Long, Hard Road To De-Weaponizing Syria's Economy

Thousands have been killed on both sides, many were imprisoned or disappeared, and countless others fled to neighboring countries or sought refuge in Europe.

As the war dragged on, the situation grew increasingly dire. In 2024, the United Nations described the Syrian crisis as“one of the world's most complex emergencies.” Hundreds of thousands of Syrians risked their lives seeking refuge in countries worldwide.

Since 2011, Syria's GDP has plummeted by 87 %, its currency has lost more than 99% of its value and inflation on basic consumer goods has soared beyond 300 %.

The deteriorating economic and social conditions in Syria, exacerbated by increasingly stringent sanctions, have completely disconnected Syrian companies from regional and global supply chains. Most businesses had to shut down , with only a few managing to relocate to neighboring countries.

Businesses that managed to survive have devolved into zombie firms - businesses that are no longer economically viable, but that are being sustained through other means, like government subsidies.

Illegal economic activities flourished, secretive supply chains emerged and corruption became deeply entrenched within public organizations.

In the wake of the Syrian government's collapse, analysts - though optimistic - remain skeptical about the country's future .

The new ruling entity in Damascus is Hayat Tahrir al-Sham (HTS), a former branch of al-Qaida and the foremost force in the rebel coalition. HTS previously competently governed Idlib, a city in northwestern Syria, relying on foreign aid via Turkey to deliver basic services to citizens.

Critics argued the HTS government in Idlib was “dictatorial” and“authoritarian” enough to spark protest earlier this year . On December 9, HTS asked the Idlib government - which is exclusively made up of HTS loyalists - to govern Syria until March 2025. The group has not disclosed its plans beyond that date.

Managing the rural, conservative region of Idlib is far different from managing a complex country like Syria. Nevertheless, despite growing concerns about HTS's one-party interim government, the group is likely to capitalize on the public's relief at the downfall of Assad's regime and the end of 13 years of civil war to establish short-term political stability.

Other opposition groups, many with violent histories, appear to support HTS's short-term plan , seeking to negotiate their role in the new political settlement. However, early indicators suggest HTS, while adopting inclusive rhetoric , continues to adhere to an authoritarian and totalitarian style of governance.

HTS's key backers, Turkey and Qatar , will likely provide financial aid and funds to boost public opinion in the short term. However, long-term political stability in Syria hinges on sustained public support, which is deeply tied to the country's economic situation. The new rulers in Damascus face the daunting job of reviving the economy.

A key prerequisite for reviving the Syrian economy is the de-weaponization of regional and global supply chains, which involves more than removing the imposed economic sanctions on Syria. It requires revitalizing small and medium-sized enterprises and rebuilding public organizations capable of supporting domestic supply networks compatible with regional and global supply chains.

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This is easier said than done; small and medium-sized enterprises and the middle class have been decimated over 13 years of civil war. Public and private organizations in Syria have already undergone the zombification processes, becoming heavily reliant on aid to survive.

Zombie firms typically exhibit sub-optimal production performance, low innovation and a negative impact on economic activity . As such, it's likely that local organizations lack the current capacity to participate and/or upgrade in regional and global value chains. Rebuilding these capabilities will require establishing a strong innovation ecosystem and domestic supply chain governance .

Early indicators suggest that HTS will favor its loyalists to dominate economic and social activities. Such an approach risks recreating an Islamic version of Assad's economic governance, long characterized by a state-directed economy, capital controls and cronyism. Key regional players , Arab states and international players have already expressed concerns about engaging with the Syrian economy under the new Islamic regime in Syria.

Throughout the past 13 years, the Assad regime emphasized a winner-takes-all approach - a stance that HTS appears now to adopt. To revive the Syrian economy and de-weaponize supply chains, HTS has no choice but to abandon such a mindset. Otherwise, the new ruler in Damascus will soon face the same challenges that led to the previous regime's collapse.

Hassan Wafai is associate professor, Faculty of Management, Royal Roads University

This article is republished from The Conversation under a Creative Commons license. Read the original article .

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