Key Developments: Syria’s economic relationship with Türkiye deepened across almost every sector in August, driven by a sequence of high-level visits. The Turkish energy and trade ministers each traveled to Syria, a deputy industry minister toured northern industrial zones, and a Turkish delegation of some 40 companies attended a bilateral business forum in Damascus timed to the opening of the 63rd Damascus International Fair. The engagement produced instruments covering hydrocarbons, mining, industrial-zone expansion and border infrastructure. Turkish customs data published during the month showed bilateral trade at a record USD 3.73 billion in 2025, but also that Syrian exports to Türkiye had fallen by nearly half over the same period.

These developments followed a presidential decree issued in the first week of the month that appointed a Türkiye-based businessman and founding officer of the Syrian–Turkish Business Council to head the state body responsible for licensing foreign investment. Indeed, on August 5, President al-Sharaa issued Decree No. 162 of 2026 naming Rawad Ramadan Director-General of the Syrian Investment Agency (SIA), replacing Talal al-Hilali, who had held the post since June 2025. Ramadan was described as a rising figure in Syrian business who has headed the Syrian Council for the Coordination of Joint Business Councils at the Ministry of Economy and Industry since January 2026 and previously served as deputy chairman of the Syrian–Turkish Business Council since its formal establishment in August 2025. Ramadan serves as executive board chairman of Isra Holding in Türkiye, a group active in real estate development, construction, energy, and investment funds. Notably, Syria’s Ministry of Economy and Industry has met with Isra Holding since June over the rehabilitation and expansion of Bab al-Hawa Industrial City, and the two signed the expansion agreement at the Damascus International Fair on August 26.

Before the Fair, Turkish Energy and Natural Resources Minister Alparslan Bayraktar traveled to Damascus on August 19, where President al-Sharaa received him at the People’s Palace, before signing several energy agreements with Syrian Energy Minister Mohammed al-Bashir. Bayraktar said state oil company TPAO and private Turkish firms were ready to conduct seismic surveys and exploration drilling on Syrian onshore and offshore blocks, with TPAO able to begin “immediately.” The visit also led to the signing of a phosphate-related memorandum of understanding (MoU), which the Turkish Ministry of Energy described as concluded between Turkish state mining company MTA International Company (MTAIC) and Syria’s general directorate for mineral resources. The Syrian Ministry of Energy characterized the instrument as a tripartite MoU in earth sciences and mining, and named MTA director-general Vedat Yanık and International Mining Company chief executive Nail Yıldırım as part of the delegation. Bayraktar said the MoU would extend to sulphuric and phosphoric acid production, rehabilitating the phosphate transport fleet, and building a railway linking the fields to a port.

In the electricity sector, Minister Bayraktar said commissioning the Birecik–Aleppo line announced in May would nearly triple Turkish electricity exports to between 800 and 900 MW, with the new infrastructure entering service “in the coming weeks”, while al-Bashir put the line’s entry into service at the end of September, delivering around 500 MW of additional electricity to Aleppo and its surroundings. Türkiye currently exports 281 MW and pipes 3.4 million cubic meters of gas per day through the Kilis line opened in August 2025, according to Bayraktar.

On the commercial side, Turkish Trade Minister Ömer Bolat inaugurated on August 14 a truck waiting terminal at Cilvegözü on the border with Bab al-Hawa alongside the head of the General Authority for Borders and Customs (GABC) Qutaiba Badawi, stating that bilateral trade grew 16 percent in the first seven months of 2026 after a 45 percent rise across 2025 to roughly USD 3.75 billion. Badawi said transit truck movements rose from about 3,500 in 2025 to more than 30,000 in the first seven months of 2026, and that six crossings are operational with Qamishli–Nusaybin under technical preparation. Speaking in Aleppo on August 27—his first visit to the city since 2004—Bolat put 2025 trade growth at 42 percent, said he had met Syrian ministers three times in a month, and reported a Syrian commitment to complete reopening of the Qamishli crossing by year-end. Türkiye’s trade ministry separately reported continuing expansion works at Cilvegözü (Bab al-Hawa on the Syrian side), Akçakale (Tal Abyad), Öncüpınar (Bab al-Salameh), Çobanbey (al-Rai), Karkamış (Jarablus) and Nusaybin (Qamishli).

In industry, a delegation from Türkiye’s Ministry of Industry and Technology, headed by deputy minister Oruç Baba İnan, entered Syria at the al-Rai crossing on August 19, where Deputy Minister of Economy and Industry Basel Abdul Hannan received it, and over the following day toured the al-Rai, al-Bab, Sheikh Najjar and Bab al-Hawa industrial cities before İnan met Economy and Industry Minister Nidal al-Shaar. At the Syrian–Turkish Businessmen Forum on August 26, attended by the 40-company Turkish delegation led by Bolat and Turkish Exporters Assembly chairman Mustafa Gültepe, Federation of Syrian Chambers of Commerce head Omar al-Ali announced work to raise trade to USD 10 billion. Newly-appointed SIA Director-General Rawad Ramadan addressed the same forum, telling participants that Syria needed broad investment across energy, infrastructure, real estate, tourism, agriculture and services. On the same day, the management of the Bab al-Hawa Industrial City and Isra Holding (Mr Ramadan’s company) signed an agreement for the expansion of Bab al-Hawa Industrial City with the aim of creating some 2,000 industrial investment opportunities.

In finance, Minister Bolat said further steps are expected on Turkish banks operating in Syria, following the Central Bank of Syria’s July 29 agreement to open an official account at the Central Bank of the Republic of Türkiye.

Why It Matters: In the reading circulating in Damascus, Talal al-Hilali had come to be seen as too closely aligned with the UAE, and both Ankara and Riyadh had grown uncomfortable with him; Rawad Ramadan’s elevation reads as a correction, placing at the head of the investment agency a figure whose commercial base is in Türkiye and whose institutional role since January has been coordinating Syria’s joint business councils. Notably, Ankara’s push arrived alongside the Saudi commitments covered in another entry of this month’s edition, and Ramadan’s appointment is one both capitals could welcome.

Yet, this appointment appears to carry an obvious conflict of interest, as hinted at in the Key Developments section. The SIA licenses foreign investment, and its new director-general chairs a Turkish holding company active in construction, real estate and energy; three weeks after his appointment, that company signed an industrial-zone expansion agreement with a state-managed entity at the Damascus International Fair, on a day when Ramadan himself addressed the accompanying business forum in his official capacity. As of publication, none of this has been publicly addressed, and no Syrian institution has published a conflict-of-interest framework that would govern the situation. For a state courting investors on the promise of predictable rules, leaving the question unanswered is a needless cost.

On the agreements and promises made in August, interconnection capacity, gas, phosphate processing, industrial-zone rehabilitation, and expanded crossings are all positive inputs that could raise what Syria can produce and move, rather than substituting for it. The Birecik–Aleppo line, if it enters service on the timetable al-Bashir gave, is the single largest addition to Syrian electricity supply in prospect. Yet the composition of trade is where the enthusiasm should stop.

Turkish Statistical Institute data show bilateral trade at a record USD 3.73 billion in 2025 and Syrian exports to Türkiye falling 46 percent over the same year, from USD 438 million to USD 235 million, reversing four consecutive years of gains. The export-to-import ratio widened from 5:1 to 15:1, and the partial 2026 figures point the same way. Syria is quickly losing ground as a supplier to its largest trading partner, and a USD 10 billion target reached on the present composition would mean roughly USD 9.4 billion of Turkish goods entering a market whose own producers are already struggling to compete against them.

Whether that is integration or displacement depends entirely on what crosses the border, and nothing announced in August distinguishes between the two, as Syrian industrialists have long been complaining of the current status quo. But the authorities in Damascus can still make that distinction through tariff structure, standards enforcement, and the sequencing of industrial-zone rehabilitation against import liberalization. Using such tools can be seen as protectionist and might run counter to the free-market philosophy adopted by the transitional government, yet it would ensure that the border crossings whose capacity is being expanded carry Syrian goods northward as well as Turkish goods south.

Overall, however, the expansion of Turkish economic weight in Syria is, on balance, good for the country: foreign direct investment, capital, inputs, and market access, from a neighbor with the industrial capacity to supply them. Still, as Turkish interest in Syria, both politically and commercially, grows, so does the Israeli–Turkish dispute being conducted on Syrian territory. On August 18, Israeli aircraft struck the Abu al-Duhur airbase in eastern Idlib, as Netanyahu’s office stated that Israel and Syria had agreed to a security status quo which Damascus was on the verge of breaching by allowing Turkish troops to deploy at the base, and that repeated Israeli warnings had been ignored. A Turkish official rejected the premise, saying no Turkish troops had been at the airbase.

Regardless of who wins the blame game, however, the costs of that exchange ultimately fall on Syria. The airbase is Syrian, the sovereignty violated is Syrian, and the reputational damage accrues to Syria rather than to either party to the dispute. The Syria Dispatch heard consistently from Turkish businesspeople in Ankara and Istanbul during August that the Israeli threat now features in their investment calculations, and that they consider themselves specifically exposed precisely because they are Turkish. That is the practical damage, and it lands on the same commercial relationship this entry has otherwise described as expanding.

Ankara and Tel Aviv have channels through which to manage their differences, and Syria’s reconstruction should not be the venue.

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Key Developments: August produced the densest month of Syrian–Saudi commercial activity since the February 2026 Riyadh package, falling into two clusters: an energy round at the start of the month, and a concentrated week from August 26 in which the Saudi transport minister’s visit, a central bank agreement, and the 63rd Damascus International Fair produced instruments across transport, finance, water, agriculture, and heavy industry.

On August 5, Syrian Electricity Company (SEC) executive director Omar Shaqrouq signed three power purchase agreements (PPAs) with Saudi contractor Mohammed A. Al-Harfi for three solar power plants totaling 760 MW of energy generation, in addition to 1,077 MWh of battery energy storage system (BESS) at Wadiyan al-Rabi in Rural Damascus, branded under the Shams al-Sham initiative and valued at roughly USD 1 billion. These three PPAs were followed by two accompanying technical cooperation agreements between Al-Harfi and Saudi Electricity Company for Projects Development (PDC) and Germany’s Siemens Energy, respectively. The projects appear to supersede the earlier February memorandum for 210 MW of solar power generation and 827 MWh of BESS. Also in the energy sector, Deputy Energy Minister for Oil Affairs Ghiath Diab received a Saudi energy ministry delegation on oil and gas cooperation on August 9.

In parallel, Saudi-Syrian collaboration extended to the transport sector, with significant sums at play there too. On August 20, the General Establishment for Road Transport awarded the Damascus–Palmyra–Deir ez-Zor rehabilitation contract to Syria’s Al-Kawati and Saudi Arabia’s Al-Rawaf at roughly USD 300 million over 780 days, covering some 425 kilometers of the corridor linking the capital to the east. Furthermore, the Minister of Transport’s Assistant Mohammad Rahhal and Saudi Deputy Minister of Transport Rumaih Al-Rumaih reviewed land transportation developments, rail and transit links, and logistical cooperation. The two parties noted truck traffic on the Türkiye–Syria–Jordan–Saudi axis had risen from about 10 to 30 vehicles daily against a target of 100, and that Syrian drivers were waiting 40 to 50 days for visas. On that last point, the two sides agreed to place the acceleration of multiple-entry permits on the agenda of the Saudi transport minister’s visit to Damascus at the end of the month, alongside driver license recognition and truck specifications. Still, despite the delays, Damascus exporters welcomed Riyadh’s resumption of driver visas after a fourteen-year suspension, saying it removed the high cost of transloading at the border.

Eventually, Saudi Transport Minister Saleh bin Nasser Al-Jasser’s visit to Damascus on August 27 led to the signing of four agreements on roads, rail, post, and aviation. The first two agreements covered railways and road transport on digitization, safety, and training, though limited to studies and technical frameworks; the third covered bilateral air transport based on the open-skies principle; and the fourth covered postal cooperation.

In finance, the Central Bank of Syria and the Saudi–Syrian Business Council agreed the same day to establish a joint Syrian–Saudi bank and to open direct correspondent channels, with Governor Safwat Raslan framing the objective around transfers tied to investment in tourism and real estate. Yet, no capital, ownership structure, or licensing timetable was announced.

August 27 got busier as Syrian–Saudi collaboration carried into the water sector, when the Syrian Ministry of Energy signed a technical services agreement with ACWA Power, Saudi Arabia’s Water Transmission Company (WTCO), and German consultancy Fichtner to prepare studies for desalination capacity of 1.2 million cubic meters per day and a water transmission network of some 400 kilometers. This development represents the study phase of the joint development agreement concluded in February.

Finally, President Ahmed al-Sharaa received Saudi–Syrian Business Council chairman Mohammed Abu Nayyan at the People’s Palace, accompanied by Economy Minister Nidal al-Shaar, for a week in which the 63rd Damascus International Fair converted much of the pipeline into signatures. Agriculture Minister Basil al-Suwaidan signed a memorandum of regulatory harmonization and cooperation with the Saudi Ministry of Environment, Water and Agriculture on August 28, followed by three separate memoranda with Saudi companies Khair Alhgeyad, Mazarina, and Manoura, covering fodder land, sheep export infrastructure, and fisheries and aquaculture, and a poultry sector memorandum with the Al-Sahli Group on August 29. Still at the International Fair, the Ministry of Economy and Industry signed a 30-year memorandum with Ithra Holding for the Hama iron and steel works: five years of rehabilitation followed by twenty-five years of operation, minimum output of 350,000 tonnes annually within four years, and an estimated 2,500 jobs. No project value was disclosed.

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Why It Matters: Compared with February 2026, the more than twenty agreements and other instruments signed in August across agriculture, transport, energy, communications, the economy, and banking seem to provide a more meaningful sign of institutional engagement than the single headline investment package. Given that most large projects to have materialized in Syria since December 2024 have been state-backed and politically driven, the succession of high-level Saudi delegations visiting Damascus and meeting their Syrian counterparts gives the recent developments some teeth. Still, most, if not all, of the agreements took the form of memoranda of understanding, which, since December 2024, have proven notoriously difficult to convert into binding agreements, let alone implemented projects. Most also remain unpriced: only one of the month’s instruments carried a stated contract value, and one other a reported valuation.

Another catch is that most of what actually changed in August did not require Riyadh to put up capital. Driver visas, open skies, and postal cooperation are administrative measures, but they immediately affect how Syrian businesses operate. In that sense, Riyadh’s modus operandi is closer to what the French government proposed to Syria more than a month ago. By contrast, most instruments involving significant capital remain at the feasibility-study, technical-agreement, or development-plan stage. Even the solar projects signed at the start of the month will not add generation capacity overnight. The difference between what changed immediately and what may eventually be built is probably the most important thing to keep in mind when reading August’s announcements.

The picture becomes clearer when viewed alongside Türkiye’s growing economic role in Syria. Ankara is increasingly present in industry, energy, and cross-border trade, while Riyadh is positioning itself around finance, logistics, water, and real estate. The two are therefore not necessarily competing for the same space, at least for now, and Damascus benefits from having both. That division of labor has yet to be tested by a case where the two countries’ interests collide over a major asset.

Whether the partner is Saudi Arabia, Türkiye, or another, the harder question is how any of this gets financed. The Damascus–Palmyra–Deir ez-Zor road is a state procurement, yet no funding source was disclosed for a USD 300 million contract. Sham View presents the opposite model, explicitly financed through investor capital with payments linked to construction progress. Still, reporting on comparable projects suggests much of that capital ultimately comes from advance payments by Syrian buyers rather than fresh foreign money. On that reading, the Saudi contribution is primarily a development model and a brand, not a direct capital transfer.

That makes the proposed joint bank more consequential than its modest billing suggests. Syria’s ability to move money through the international banking system remains a constraint on almost everything else, and its FATF grey-listing adds a further layer of friction. An agreement to establish a Syrian–Saudi bank and open direct correspondent channels is still only a statement of intent, but it is a statement of intent about the one thing that would determine whether the rest of August’s paperwork moves money at all.

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Key Developments: On August 4, the Syrian Petroleum Company (SPC) announced it had assumed control of all oil fields in the Northeast, with SPC Director Youssef Qiblawi saying rehabilitation would begin immediately and take six months to a year. Qiblawi said the fields were producing more than 100,000 barrels of oil per day (bopd), with output expected to exceed 250,000 bopd by 2027. The handover implements the third clause of the January integration agreement between Damascus and the SDF, according to Qiblawi, which stipulated that the government take control of all border crossings and oil and gas fields in the region. Reporting in late August indicated that the transfer of all remaining fields and wells in Hasakah would be completed on September 10, following Mazloum Abdi’s August 25, 2026 announcement of the SDF’s dissolution.

The handover was accompanied by HKN Energy’s entry into Rmeilan, Syria’s largest field complex, which holds more than 1,300 wells and produced between 180,000 and 200,000 bopd before 2011, roughly half of national output, according to Qiblawi. It was reported that the state’s share of the project would be 70% versus 30% for the American company, and that Hasakah governorate would receive a share of revenues. Other reporting on the same agreement described a 25-year term with a phased revenue split, giving the government 60% during the first five years, 65% in a second phase, and 70% for the remainder of the contract. The agreement also includes salary increases for field employees and expanded environmental services for residents of the governorate.

More broadly, the Ministry of Energy reported that in H1 2026 it signed seven memoranda of understanding and three development contracts, completed 3,460 meters of drilling, repaired 21 wells, brought 152 wells into operation, and brought 10 new wells into service. It also reported rehabilitating five kilometers of the Conoco gas line and restarting the main pumping unit in Homs after a twelve-year stoppage.

In parallel, the SPC announced the complete removal of primitive refineries, known as harraqat (حراقات), from Deir Ezzor governorate. SPC Executive Support Director Majed Habib subsequently detailed the scale of the campaign: more than 1,660 units dismantled by company teams across Deir Ezzor and Hasakah, including over 1,200 in the al-Omar sector, around 400 in the Dijla sector and along the Jabsah line, and around 60 in the Shaddadi sector, with owners removing a further 300 themselves, bringing the total to approximately 2,000. Habib said individual units ranged from around 10 to around 400 barrels of capacity, that the file was complete in Deir Ezzor but ongoing in Raqqa, Hasakah, and rural Aleppo, and that the company had absorbed some former operators into formal employment, assisted owners in relocating equipment, and compensated eligible cases under an approved mechanism.

Against these consolidation measures, the Central Authority for Control and Inspection (CACI) disclosed findings of an investigation spanning May to August 2026 into a fraud at Deir Ezzor’s oil fields amounting to USD 28 million. The Authority reported preliminary damages of more than USD 8 million from contracting, maintenance work, and mismanagement, plus a further USD 20 million in price differentials on crude transport contracts between the Central Region administration and haulage companies. Following the three months of monitoring involving 22 inspectors, the Authority suspended nine officials and referred them to the judiciary, among them the director of Deir Ezzor fields, the director of oil transport and distribution for the Central Region, the transport supervisor, and several production and well-services officials at the al-Omar, al-Teim, and al-Tanak fields. It also directed the termination of contracts with non-compliant contractors and recommended precautionary seizure of the assets of those implicated. The specific findings included the absence of genuine tanker sealing at field loading yards, with loads estimated arbitrarily; maintenance contracts held for months by technically unqualified companies without objection from any technical or administrative committee; and producing wells left shut in without any party reporting or restarting them.

Separate investigations into six contracts dating from the Assad era concluded for the Baniyas refinery company between 2021 and 2024 identified violations worth old SYP 3.396 billion, of which old SYP 1.1378 billion consisted of price differentials granted to a contractor because of rising industrial diesel prices. Energy Minister Mohammad al-Bashir directed that oversight work continue until completion with results disclosed progressively, and said further files remained under review.

Ministry of Energy data for the first half of 2026 put crude production at 14.8 million barrels, refined products at 3.5 million tons, raw natural gas at 1.42 billion cubic meters, and clean gas at 1.25 billion cubic meters. Over the same period, the ministry recorded imports of 1.5 million tons of crude, 1.01 billion cubic meters of gas, 598,000 tons of diesel, 283,000 tons of petrol, 196,000 tons of LPG, and 32,000 tons of fuel oil, alongside 110 tankers received at oil terminals.

Against this backdrop, queues nevertheless returned to filling stations in Damascus and its countryside from August 11, which SADCOP attributed to an emergency technical fault in the petrol transfer pump on the Baniyas–Homs line, saying it activated an alternative supply plan by road tanker and discharged around 73,000 cubic meters of petroleum products over two days. Minister of Energy Mohammad Al-Bashir formed an inspection committee to determine why petrol was scarce in the capital despite being available in depots, requiring it to report within 48 hours. SPC Media Director Mohammad Nour al-Ahdab subsequently attributed the crisis to a halt in petrol production at the Homs refinery, the concentration of loading operations at the Baniyas depot, and higher demand, acknowledging that the supply system was operating with a limited safety margin and that reserve stocks required strengthening. He later denied reports of widespread substandard petrol at official stations, attributing quality complaints to mixing and to smuggled material circulating outside formal distribution channels.

Further highlighting the hydrocarbons sector’s fragility, on August 18, an explosion struck the main export pipeline from the Jabsah gas plant in Hasakah at around 4 AM, halting gas flow and disrupting supply to several power generation turbines; SPC said preliminary investigations pointed to deliberate sabotage and announced additional security measures around oil and gas facilities and transmission lines. The same day, three workers were killed by a hydrogen tank explosion during component replacement at the Baniyas thermal power plant.

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Why It Matters: August’s shortage echoes those reported in July, albeit for different reasons, and remains substantively different. Yet the result is the same, and public discontent is stark across the country. While July’s queues followed a pricing decision taken without a mechanism to compensate stations holding higher-cost inventory and thus represented a coordination failure, August’s followed a mechanical fault and a refinery outage and were a redundancy failure. The SPC’s own characterization of a limited safety margin is the more useful admission: with the Baniyas refinery under rehabilitation, loading concentrated at a single depot, and reserve stocks acknowledged as insufficient, the system has no absorptive capacity. The Jabsah sabotage makes the same point on the gas side, where a single line failure propagated directly into power generation. Investment announcements are accumulating faster than the buffers that would make the existing system tolerable to live with.

The harraqat file closes a thread this digest has followed since May. The state’s case was always sound on environmental, fiscal, and safety grounds, and removing roughly 2,000 units is a genuine administrative achievement in itself. But the distributive question remains open in the same form. SPC has described absorption into formal employment, equipment relocation, and compensation for eligible cases, without publishing the number of workers absorbed, the terms offered, or the value disbursed, which represent precisely the gaps that workers identified in Aleppo and Deir Ezzor earlier in the year. In parallel, the unresolved case of the dismissed Furat Petroleum employees, who appealed to the Energy Minister in early August after interviews held in May produced no decision, suggests that the Ministry’s capacity to absorb additional staff might be limited, or at least slower than its capacity to remove, close down, and dismiss. Given the many grievances piling up in Northeast Syria, this Ministry too will have to be careful about sequencing: informal refining is being eliminated in the same governorates where the population seems to be struggling the most and where the government cannot afford to be contested.

Still, as the integration process seems to be moving forward with few struggles, at the political level at least, Damascus managed to consolidate the oil sector on four fronts. The remaining fields outside government control were transferred to SPC, while the terms for operating the largest of them over the next 25 years were agreed. In Deir Ezzor, the parallel refining economy ended, and the state began prosecuting officials within its own oil bureaucracy. Taken together, these moves mark a significant shift in how the sector is controlled, addressing gaps that have remained since 2012. They also leave Damascus with fewer intermediaries to point to when problems arise. From September, more of the responsibility for what the sector produces, collects, and ultimately delivers to petrol stations in Damascus will rest directly with the state.

Finally, the corruption findings may appear less consequential than they are, as they raise questions about the state’s ability to manage its new oil contracts. The CACI identified failures in the basic functions that determine whether a revenue-sharing agreement can actually be enforced: metering, calibration, tanker sealing, load verification, contractor qualification, and monitoring of well productivity. A state that cannot verify how much crude leaves a loading yard cannot verify the basis on which its 60% or 70% share is calculated.

This is the practical side of the argument made in previous editions that contract design matter more than the identity of the investor. But, given this latest development, the question is no longer just how the contracts are designed; it is whether the state has the administrative capacity to enforce them. The sequencing is therefore unfavorable: the contracts were signed first, and these control weaknesses were documented afterward. That an external body uncovered the violations during a single field visit, rather than SPC’s own internal controls, should concern both counterparties and the Ministry of Finance—particularly given that oil and gas revenues only began flowing to the Treasury in May.

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Key Developments: On August 31, the Ministry of Finance published a “citizen’s version” of its financial performance report covering the execution of the 2026 state budget from January 1 to June 30. Public revenue reached approximately USD 2.695 billion over the six months, equivalent to 31% of the USD 8.716 billion projected in the 2026 budget and a monthly average of around USD 449 million, while public expenditure reached approximately USD 3.7 billion, or 35% of approved appropriations, producing a fiscal deficit of about USD 1.005 billion. Against the first half of 2025, revenue rose by 111% and expenditure by 331%; the comparable half-year in 2025 showed revenue of USD 1.28 billion, expenditure of USD 858 million, and a surplus of USD 422 million.

Finance Minister Mohammad Yisr Barnieh described the report as the third installment in a disclosure series that began with the 2025 performance report and the 2026 Citizens Budget, and as a shift from publishing approved appropriations toward periodic reporting of actual execution.

On the revenue side, the report breaks the total into USD 1.079 billion in customs duties (40% of the half-year total, and 56% of the annual estimate for that line), USD 763 million in returns on state investments (28%; 41%), USD 601 million in oil and gas revenue (22%; 25%), and USD 252 million in taxes and fees (9%; 10%). Expenditure was distributed between USD 1.339 billion in wages, salaries, compensation and benefits (36% of the half-year total, 37% of the annual allocation), USD 1.025 billion in administrative spending (28%; 65%), USD 1.021 billion in investment spending (28%; 35%), and USD 315 million in subsidies and social security (9%; 13%).

The ministry attributed the expenditure increase mainly to the salary and wage rises applied from May, expanded spending on government priorities, and higher costs for imported goods, services and inputs driven by regional developments. It noted that oil and gas revenue only began being transferred to the ministry in May and that proceeds from the second mobile operator license were not collected during the period, meaning the half-year results reflect only part of expected annual revenue. The report states the deficit was managed through short-term investment financing repayable within a year, but did not mention the source of this financing.

In contrast (and perhaps in response) to low tax revenue collection, revenue administration and enforcement were a focus in August.

On August 17, Barnieh warned chambers of commerce and industry that repeated cases of under-valued invoices in customs declarations had reduced collection of the tax advance on imports, describing the practice as tax evasion subject to penalties unless corrected voluntarily. The minister suspended 34 employees on August 6, 24 in the finance directorates of Damascus, Hama and Aleppo and 10 at the Real Estate Bank, following 94 suspensions in May; the Central Bureau for Financial Control identified a 2021 Real Estate Bank contract carrying a financial impact of USD 8.454 million, and separately uncovered an embezzlement scheme involving real estate sales tax receipts at the Kiswah finance directorate. A national campaign to review state property investment contracts, run by the illicit enrichment committee with the Ministry of Finance, was launched on August 2.

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What It Matters: Barnieh presented the half-year result as a deficit “within target,” at 56% of the budgeted USD 1.8 billion. That sits awkwardly beside his own revision of full-year revenue to “close to USD 8 billion,” a downgrade of roughly USD 716 million against the April budget. If revenue lands there and appropriations execute in full, the deficit is closer to USD 2.5 billion, around 40% above target and equivalent to some 12.5% of an estimated GDP of USD 20 billion.

Such a ratio is unstable, since the denominator (the budget) is contested: the budget itself assumes GDP of around USD 33.7 billion, Barnieh has put 2025 output at USD 30.6 billion, and al-Sharaa has projected USD 50–60 billion for 2026. Still, and regardless of the ratio, a deficit overshoot of this order means finding some USD 700 million beyond what was budgeted, in a context where the sovereign sukuk framework has yet to produce a first issuance, and no domestic securities market exists to absorb one. The ministry’s warning that spending will accelerate as the wage increase reaches full effect may also mean cuts to development and investment expenditure.

On revenues, customs alone delivered 40% of half-year receipts, while taxes and fees delivered 9%, with the tax line executing at 10% of its annual allocation—by far the weakest performance of any category—against a budget that assumed taxes, fees and customs would jointly supply about half of revenue.

Looking at the structure of revenues, Syria remains fiscally a “border state” rather than a tax state, collecting where goods cross a frontier rather than where income and consumption are generated. That is not surprising given how weak tax enforcement has historically been. But this also reflects the new authorities’ institutional history: governing a large territory with limited administrative reach made customs the most practicable revenue source, and that lesson appears to have carried over. The General Authority for Land and Sea Ports was among the first bodies established after the collapse of the Assad regime, which says something about where the priority sat from the outset.

The reliance on customs revenue ties the budget to import volumes, which depend on an exchange rate and a trade regime the government is actively liberalizing; it is inflationary at the point of collection, since duties and the tax advance on imports pass into consumer prices; and it is regressive relative to a functioning income tax. Based on The Syria Dispatch’s review of the new tariff schedule, because most current duties are specific rather than ad valorem, assessed on the weight of goods, inflation quickly erodes their real value—and the government is left better off with more imports for more revenue, which undermines local industry and production it needs to protect. The August circular on under-valued declarations is a rational response to immediate leakage, but it is border enforcement standing in for a domestic tax base, and the reform meant to build that base is not expected to take effect before 2027.

Execution rates tell a similar story on the spending side: administrative spending ran at 65% of its annual allocation in six months, while subsidies and social security ran at 13%, so the fastest-disbursing category is the cost of running the state apparatus and the slowest is the one that reaches households directly. That is awkward given that August 2026 also produced reports that nine in ten Syrians remain in poverty and continued contraction of humanitarian food assistance amid funding shortfalls.

Finally, despite the overall transparency, the financing disclosure is the report’s clearest gap: the deficit was covered by short-term investment financing repaid within a year, with no instrument, counterparty, cost, or maturity given. The sukuk and treasury securities framework was still at the draft-strategy stage in mid-July, as covered in last month’s edition, so whatever financed the first-half gap was not that. A government that has genuinely stopped borrowing from the Central Bank—a real and underrated break with the pre-2024 model—has a strong story to tell about how it is financing itself instead, and not telling it invites the assumption that the answer is less clean than the alternative.

That said, the disclosure deserves credit on its own terms: a mid-year execution report with a line-item breakdown, published within two months of the period closing, is not the regional norm, even if these are in-year figures from a twenty-one-slide summary rather than audited accounts. The year-on-year comparison is about as flattering as it could be, given that the first half of 2025 ran on a one-twelfth budget based on appropriations inherited from the former government, so the 331% expenditure increase measures a state resuming normal fiscal operation across reunified territory at least as much as a decision to spend more.

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Key Developments: The Central Bank of Syria (CBS) began withdrawing the old Syrian pound on July 31, after the replacement deadline expired on July 30. In its August 2 statement, the CBS confirmed that old banknotes of all denominations had lost their legal-tender status (al-quwwa al-ibra’iyya, القوة الإبرائية), were no longer legally valid in financial transactions, and could not be used to settle obligations or discharge payments in any form. The CBS put the overall replacement rate above 95% of the monetary mass on preliminary estimates, up from the roughly 80% reported in July, while CBS Governor Mohammad Safwat Raslan separately cited a figure above 90%.

Citing that completion rate, the CBS granted an exceptional one-week window running from Sunday, August 2 to Thursday, August 6, during which holders could surrender old notes and receive their value in the new currency through all public and private banks and Syrian Post branches in every governorate, free of commissions, fees, taxes or other charges. After that window, withdrawals were to continue for five years exclusively through the CBS’ Damascus headquarters, using an online appointment-booking mechanism. To manage demand in the northeast, the CBS announced on August 3 the extension of operating hours at 20 Syrian Post outlets across Raqqa, Hasakah and Deir Ezzor to 8:30 AM–7:30 PM through August 6, and waived both prior online registration and the requirement to present 100 notes of a given denomination for the duration of the window. Two days later, on August 5, the CBS announced that the exchange process in the northeastern governorates would be extended until August 20.

On August 9, the CBS again reversed course, allowing withdrawals to continue through authorized Syrian Post outlets in all governorates for a period of five years, so that citizens need not travel to Damascus, and that it was coordinating with the Syrian Post to increase the number of counters. That decision effectively canceled the earlier restriction on direct exchanges, limited to the eastern governorates, until August 20. On August 14, it opened an electronic application channel under which the counter-value is credited to a bank account nominated by the applicant, with eligibility restricted to Syrian natural persons and one application permitted per holder.

Amid these decisions, confusion over the currency exchange process was felt unevenly, with the Northeast, still in the process of political, security, and economic integration, seemingly bearing the brunt. Reports in early August said delays in opening exchange centers in Raqqa and Hasakah caused near-paralysis in buying and selling, and that many residents disposed of their old-currency savings by selling them for dollars at rates reaching SYP 17,000 old (SYP 170 new) to the dollar, well above the prevailing rate of around SYP 130 to 132 per USD. Reporting from Qamishli in late August, Alexander McKeever told The Syria Dispatch that the old currency remained the dominant medium of exchange in the city despite having lost its legal-tender status, with most purchases settled in old notes and change returned in them (Visit Alexander’s publication: This Week in Northern Syria).

Reports also documented a parallel market in Damascus in which the standard offer was SYP 750 new for every SYP 100,000 old (instead of SYP 75,000), with intermediaries trading banknotes as an actual commodity and targeting the elderly, the low-income, and those unable to reach official centers before the deadline.

Internal security forces in Raqqa detained three money changers on August 4 for exploiting citizens and manipulating exchange rates in old-currency transactions. Still, such operations do not seem to be strong enough deterrents to prevent abuses.

In Hasakah, rumors in mid-August that August 18 was the final date for accepting old notes triggered renewed panic, prompting the CBS’ media department to restate that the end of legal-tender status did not extinguish the right to exchange; residents described petrol stations, phone dealers and wholesalers refusing old notes or demanding payment in dollars, and queues at centers that ran out of new banknotes. Governor Raslan responded to the Hasakah dispute in a Facebook comment, questioning the extent to which the bank was responsible for “refining people’s morals” and attributing part of the disruption to profiteering.

Adding to the confusion and the quick succession of decisions, shortages of small denominations, especially the CBS decision not to print a SYP 5 note, despite printing a SYP 25 note, compounded problems related to the new currency. For instance, reporting from the coast documented grocers substituting an egg or a piece of confectionery for change of SYP 10 or 25 new, and pharmacists offering paracetamol sachets or plasters in place of small balances, with one public employee reporting he had yet to handle a SYP 25 new note. The Syria Dispatch observed the same pattern firsthand in Damascus during the first two weeks of August, with SYP 5 change either withheld altogether or returned as a single falafel or apple, or in old SYP 500 notes, nominally equivalent to SYP 5 new but no longer legal tender.

The lack of small denomination also led internal transport drivers in Raqqa striking on August 10 and gathering outside the governorate building over the same shortage: fares are set at SYP 30 new (SYP 3,000 old) while passengers tender 20 or 25, and drivers described returning biscuits, chewing gum and lighters in lieu of change, demanding either a fare increase to SYP 50 new (SYP 5,000 old) or subsidised diesel allowing them to hold the fare at SYP 20 new (SYP 2,000 old). The transition also remains incomplete in the unit of account, even with state institutions and large companies such as the General Telecommunications Company and Zain (formerly MTN) still issuing bills denominated in old lira, and the old SYP 500 note still circulating in transport and markets.

The liquidity squeeze caused by a lack of new currency in the market migrated into the digital payments layer and money exchange companies. Complaints in Aleppo surfaced on August 7 that exchange offices would settle Sham Cash balances only in dollars, and that intermediaries were charging between SYP 150 and 180 for every SYP 10,000 new withdrawn. A withdrawal ceiling of SYP 14,400 new on August 11 at one Al-Fouad branch, which was also settling dollars at SYP 119 new, was also recorded. Later reporting found that numerous Damascus exchange companies had suspended the service entirely, citing a failure in the electronic link with the CBS, while sources attributed the suspension to the bank halting cash withdrawals by those companies beyond limited quantities.

Sham Cash responded by launching an online complaints channel and reaffirming a maximum withdrawal commission of three per thousand (0.3%). Marketing director Mohammad Basiki subsequently set out a ceiling of three per thousand on withdrawals and two per thousand on deposits, down from five per thousand before the new currency, noting that the company retains none of the commission, that 29 authorized companies provide the service, and that the regulation of exchange offices falls to other authorities. By August 20, public-sector employees could not convert salaries into cash at any office, and an informal market emerged in which brokers discounted balances by as much as 15% for cash. Basiki denied any platform-wide ceiling, while an exchange-sector source attributed the rationing to CBS liquidity management and to the volume of old currency withdrawn exceeding the volume of new currency injected.

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Why It Matters: Both risks that materialized in August, the convoluted post-July 31 procedure and the liquidity crisis, were flagged in advance. On August 3, one expert warned that confining exchange to Damascus would open a parallel market in old notes, with holders unable to travel selling below face value to intermediaries who would capture the spread, while another argued that the five-year horizon was generous but that outcomes depended on banking-sector liquidity and the easing of withdrawal restrictions; a third attributed the change shortage to the concentration of issuance in higher denominations. The many decisions and reversals in the first two weeks of the month are both confirmation that the mechanism was designed without its distributional consequences worked through and a sign of responsiveness, and they eased access to the service while leaving the conditions attached to it untouched; no remedy has been announced for the denominations at all.

As for the liquidity crisis itself, one economist calculated that an economy of USD 18–19 billion settling some 85% of payments in cash needs a working stock of SYP 400–430 billion new, against which he put immediately usable cash at SYP 300–340 billion new (USD 2.5–2.8 billion)—a gap sized at 20–28% of the economy’s cash requirement, stalling roughly SYP 4 billion new (USD 33 million) of transactions a day and concentrated geographically enough to open an 8.5% spread between the dollar rate in eastern exchange shops and the rest of the country.

That number describes a failure which has now materialized through every layer of the financial and transaction chains, with banks rationing withdrawals and exchange and transfer companies, which hold the country’s largest private cash inventories and exist to convert balances into notes, suspending the service outright in Damascus. The most telling adaptation is that some offices in Aleppo would pay only in dollars. Faced with a shortage of one currency, the SYP, the market substituted another, the USD. As a result, the redenomination process, initially intended to restore confidence in the national currency, has, in its execution, made a foreign one the more reliable medium of exchange in parts of the country.

Far from a mere technicality, this incidence is also regressive at every stage. For instance, the Agricultural Cooperative Bank’s decision to route 25% of wheat farmers’ net dues through Sham Cash came precisely because the CBS lacked the cash to pay in full. Public employees and now farmers—people paid in fixed sums they must convert entirely into cash to live on, especially since digital payments scarcely exist in Syria—absorb a levy of up to 15% to access their own money, while anyone holding dollars or bank deposits they need not draw down pays nothing. This is a transfer from the poorest cash-dependent households to whoever holds banknotes, and it is invisible in every official statistic.

Still, the bigger question the month, and those prior, in fact, leaves unanswered is why the CBS is short of cash at all. The bank has not published a figure for new currency in circulation, and the possibilities are not equally benign: a printing or distribution bottleneck is a logistical problem that will resolve, while a deliberate decision to hold the money supply tight in order to force adoption of electronic payment is a policy choice being made without being announced.

The August 22 adoption of a licensing and supervision framework for payment service providers and e-money issuers, and the floating of semi-monthly salary payments to spread cash demand, both point toward the second. Still, lack of liquidity could also be a way for the CBS to stabilize the exchange by constraining money in circulation, but this is not an ideal policy decision (READ: Currency Replacement Ends as Syria Builds New Monetary Policy Tools). Back to digitization, this remains a defensible objective, and Syria will need it. But adoption compelled by the unavailability of cash is not the same as adoption earned by a payment system people trust, and people who did not choose it are now paying the bill in 15% increments.

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Key Developments: On August 24, the United States formally rescinded Syria’s designation as a State Sponsor of Terrorism (SST), posting the removal on the US Treasury’s website after the 45-day congressional notification period triggered by President Donald Trump’s July 8 notification expired. Secretary of State Marco Rubio announced that he had also delisted Hay’at Tahrir al-Sham as a Specially Designated Global Terrorist (SDGT), stating that the two actions “eliminate the final major barriers” to private-sector investment in Syria and citing the Syrian government’s counterterrorism record, including its accession to the Global Coalition to Defeat ISIS in November 2025 and operations against ISIS, Al-Qaeda, Hezbollah, and Iran-aligned networks. Syria had been designated since 1979, and its removal leaves Cuba, Iran, and North Korea on the list.

The rescission terminates or waives restrictions flowing from the designation under several statutes, including the Arms Export Control Act, the National Defense Authorization Act for Fiscal Year 2019, the Foreign Assistance Act of 1961, the Syria Accountability and Lebanese Sovereignty Restoration Act (SALSA) of 2003, and the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991.

The delisting followed months of negotiation spanning economic and security files. Damascus committed to sharply reducing Russian crude imports during the SST discussions, though US officials denied any formal linkage; Russian shipments had risen 75% this year to roughly 60,000 barrels per day, making Moscow Syria’s dominant supplier. Two further steps pointed in a similar direction: on August 9 the Syrian foreign ministry announced a memorandum of understanding converting the Hmeimim airbase and Tartous naval base into joint training centers and returning their civilian facilities to Damascus within three months, and a civil aviation delegation met Russian counterparts at Latakia International Airport on August 13 to begin handover procedures. Neither was framed as a concession to Washington, but both narrow Russia’s autonomous footprint in ways US policy has explicitly sought.

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Why It Matters: While the rescission of the SST designation lifts one of the largest pieces of American legislation impeding Syria’s recovery, significant compliance obligations survive the rescission.

At the US government level, sanctions under the Countering America’s Adversaries Through Sanctions Act continue to apply, and Assad-era figures, human rights abusers, and Captagon traffickers remain on the Specially Designated Nationals list, as set out in the updated Tri-Seal Advisory. The Department of Commerce is still revising the Export Administration Regulations, and the State Department is also in the process of publishing an amendment removing the policy of denial1 under the International Traffic in Arms Regulations, though only once remaining statutory restrictions are resolved–principally the SALSA prohibition on exporting US Munitions List items, for which a waiver was transmitted to Congress alongside the rescission.

Direct US economic support remains constrained, as the US Development Finance Corporation still does not operate in Syria, absent its own regulatory action, and the Export–Import Bank of the United States (EXIM) as Syria remains on the risk-based country limitation schedule. Finally, any change to the visa-waiver exemption under INA Section 217(a)(12); that is, an obscure piece of ‘sanctions’ that prevents foreign nationals who visited ‘high-risk’ jurisdictions, including Syria, from benefiting from the Visa Waiver Program to enter the US, requires congressional action.

At the private sector level, however, the extent to which the SST rescission will have a direct, short-term effect is unclear. While many private sector actors have pointed to the SST as the main obstacle preventing their entry into the Syrian market, as reported to The Syria Dispatch, it is worth asking whether the designation was ever the main binding constraint. Syria was listed in 1979, yet traded with the United States and stayed connected to the banking system for much of the intervening period; the label’s direct effects fell mainly on bilateral assistance and defense exports, and much of its weight was reputational. On that reading, the restrictions under the SALSA of 2003 might have been more damaging to trade and investment, and the practical question is which of its provisions survive the August 24 waiver.

Another question is whether American companies will now use this last piece of legislation to justify staying far from the US market, as the American administration encourages them as much as possible to go into Syria, raising the question of the wider gap between legal permission and commercial behavior.

The US Treasury has already confirmed that American financial institutions may service Syrian clients, process payments involving Syrian banks, and establish correspondent relationships without involving sanctioned parties. The investor guides published by the US Embassy in Syria point in the same direction, presenting investment in Syria as something the US government views favorably. Washington has also acknowledged the constraints that remain, recently publishing a grant opportunity for projects benefiting Syria that “advance US commercial diplomacy and put American interests first.” That willingness to press American commercial interests in Syria sits within President Donald Trump’s stated foreign policy ambition of making America “safer, stronger, and more prosperous”.

Yet, the obstacles that remain today are operational rather than legal. Commercial and business activity remains constrained by the lack of established correspondent relationships, the scarcity of credit, persistent security risks in the east where the most valuable hydrocarbon assets sit, and weak frameworks for contract enforcement.

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Key Developments: Around 100 traders and workers in the second-hand clothing trade, locally known as bala (بالة), demonstrated outside the customs building in Raqqa on the morning of Sunday, August 16, against the General Authority for Land and Sea Ports (GALSP) decision banning the import, sale, purchase and circulation of used clothing inside Syria, and demanded the release of detained traders and the cancellation of fines. Leading up to the protests, the customs police had imposed substantial fines on a number of Raqqa traders, with individual cases cited by traders including a fine of USD 1,080 levied after the sale of a single 40-kilogram bundle, a fine of roughly USD 7,500 demanded from a detained trader whose goods were valued at around USD 700, and a single case reported at approximately USD 460,000 on confiscated goods.

These latest developments come as enforcement of the prohibition tightened over the summer, concentrated in the northeast, as a direct product of institutional unification rather than the tariff alone. Traders say a March 2025 ban on the import of second-hand clothing was not applied in the Northeast in the same way as the rest of Syria, because the region was then administered by Autonomous Administration of North and East Syria (AANES) institutions and imports continued through the Semalka crossing with Iraqi Kurdistan under the commercial arrangements applied there. Imports stopped once the Syrian government took over administration of Raqqa in January 2026, leaving wholesalers holding stock brought in beforehand and with the GALSP requiring Raqqa traders to re-clear warehouse stock previously cleared through AANES channels. Traders reported that fines and seizures began without prior warning or any transitional period to liquidate existing inventory, and asked for an inventory of pre-decision stock and permission to sell it down. The effects have extended to Hasakah, where shipments can no longer cross the crossings and shops on the city’s Bala Street have closed or switched to selling new clothing.

In the Raqqa governorate alone, people working in the trade estimated that around 30 wholesale outlets and between 500 and 600 retail shops sell second-hand clothing, while roughly 1,500 households privately buy bundles of clothes for resale to supplement income. Local traders say the price gap explains demand for second-hand clothing: a used pair of trousers sells for about USD 1.5 against roughly USD 10 for a locally manufactured equivalent, and used footwear of reasonable quality sells for around USD 10 against USD 30 to 40 for new domestic shoes. Furthermore, traders in Hasakah argue that local factories currently produce neither the volume nor the quality needed at prices matching household incomes.

The decision to ban the import of second-hand clothing stems from Syria’s new harmonized customs tariff, as issued under Decree 110 of 2026 and in force from June 1, 2026, which places used clothing outside the ordinary duty structure altogether. In the tariff schedule reviewed by The Syria Dispatch, heading number 6309 (the international code for ‘used clothing and other used articles’) carries the entry “negative list“ in the import-duty, service-fee and total columns, rather than a rate, in contrast with the neighboring textile headings 6306 to 6308, which are themselves assigned an import duty.

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Why It Matters: The prohibition on importing second-hand clothing sits at the end of a sequence of reversals dating back to the early years of the conflict. In late 2013, the former Deputy-Minister of Economy Abdel Salam Ali framed the decision as not wanting Syria to become “the world’s garbage disposal,” but also to protect the local textile industry. In July 2018, the then Ministry of Internal Trade, led by Abdallah Al-Gharbi, reaffirmed the decision, arguing that imports were already prohibited and that the trade harmed national industry.

In areas under the former Assad regime's control until December 2024, the import ban was, on paper at least, still in full force. Following the transition, however, enforcement lapsed, but the new government then reimposed an import ban at the start of March 2025, again citing the need to protect the national garment industry. In the intervening period, the trade was in practice taxed rather than eliminated: traders in Idlib reported paying duties of USD 4,000 per ton on imported used clothing by August 2025, while Damascus traders described charges of USD 2 to 4 per kilogram in December 2025, raising the landed cost of a bundle from about USD 150 to over USD 250. Domestic manufacturers have continued to press for restrictions, with garment producers in Hama describing inflows of baled clothing and cheap imported ready-made garments as unfair competition in July 2026.

This sequence marked prohibition, collapse of enforcement, prohibition again, then taxation in practice, then a tariff line marked “negative list” provides an interesting read on the state of Syrian trade administration as much as on the current state of used clothing. Each reversal followed a change in who controlled the relevant territory and the relevant customs post, rather than a change in policy reasoning. The Northeast illustrates the point most sharply. Under the AANES, Damascus’ March 2025 ban had no effect. When it was, the rule arrived seemingly without the transition that would normally accompany extending a legal regime into territory where a different one had been in force. This sudden change led traders to account retroactively for stock that was lawfully cleared under the authority that governed them at the time.

While the rationale is clear, and the stated beneficiary is the domestic garment industry—which faces real cost pressures and has been calling for protection—the immediate cost falls on low-income households and on a retail and resale network that, in Raqqa alone, includes several hundred shops and roughly 1,500 families selling clothing from home. Banning used clothing is likely to push up the effective cost of clothing for these families several-fold, at a time when local production is not, according to traders in Hasakah, in a position to replace it at comparable prices.

Beyond the price paid by consumers, enforcement against traders has also been strict and, at times, appears disproportionate to the transactions involved: as mentioned, roughly USD 7,500 demanded on goods worth about USD 700, and USD 1,080 on the sale of a single bundle. Detaining retail traders and seizing vehicles carrying small quantities between the city and the countryside also places much of the burden on the least consequential participants in the chain.

If the policy objective is to stop used clothing from entering Syria, the most effective point of intervention would be at the border, rather than at the shop. Mirrored bilateral trade data suggest that Syrian imports of used clothing did not stop after March 2025 (see table below), indicating that the issue may lie at customs centers themselves. Yet, when budget disclosures show that customs duties accounted for 40% of state revenues in the first half of 2026, compared with just 9% from taxes, it is easy to understand why the government might have an incentive to maintain import flows across a wide range of products (READ: Finance Ministry Publishes First-Half Results as Spending Outruns a Recovering Revenue Base).

In fact, placing items on an unclear “negative list” itself leaves room for inconsistent enforcement. No published source sets out what the marking obliges customs officers to do, and the material accompanying Presidential Decree No. 110 of 2026 does not define it. It is widely understood as a prohibition and, for some headings, appears to be absolute. According to first-hand accounts from Damascus gathered by The Syria Dispatch, musical instruments, which also appear on the “negative list”, are indeed prohibited from being imported into the country.

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Key Developments: The Syrian Grain Corporation (SGC) announced on August 5 that it had taken in 2.7 million tons of wheat from farmers this season, above the 2.55 million tons it treats as Syria’s annual requirement. SGC Deputy Director General Ahmad Qadoun said the next day that Syria would need no imports this season, and that it last achieved wheat self-sufficiency in 2010, when pre-war output stood at around 4.1 million tons. Qadoun separately clarified that the 2.7 million-ton figure measures deliveries to state collection centers, not total national production.

Yet other figures suggest confusion over Syria’s total wheat requirement: a Ministry of Agriculture official put annual needs closer to 4 million tons in 2026, with the gap covering non-bread uses such as seed, feed, and bulgur, as the 2.7 million-ton figure relates only to Arabic bread. But even regarding bread, the matter is not that simple.

Procurement data through mid-July split the crop into 54.4% soft wheat and 45.6% durum, which, applied to the full 2.7 million tons and measured against the 80/20 soft-to-durum blend used for Arabic bread, implies a soft wheat shortfall of roughly 570,000 tons alongside a durum surplus of roughly 720,000 tons, as set out in our standalone analysis this month. Moreover, despite Mr Qadoun’s claims that wheat imports will not be necessary, imports have continued regardless: a shipment arrived at Tartous Berth 4 on August 11, in the first vessels handled there after the berth’s handover from Russian forces.

As for the harvest itself, Ministry of Agriculture data put the area sown at roughly 1.4 million hectares with expected output above 3 million tons, against 934,183 tons in 2025, when drought pushed rainfed areas almost entirely out of production (actual rainfed output that year was 29,000 tons against a planned 800,000). The Ministry fully executed its 2026 Agricultural Plan, with average yields above 3,000 kg per hectare on irrigated land and around 1,800 kg on rainfed land. Hasakeh accounts for about 37% of output, followed by Raqqa and Aleppo at 18% each and Deir Ezzor at 11%; Hasakeh alone had marketed 1.15 million tons by August 2.

Still, following up on July’s story of unpaid dues, payment continued to lag well behind procurement. To facilitate the transfer of wheat dues, the Agricultural Cooperative Bank (ACB) issued a circular on August 13 directing branches to transfer 25% of farmers’ net dues to their Sham Cash accounts, with the remaining 75% to be paid under existing procedures (via ACB branches). The circular said the measure was necessary because the Central Bank of Syria (CBS) lacked the liquidity to settle grain values in full. SGC Director General Hassan Othman said new SYP 35 billion had been transferred in a first tranche (USD 265 million), followed by new SYP 65 billion (USD 492 million)—together the full new SYP 100 billion (USD 757 million) allocated for procurement, against a bill of roughly new SYP 148.5 billion (USD 1.12 billion) calculated from the official price of new SYP 55,000 per ton for 2.7 million tons.

While some invoices are already being settled, the director of one of the ACB’s Hasakah branches, Azzou al-Hamed, said instructions concerning Sham Cash had not yet reached the branch, as his branch began settling invoices up to new SYP 1 million (old SYP 100 million; around USD 7,576) in cash in a single payment, while larger invoices are to be paid in four equal monthly installments. This scheme appears simpler than the three-tier schedule reported in July, which required an initial payment plus three installments for invoices between 1 and 5 million. Nevertheless, the Sham Cash mechanism proved unpopular among farmers who objected to it on three points: the 25% share is too small to clear debts that fell due in mid-July, older farmers often hold no account and cannot use the application, and cashing out requires travel to agents, with some fearing undisclosed deductions.

Alongside the complications of delayed payments, two relief measures were issued. On August 9, the finance and agriculture ministers agreed to extend repayment of non-performing agricultural loans by three months under Presidential Decree No. 70 of 2026, and to direct the ACB toward concessional lending for modern irrigation, machinery, and solar systems. On August 24, the Drought and Natural Disaster Mitigation Fund approved compensation of SYP 112 million for around 1,700 farmers in Idlib, Aleppo, Quneitra, and Tartous—the first three included for the first time—for flood, storm, and waterspout damage. While reports did not specify the denomination, the scale implies new SYP (around USD 830,000, or roughly USD 490 per farmer). The agriculture minister also instructed officials to complete the parallel compensation file for Deir Ezzor, Raqqa, and Hasakeh (at the time of writing, it is unclear how much has been allocated for compensation in these three governorates).

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Why It Matters: This month’s obvious point of contention remains the routing of a quarter of farmers’ dues through Sham Cash, thereby extending a payment channel whose ownership and governance remain unclear into a new and large constituency. The application was adopted as a vehicle for public-sector salary payments in early 2025 without a publicly disclosed CBS license, if any. The matter, which escalated into a dispute over Sham Cash’s licensing and its approval for government use, was reportedly among the undisclosed factors behind the removal of Abdel Qader Husrieh as Central Bank governor in May and the appointment of Mohammed Safwat Raslan (a change covered in the May edition of this digest). Still, Sham Cash announced in July that it would align with newly-issued CBS requirements ahead of the issuance on August 18 of Decision 1124, adopting a national electronic payment and digital transformation system.

In practice, however, Sham Cash’s expansion to include the payment of farmers’ dues has led farmers to fear undisclosed deductions—despite Sham Cash capping withdrawal commissions at three per thousand (0.3%)—, especially as the AGC takes no fees. These fears may well be justified, as agents have reportedly been informally charging 1–2% per withdrawal. The fact that not all farmers may have Sham Cash accounts raises additional questions about how they will withdraw their dues. Finally, now that farmers are getting paid through Sham Cash, each expansion of the platform’s user base, first with public sector employees, enlarges a payments monopoly ahead of the regulatory framework meant to govern it, rather than after it.

Qamishli protest flyer calling for the expedited payment of dues owed to farmers for the wheat harvest (via Alexander McKeever (Twitter/X), read his publication on Northeast Syria).

It is also worth noting that the timing compounds a second squeeze. Farmers are being pushed toward electronic payment during the withdrawal of the old currency, as covered in the July edition, when physical notes are already scarce—and the circular itself cites the Central Bank’s lack of liquidity as the reason for the Sham Cash share.

The liquidity shortfall matters most because of when it falls in the agricultural year. Syrian winter wheat is sown from roughly November, with land preparation, seed, fertilizer, and fuel purchases concentrated in September and October. Farmers who deliver in June and receive their first installment in August, with the balance spread over four months, will be buying next season’s inputs before being paid for this year’s crop. Those who financed the 2026 crop on supplier credit face creditors who may want settlement in full rather than in installments and may not extend credit again. A plausible outcome is reduced planted area or a shift to cheaper, lower-yield practices in the same eastern governorates that produced this year’s recovery.

That points to a design problem rather than a one-off cash shortage. The state committed to buying an open-ended quantity at a fixed price without securing financing proportionate to a good harvest—the same announcement–delivery gap identified in the July edition, when the allocated new SYP 100 billion was already visibly short of the bill.

All of these challenges will be felt most acutely in the Northeast, which produces the most wheat, at a key political moment. Indeed, this is the first procurement season run under the integration agreement. While Damascus is effectively arguing that centralized administration produces better outcomes than the arrangements it replaced, the current challenges might shatter this claim. Farmers in those governorates protesting outside government buildings over unpaid dues make that argument harder to sustain.

Finally, the self-sufficiency claim is also a questionable objective to organize policy around. As set out in our standalone analysis, Syria produces more durum than its bread requirement absorbs and less soft wheat, which it has historically managed through trade—exporting the surplus at a premium and importing what it lacked. Rainfall did most of the work this year, and three-quarters of cultivated land remains rainfed in a country where drought years are becoming more frequent, not less.

The credibility cost is separate and avoidable, especially given that wheat arrived at Tartous on August 11, days after officials said no imports would be needed. The cargo may well relate to a pre-existing contract or to varieties outside the Grain Corporation’s purchases, but a headline declaration followed by visible imports invites the conclusion that the declaration was overstated.

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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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