Centralization First: Syria’s Emerging Political Economy
On reconstruction, Gulf capital, debt, and the risks of managed access.
On December 4, 2025, I joined Colin Powers and Richard Solomon on Sultat al Mal – The Power of Money (Episode 9: Ahmed al-Sharaa’s Syria: A Political Economy – Part 1) for a wide-ranging discussion on Syria’s emerging economic model.
Nearly three months later, many of the structural questions we discussed remain highly relevant: the centralization of authority under the new institutional setup, the rise of sovereign and development funds, the growing reliance on PPPs, evolving state–capital relations, Gulf capital’s expanding role, and the unresolved questions surrounding sovereign debt and financial reform.
The conversation took place at an early but decisive moment in Syria’s post-Assad transition—when institutions were still being consolidated, major MOUs were being signed, and the contours of the new political economy were beginning to take shape. Below is a structured readout of the key arguments I made during the discussion.
1. Centralization and the “Project State” Model
In the first part of the program, I argued that the new institutional setup signals a clear hierarchy of priorities: centralization first, investment facilitation second, and accountability third—for now. The Constitutional Declaration concentrates authority in the presidency, while newly created or revamped bodies, including the Supreme Council for Economic Development, the Syrian Investment Authority, and the Syrian Sovereign and Development Funds, largely report upward rather than outward.
“My read is centralization first, investment facilitation second, and accountability third, at least for now.”
I characterized the emerging model as a “project state”, where reconstruction is fast-tracked through sovereign/development vehicles and public-private partnerships, with the presidency acting as the central hub. At the same time, a technocratic layer built atop a factional inheritance, with governing instincts shaped by Idlib’s wartime political economy: tight control, selective inclusion, and speed. This can produce early wins (e.g., ports and energy MOUs) but risks institutionalizing opacity.
A year after the collapse of the Assad regime, I emphasized that this remains an early post-regime phase. The Constitutional Declaration was drafted quickly to balance domestic and international audiences during a period when the new authorities were still consolidating power. The rules of the game are not yet fully set a d that Parliament’s ability to legislate and exercise oversight will be a key test of whether meaningful checks on executive and economic power emerge.
2. State–Capital Relations: Managed Access, Not Open Competition
There are obviously clear continuities between Idlib and Damascus in the structure of state–capital relations, as I described the current pattern as:
Centralized bargaining rather than rules-based policymaking, with deals routed through committees and funds with limited public disclosure.
“Managed access” rather than “free access”, where businesspeople operate through proximity and sponsorship networks.
“We have first centralized bargaining rather than rules-based policymaking.”
In my view, this is unsurprising for several reasons: (1) many formerly wealthy elites were tied to Assad and are now sidelined or cautious; (2) authorities must move quickly, and personal networks accelerate decisions; (3) investors close to the current leadership are more willing to move in Syria’s high-risk environment; (4) there is a strong supply-and-demand dynamic, with many investors eager to enter; thereby, limiting their leverage to impose conditions.
As a result, early beneficiaries are likely to be firms positioned to win concessions and PPPs, along with intermediaries who possess security-bureaucratic access. Broader households, given that roughly 90% of the population lives under the poverty line, will only benefit if deals translate into tangible improvements in electricity, water, jobs, and price stability.
Obviously, there is a risk for these patterns to become entrenched. However, two potential counterweights should be considered:
Donors and international partners, if they coordinate around transparency, procurement standards, and audit safeguards;
Parliament, if it gains the capacity to legislate and oversee executive economic decisions meaningfully.
3. Gulf Capital: Necessary but Risky
In my opinion, Syria’s outreach to the Gulf reflects limited alternatives. Yet, the state is effectively swapping long-term revenue streams for short-term capital expenditure, fuel, and legitimacy. While Gulf engagement may be one of the only viable sources of large-scale financing, it risks rent leakage, weak domestic value capture, and longer-term fiscal vulnerabilities, especially if PPP structures generate implicit or contingent liabilities.
“The risk here is that the state is effectively swapping long-dated revenue streams for near-term capital expenditure, fuel and both internal and external legitimacy.”
Parliamentary oversight will be key.
Still, details surrounding various deals, including the UCC Holding BOO electricity deal, for which I mentioned that key contractual terms (pricing, indexation, guarantees) have not been made public, making firm conclusions impossible.
4. Banking Sector Constraints
Then, I discussed plans to expand Syria’s banking sector, possibly by doubling the number of banks, as per a previous statement from the Central Bank Governor. I argued that the most realistic path would involve foreign banks (particularly Gulf institutions) opening affiliates or recapitalizing existing Syrian banks.
“There are virtually no correspondent banking ties between the Syrian interests and the rest of the world.”
However, I see several major bottlenecks:
Lack of correspondent banking relationships;
Persistent compliance caution despite sanctions easing;
Snapback risks;
AML/CFT vulnerabilities and heavy cash usage;
Weak capitalization and non-performing loan exposure in domestic banks.
Indeed, only a small share of liquidity is in the formal banking system, and meaningful normalization will take time.
5. Debt to Iran, the EU, and Future Borrowing
On the topic of debt, I expressed some skepticism vis-a-vis the various figures put forward. Syrian authorities have cited approximately $30 billion owed to Iran and Russia, while leaked Iranian documents have suggested up to $50 billion owed to Tehran alone. This is because much of this debt was opaque and did not follow proper parliamentary procedures.
“The most likely trajectory is not a clean restructure or repay decision, but rather… a selective contestation of claims.”
As a result, the most likely path is selective contestation, particularly framing Iranian claims as “odious” or non-enforceable. In fact, I highly doubt that Syria will repay substantial portions of that debt.
I also highlighted Syria’s outstanding obligations to the European Union (approximately €640–700 million), suggesting that restructuring or forgiveness is more plausible than repayment.
Regarding new borrowing, although Syria is now eligible for World Bank operations after Gulf states cleared arrears, officials have publicly signaled reluctance to borrow externally. However, I am still quite skeptical about a strategy relying primarily on donations and PPP-style investment, noting that “free money” is rarely free and often carries political or economic strings.
I would like to sincerely thank Colin Powers for the invitation and for hosting such a thoughtful and substantive discussion on Sultat al Mal – The Power of Money. It was a real pleasure to exchange views with both Colin and Richard Solomon at such an important moment in Syria’s transition.
If you would like to listen to the full episode (Episode 9: Ahmed al-Sharaa’s Syria – A Political Economy, Part 1), you can find it here:
👉 https://podcast.ausha.co/sultat-al-mal-the-power-of-money/9-ahmed-al-sharaa-s-syria-a-political-economy-part-1
The episode runs for 55 minutes and covers institutional restructuring, state–capital relations, Gulf financing, sovereign debt, and the outlook for Syria’s financial sector in greater depth.
And of course, I would also encourage you to listen to Part 2 of the conversation (Episode 10 – Ahmed al-Sharaa’s Syria: A Political Economy, Part 2): https://podcast.ausha.co/sultat-al-mal-the-power-of-money/10-ahmed-al-sharaa-s-syria-a-political-economy-part-2