to financing firms and productive investment. The risk is particularly important in an economy with limited liquidity and weak financial intermediation. On the other hand, sukuk could support recovery if they attract dormant savings or external investors and finance clearly identified, economically viable infrastructure or productive projects. Their success will therefore depend less on the Islamic label than on project selection, transparency, repayment capacity, and whether the proceeds create future economic value rather than simply covering recurrent expenditure.

Finally, the planned regulation of electronic wallets is an important step toward formalizing Syria’s rapidly expanding digital payments sector. This is particularly relevant for Sham Cash, which has controversially become one of the country’s most widely used payment platforms while operating in a largely unregulated environment. There is no public record (in the Official Gazette or elsewhere) that Sham Cash currently holds a formal license, though the company registered in Damascus last year and may hold some form of authorization from the Central Bank or the former Syrian Salvation Government that has not been publicly disclosed. For many Syrians, especially in areas with limited banking infrastructure, electronic wallets have increasingly substituted for traditional bank accounts, making their integration into a formal regulatory framework an important prerequisite for rebuilding confidence in the financial system.

In this regard, Sham Cash’s announcement on July 2 that it would begin implementing new regulatory standards and compliance requirements, in line with the Central Bank’s guidance and international best practices, suggests the company is positioning itself for an eventual licensing framework while anticipating greater regulatory oversight of the sector. More broadly, it also signals that the authorities are serious about moving from a de facto monopoly toward a regulated market in which additional electronic-wallet providers could eventually operate under common rules. There is little indication so far that the government would oppose licensing competitors. Still, Sham Cash’s head start is now substantial enough that a more open licensing regime would not necessarily translate into a more competitive market.

Sham Cash could remain the government’s default partner for state-linked payment flows regardless of how many licenses are issued, and there is a real risk that licensing conditions end up designed, deliberately or not, in ways that only an incumbent of Sham Cash’s scale can currently meet, thereby entrenching rather than breaking the existing monopoly. Interestingly, the July 2 statement was also released in English, apparently a first for the company, which may indicate an effort to signal to potential foreign partners, investors, and payment providers that Sham Cash intends to align itself with internationally recognized regulatory and compliance standards.

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Key Developments: Syria just had its strongest wheat procurement season in years: the Syrian Grain Corporation says official collection centers had taken in 2.5 million tons by July 29, well above recent seasons and enough to meaningfully rebuild public stocks.

Detailed figures published earlier showed that 2.08 million tons had been delivered through more than 116,000 transactions at 84 centers across 11 governorates. Soft wheat accounted for 54.4% of the total and durum wheat for 45.6%, although most deliveries were classified as second-, third-, or fourth-grade rather than first-grade. Officials expected wheat marketing to continue until the end of August. Procurement also began in Suweida in July, where preliminary estimates similarly pointed to better yields and grain quality than in previous years.

But a harvest this large strained storage, transport, and payment systems. Silos and collection centers in the northeast reached capacity during the procurement peak, forcing the authorities to open additional centers in Hasakah, use outdoor bulk-storage areas, transfer grain between governorates, and allow farmers to deliver to centers in Damascus and Homs, with the Grain Corporation covering transport costs. The recently rehabilitated Adra silo, now Syria’s largest with a capacity for 200,000 tons, helped absorb part of the surplus, while further silo repairs are underway.

The government also relied heavily on its new electronic booking platform, which initially caused registration difficulties but later reduced congestion and allowed officials to anticipate delivery volumes and coordinate weighing, testing, accounting, and payment procedures. The more serious bottleneck was liquidity. Delays of around a month in paying farmers reportedly encouraged the emergence of a parallel grain market, with cash buyers purchasing wheat at prices around 20% below the official rate of new SYP 55,000 per ton from farmers needing to repay debts, cover harvesting and transport expenses, or finance the next season.

The government also allocated around old SYP 10 trillion (new SYP 100 billion) for procurement and began transferring funds to the Agricultural Cooperative Bank, but payment preparations were still continuing in parts of Hasakah by mid-July. By that time, however, it was reported that most obstacles had been resolved and that the Agricultural Cooperative Bank would start disbursing payments soon, albeit with significant delays. For instance, on July 26, the bank’s Izraa branch in Daraa was still processing farmers who had delivered wheat between June 1 and June 10, with payments dependent on the funds transferred by the Central Bank’s Daraa branch.

Nevertheless, the new SYP 100 billion reportedly set aside for procurement does not look like enough to cover what has already been delivered. At the official procurement price of new SYP 55,000 per ton, purchasing the 2.5 million tons collected by the end of July would cost approximately new SYP 137 billion (around USD 1 billion), roughly one-third more than the funding reportedly allocated.

That shortfall likely explains why farmers have been waiting so long to get paid and why the government is implementing a new payment process.

On 21 July, Syrian media reported that the Agricultural Cooperative Bank had introduced a new payment schedule for larger grain invoices. Payments of up to new SYP 1 million would continue to be made in full, while invoices between new SYP 1 million and 5 million would receive an initial payment of new SYP 1 million, with the balance paid in three monthly installments. Invoices exceeding new SYP 5 million would instead be settled over four monthly installments. The measure spreads out the state’s costs, but it also leaves bigger producers and traders waiting on cash right when they need it most: to repay debts, cover operating costs, and gear up for the next planting season.

Subsequent reporting from the Agricultural Cooperative Bank’s Izraa branch stated that individual beneficiaries could initially receive up to new SYP 100 million (around USD 741,000), with any remaining balance paid in three or four monthly installments. Although this amount would be unusually high for an individual farmer (equivalent to payment for more than 1,800 tons of wheat), it may apply more broadly to agricultural companies, cooperatives, traders, or other entities delivering aggregated quantities. Still, the report may have confused old and new currency denominations. Old SYP 100 million is equivalent to new SYP 1 million, matching the threshold cited in earlier reporting.

Vegetable, fruit, and other market-crop farmers had a very different season. Farmers interviewed across Rural Damascus, Quneitra, Hama, and southern Syria described an increasingly unviable cost structure: seeds, fertilizers, pesticides, fuel, electricity, machinery, and transport are priced directly or indirectly in dollars, while crops are sold in Syrian pounds into a domestic market with very weak purchasing power

They also reported widespread sales of expensive but ineffective or unlicensed pesticides, large differences in prices between agricultural pharmacies, limited access to formal credit, and heavy dependence on wholesalers and traders willing to provide inputs on credit. One watermelon producer estimated that cultivating a single dunum costs around USD 750, while the net crop sold for only about USD 337, implying a loss of more than USD 400 before accounting for all financial risks.

Farmers also blamed the absence of a clear planting calendar and continuing barriers to exports through Jordan, Iraq, Saudi Arabia, and other Gulf markets, where inspections, visa requirements, and lengthy border procedures can damage perishable produce before it reaches buyers. These pressures help explain why the improved wheat harvest has not translated into a comparable improvement in food security (For more on efforts to improve cross-border trade, transport, and agricultural cooperation, see our article on Syria–Lebanon economic relations.)

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Why It Matters: At the national level, the 2026 wheat season is a clear win for Syria. Procurement of more than 2.5 million tons should allow the government to rebuild strategic stocks, reduce near-term wheat imports, and protect flour and bread supplies after two poor seasons. As discussed in the June edition of this digest, stronger domestic production can also reduce demand for foreign currency and ease pressure on the trade deficit and the Syrian pound. Still, much of this year’s improvement resulted from favorable rainfall rather than a structural increase in agricultural productivity. One good season does not resolve the sector’s dependence on weather (three-quarters of Syria’s cultivated land is rainfed), costly imported inputs, weak irrigation infrastructure, limited credit, or unreliable export access.

The procurement campaign also showed where the state-led wheat system runs out of road: financially and institutionally. The authorities successfully encouraged farmers to deliver large quantities of grain, but storage capacity, transport arrangements, banking coverage, and cash availability did not expand at the same pace. If confirmed, the installment-payment circular would effectively shift part of the government’s financing burden onto farmers, who would be financing the state’s grain purchases for months at a time. That matters most for indebted producers, who need cash now to repay traders, cover household expenses, and get ready for the next planting season.

The planned reopening of Agricultural Cooperative Bank branches in Hasakah and Qamishli is therefore particularly important. The northeast supplied around two-thirds of the wheat collected nationally, yet it continues to have some of the country’s weakest formal banking coverage. Restoring the bank’s presence would help settle outstanding wheat invoices, but its longer-term significance lies in reopening access to agricultural credit and basic financial services. As argued in the May digest, the value of the Agricultural Cooperative Bank should not be assessed solely through commercial profitability: it remains one of the few institutions specifically designed to finance farmers and rural production.

But more wheat in national stocks doesn’t mean better food security at the household level. Crisis-level food insecurity is expected to persist in parts of northeastern and northwestern Syria through January 2027, with many poorer rural households using additional seasonal income to repay debts rather than increase consumption. Flooding along the Euphrates, thousands of agricultural fires, higher fuel and input costs, currency depreciation, and reduced subsidized bread allocations have further limited the benefits of the harvest. Syria may therefore have considerably more wheat this year without many farming households becoming materially better off.

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Key Developments: Return movements continued at scale during the first half of 2026. As of May 31, approximately 1.67 million Syrians have returned from neighboring countries since December 2024, alongside around 1.96 million internally displaced people who have returned to their areas of origin as of June 2026. Türkiye and Lebanon remained the principal countries of departure, followed by Jordan, while most returnees headed toward Aleppo, Idlib, Hama, Homs, Damascus, and Rural Damascus.

Returns from Türkiye accelerated further during the summer. Turkish Interior Minister Mustafa Çiftçi said in July that around 1,000 Syrians were returning each day, bringing the number returning since the fall of the Assad government to approximately 710,000, and 1.5 million since 2016, while around 2.26 million Syrians remained registered under temporary protection.

In Lebanon, General Security extended until September 30 an exemption allowing Syrians and Palestinian refugees from Syria with irregular status to leave through land crossings without paying accumulated fees or fines and without receiving entry bans. UNHCR and IOM also continued to support voluntary returns through cash assistance and organized transport, with returning refugees eligible for USD 100 per person and some vulnerable families receiving an additional USD 300 grant. Among the roughly 581,000 returnees from Lebanon between March 2 and June 30, 2026, fewer than 140,000 said they intend to remain in Syria even if conditions in Lebanon improve, implying that most of the remainder would consider going back to Lebanon if circumstances there change.

Returns from Jordan also continued to rise. By July 18, more than 208,000 UNHCR-registered Syrian refugees had returned from Jordan since December 2024, including nearly 6,900 in June alone and an additional 4,500 in the first 18 days of July.

Movements from Egypt remained more limited. Return-related case closures slowed in May because of operational and funding constraints, as well as families waiting for the school year to end, although return activity during the first five months of 2026 remained above 2025 levels. Interestingly, departures are beginning to reshape the economic networks of Syrians who remained in Egypt. Syrian women operating home-based catering, cleaning, childcare, and tutoring businesses reported shrinking customer bases, stronger competition, and falling incomes, with some food producers receiving only one or two orders per week.

Overall, decisions to return are shaped by family reunification and perceived improvements inside Syria, but also by conflict, worsening economic conditions, and increasingly restrictive protection environments in host countries. Still, conditions after return remain the central concern.

A study of 425 refugee and IDP returnees across seven governorates found that 91 percent arrived in communities missing essential services, 71 percent were living in damaged housing, 44 percent encountered conditions worse than expected, and only 18 percent received sufficient support during the return process. Despite the return of nearly two million internally displaced Syrians, more than 5.5 million people remained internally displaced, including approximately 1.2 million living in formal or informal camps.

As for the Syrian government, its “Syria Without Camps” initiative aims to support the closure of displacement camps and provide safer and more durable accommodation by the end of 2027. Yet, the scale of the challenge remains considerable: an assessment in Idlib alone identified 736 camps accommodating around 91,000 families. Housing, service, livelihood, documentation, and funding gaps continue to limit the pace at which displaced families can return sustainably.

Yet, following a July visit to Syria, UN Special Rapporteur on the human rights of internally displaced persons Paula Gaviria Betancur welcomed the government’s commitment to ending camp-based displacement but warned that camp closures must result from durable, rights-based solutions rather than substitute for them. She emphasized that sustainable returns would require housing and property protections, mine clearance, livelihoods, functioning services, and measures to prevent secondary displacement.

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Why It Matters: The situation of Syrian refugees in Türkiye warrants particular attention. Ankara increasingly appears to be pursuing a dual-track transition away from open-ended temporary protection: facilitating the voluntary return of Syrians who wish or need to go back, while gradually regularizing those who have become embedded in—and continue to contribute to—the Turkish economy. The June announcement exempting Syrians under Temporary Protection from work permit requirements is particularly significant because it constitutes an explicit recognition that Syrian workers fill structural labor shortages. Although employment is still expected to be formally registered, removing the work permit requirement should substantially lower barriers to formal employment. While the legal basis for such exemptions dates back to an amendment published in the Turkish Official Gazette in October 2024, the June 2026 decision is reportedly its first broad application to Syrians under Temporary Protection (TP).

The June decision follows the January 2026 healthcare reform, which ended broadly automatic health coverage for Syrians under TP and tied comprehensive care instead to formal employment through the Social Security Institution (SGK), private insurance, or means-tested assistance.

Read together, the two moves suggest Ankara is shifting away from TP status as the basis for access to benefits, and toward formal labor-market participation, while making that participation easier to achieve. The likely goal is twofold: keep economically active Syrians whose skills the Turkish economy relies on, and push more Syrian employment into the formal system, which would also widen the pool of workers and employers paying into SGK at a moment when the fund is under real strain.

International donors, per sources who spoke to The Syria Dispatch, are increasingly drawing the same distinction: treating support for voluntary return and investment in long-term integration as separate tracks, on the assumption that not all displacement will reverse anytime soon. EU programming for 2025–2027 reflects that split, earmarking funds for voluntary returns while still investing heavily in education, healthcare, and livelihoods for refugees expected to stay in Turkey for the medium-term.

In a similar vein, Jordan also pursues a partial integration policy aimed at integrating Syrian refugees into the labor market, primarily through work permits issued under the Jordan Compact, an initiative launched jointly by the Jordanian government and the EU in 2016.

In June, Jordan introduced a temporary regularization program for non-Jordanian workers, offering a 50 percent reduction in accumulated work-permit fees from previous periods and waiving certain penalties for workers and employers who regularize their status by September 30. The measure is likely to benefit Syrian workers significantly, although it applies to non-Jordanian labor more broadly, and should also support the Jordanian labor market, given the country’s longstanding dependence on foreign labor. Moreover, in July 2026, Jordan eased entry requirements for Syrian investors by extending visa facilitations to the spouses and children of eligible Syrian entrepreneurs, signaling an effort to sustain cross-border economic ties despite expectations of refugee returns. This transition is nevertheless taking place under mounting financial pressure. As of June 2026, UNHCR’s Jordan operation faced a funding gap of more than USD 200 million, covering only around 28 percent of its requirements.

Unlike Türkiye and Jordan, Lebanon continues to pursue a predominantly return-oriented policy, combining administrative incentives for departure with tighter enforcement of residency rules. It has nevertheless maintained limited, time-bound avenues for regularizing Syrian workers, reflecting the continued dependence of sectors such as agriculture and construction on Syrian labor. In line with this dependence, the Ministry of Labor and the Ministry of Agriculture are reportedly reviewing a proposal to register Syrian agricultural workers through the National Farmers’ Registry.

Across the region, return decisions reflect both changing conditions inside Syria and deteriorating alternatives in host countries. Many Syrians are returning not only because they perceive greater safety or hope for family reunification, but because the economic and legal conditions sustaining their displacement have narrowed. Some formally “voluntary” returns are therefore better understood as the least untenable option available. Humanitarian organizations consulted by The Syria Dispatch similarly identified rising living costs, irregular employment, declining access to healthcare, documentation problems, and family reunification as major drivers of return, often outweighing purely security-related considerations.

Inside Syria, returning citizens can restore skills, labor, consumption, entrepreneurial activity, and family networks. Yet the country’s capacity to absorb returnees is not keeping pace with the scale of arrivals: as noted above, the large majority arrived in communities lacking essential services or housing in poor condition. More than 80 percent were also unable to find work despite often possessing substantial prior experience.

In some areas, accelerated returns are already intensifying pre-existing pressures. Residential rents reportedly increased by 50–100 percent in parts of Homs following the arrival of returnees. In Damascus and surrounding areas, additional families are returning to communities where water, electricity, sewage systems, roads, and schools were already severely overstretched. In Al-Hajar al-Aswad, thousands of families have returned despite extensive infrastructure damage, while residents in Tal Kalakh have reported growing competition over school places, fuel allocations, housing, and employment.

The principal challenge is therefore no longer simply facilitating return, but ensuring that returns remain sustainable and do not instead produce renewed poverty, social tensions, or secondary displacement inside Syria.

*This article benefited from additional research and analytical support from Ekin Keleş.

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Key Developments: French President Emmanuel Macron visited Syria on July 6–7, becoming the first head of state from the European Union to travel to the country since the fall of the Assad regime in December 2024. The visit followed Syrian President Ahmad al-Sharaa’s trip to Paris in May 2025 and included bilateral talks, meetings with Syrian civil-society representatives, and a French-Syrian economic forum focused on reconstruction and strategic regional corridors.

During the visit, Syria and France agreed to exchange ambassadors after a 14-year interruption in full diplomatic relations, with plans to reopen the French embassy in January 2027, according to diplomatic sources speaking with The Syria Dispatch. Paris and Damascus also signed a framework agreement to expand bilateral cooperation across political, economic, and institutional fields. France further announced that more than EUR 50 million recovered from assets linked to Rifaat al-Assad would be returned through development projects benefiting the Syrian population.

The economic component of the visit covered transport and logistics, aviation, institutional and financial support, health, water and energy infrastructure, higher education, investment law, and bilateral trade (see table at the end of the article).

One of the principal agreements expanded the role of the French shipping and logistics group CMA CGM beyond its existing operation and development of the Latakia container terminal. President al-Sharaa said the company had committed an additional EUR 200 million to the terminal. The new partnership covers the continued development of dry ports in Damascus and Aleppo, an integrated logistics zone at the Nassib border crossing, the rehabilitation of railway connections between Syria’s seaports and inland logistics centers, and cooperation in air-cargo handling and marketing. The partnership builds on CMA CGM’s 30-year agreement, signed in May 2025, to develop and operate the Latakia container terminal through planned investments of EUR 230 million.

Civil aviation cooperation was also expanded through a declaration of intent between Syria’s General Authority for Civil Aviation and the French Ministry of Transport. Follow-up discussions were held later in the month, when France’s Chargé d’Affaires, Jean-Baptiste Faivre, met Omar al-Hosari, director of the Syrian civil-aviation authority. Al-Hosari also announced the signing of a memorandum with Thales to modernize air-traffic management, communications, navigation, and surveillance systems. The Syrian Aviation Holding Company, formerly Syrian Arab Airlines, also signed a strategic partnership with CMA CGM Air Cargo covering cargo-aircraft operations, technical expertise, and logistics services. Syrian civil-aviation authorities separately announced that procedures were in their final stages for the acquisition of eight Airbus aircraft, which are expected to enter service progressively between the final quarter of 2026 and the first quarter of 2027.

In the financial sector, the Central Bank of Syria announced the reactivation of its account with the Banque de France and the restoration of direct institutional relations between the two central banks. The Central Bank of Syria and Expertise France also signed a memorandum covering institutional strengthening, technical assistance, and capacity-building. Cooperation announced during the visit further included French support for the restoration of Syrian financial institutions, reconstruction financing, and the re-establishment of banking services and access to credit. President Macron also said France was prepared to support the reconstruction of Syria’s payment, clearing, and financial systems; cooperation with the Financial Action Task Force (FATF); banking-sector restructuring; and Syria’s work with the International Monetary Fund and, eventually, the Paris Club on legacy debt.

Other agreements covered development, reconstruction, health, and institutional capacity-building through Expertise France and the French Development Agency (AFD). French company NovaKamp signed a protocol concerning modular water-treatment and energy solutions in Homs. The Syrian Investment Authority signed a memorandum with French law firm Gide Loyrette Nouel covering legal and institutional cooperation related to the investment environment. The Ministry of Higher Education signed a memorandum with Ellipse Projects concerning the development of university hospitals and medical-training institutions. It should be noted that all of NovaKamp, Gide Loyrette Nouel, and Ellipse Projects participated in the French business delegation that visited Syria in October 2025.

Energy and regional connectivity also featured in the discussions. President Macron said TotalEnergies was considering activities related to oil and gas, renewable energy, regional energy transit, and the possible rehabilitation of the Kirkuk–Baniyas corridor. French Foreign Minister Jean-Noël Barrot subsequently described Syria as a possible alternative route for energy shipments amid disruptions affecting the Strait of Hormuz.

In private-sector development, Proparco, the AFD Group’s private-sector financing arm, also advanced discussions on a possible return to Syria. According to a French official speaking to The Syria Dispatch, the institution is currently examining several potential projects with the European Union, including support for microfinance and small and medium-sized enterprises, although no investments have yet been formally announced. President Macron also said that France could eventually support project preparation in Syria through the Fonds d’étude et d’aide au secteur privé (FASEP).

Finally, the Conseil d’Affaires Franco-Syrien (CAFSY) and MEDEF International’s Conseil d’Entreprises France-Syrie (CEFS) signed a cooperation agreement to support French companies seeking to enter the Syrian market or expand their activities in the country.

The visit also included the return of 23 Syrian archaeological objects that had been loaned to the Arab World Institute in Paris in 2010 and had remained in France after bilateral diplomatic relations were suspended. The objects, originating from museums in Damascus, Aleppo, Latakia, and Palmyra, were transported to Syria aboard the French presidential aircraft and transferred to the National Museum in Damascus.

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Why It Matters: France’s return to Damascus carries particular historical significance. French-Syrian relations (greatly described by Manon-Nour Tannous’ fantastic book ‘Chirac, Assad et les autres’) have long been marked by a tension between proximity and mistrust: France’s mandate-era legacy left a lasting political and cultural imprint, while also fostering enduring suspicion of French interventionism. After independence, Paris sought to preserve influence through its broader Middle East strategy, maintaining relations with Hafez al-Assad despite recurring disagreements and later attempting to reintegrate Bashar al-Assad into international diplomacy before relations collapsed following the 2011 uprising.

Until the collapse of the Assad regime, France had remained one of the most consistent European supporters of the Syrian opposition, maintaining its refusal to normalize relations with Assad, welcoming the defector known as Caesar, and pursuing legal cases against senior regime figures. As journalist Wassim Nasr has argued, this consistency helped build credibility with Syria’s new authorities. President Macron’s early engagement with President al-Sharaa, including becoming the first European leader to speak with him by telephone and hosting his first visit to a European capital, further underlined the privileged nature of the relationship.

Still, for all the progress on the political and diplomatic front, the commercial relationship between the two countries has yet to catch up, but not for lack of effort by President Macron and French diplomats to fast-track ties with the new Syrian government. CMA CGM may be behind the largest of the few investment projects actually moving forward, but that has more to do with the company’s long history in Syria (the company has operated in Syria since 2009) than with any new related developments. In fact, the MEDEF business delegation that visited Syria in October 2025 is a useful reminder of how this can go: barely any of the agreements signed at that time materialized.

Thus, President Macron’s visit was, in part, an attempt to make up for that lost time (comparatively to other countries with more advanced economic, commericla and political relations with Damascus) through presidential diplomacy, the exchange of ambassadors, and a highly visible batch of commercial and institutional agreements. Worth noting, though: most of what was signed was technical and developmental rather than straightforwardly commercial. Given the underlying obstacles still impeding economic recovery, French officials described the visit to The Syria Dispatch as a chance to move past political symbolism and start addressing the practical obstacles slowing Syria’s recovery. According to the same source, President Macron raised business-environment issues that continue to impede business dealings in Syria directly with President al-Sharaa.

In fact, President Macron later argued that attracting investment starts with a “shock of confidence,” reliable banking, functioning payment systems, debt restructuring, anti-money laundering reform, and stronger financial governance. In other words, France seems to see institutional reform, not big financial pledges, as the real prerequisite for reconstruction.

For French business interests to materialize in Syria, one French official told The Syria Dispatch, sustained technical assistance is needed in the form of helping reform the financial sector and pulling Syria further into international financial and trade systems. Paris sees its edge not just in flagship companies like CMA CGM or TotalEnergies, but in institutions, such as the Banque de France, Expertise France, AFD, the French Treasury, whose job is rebuilding the institutional groundwork that longer-term private investment needs.

Given the current regional context, President Macron also framed reconstruction as a means, not an end, to larger ambitions for Syria. He tied the country’s recovery to a bigger vision: new logistics, energy, and digital corridors linking the Gulf and Europe. That overlap between French and Syrian strategic thinking is a big part of why transport, ports, civil aviation, and energy dominated the agreements signed during the visit.

In the end, whether any of this matters will come down to implementation. French companies might have connections, sector expertise, and political backing, but they are facing the same headwinds as everyone else investing in Syria: weak banking links, legal uncertainty, thin purchasing power, patchy infrastructure, and a bureaucracy still not equipped to prepare and run complex projects.

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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.

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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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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.

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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.

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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.

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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.

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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 (SPC) 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.

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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.

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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.

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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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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.

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.

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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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Key Developments: 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)

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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.

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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.

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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 2026and 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 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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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 stalledover 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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