As sanctions fall, long-suppressed Syrian economy is poised to take off
| Damascus and Homs, Syria
A rare optimism is sweeping Syria, where a brutal 14-year civil war and a five-decade dictatorship have left the country’s economy cut off from the global financial system and decades behind its neighbors.
Just days after U.S. President Donald Trump vowed to lift sanctions, one of the world’s oldest economies is gearing up to roar back to life.
Syrian business owners who for years worked around sanctions to turn a profit by hook or by crook are now eyeing a meteoric rise.
Why We Wrote This
After Syrians toiled for years to turn a profit by any means necessary, the announced dropping of U.S. and EU sanctions is sweeping the country with rare optimism. The government’s declared intent to open the long-closed economy is another cause for hope.
“We are in a transition from North Korea to South Korea,” says Mohamed Al Hafi, whose Al Hafi Cousins Trading Company exports and imports detergents and other goods. “We can finally think about being part of the world again. This is our first step, and we need everyone, including the U.S. and Europe, to make it a reality.”
On Tuesday, the European Union said it, too, was lifting economic sanctions on Syria, further raising Syrian hopes of a renaissance.
Free Syria, free market
At the Middle East’s oldest commerce chamber, Damascus merchants are bullish about the future.
“The lifting of sanctions on our banking system will have an immediate impact,” says Fawaz Alakkad, president of the Damascus Chamber of Commerce.
“This will open up markets in ways we couldn’t have imagined. We will be able to export to Europe and the U.S. Soon we can work via Amazon and eBay, all these online platforms that are currently blocked in Syria that we can’t even open.”
Magnifying this optimism is a Syrian government bent on opening up the country’s economy.
Instead of Russia or China, which for decades were Syria’s main partners under its closed economy, the interim government is looking to Europe and the United States as a model.
Syrian merchants and industrialists – long squeezed by bureaucracy and threatened with jail – say they are being treated like partners and listened to by the new government as it looks to overhaul legislation from decades of Assad-family rule.
Officials say a team of technocrats and business owners in the interim government are currently preparing a raft of laws to create incentives for foreign investors, boost local industry, and make it easy for Arab and Western companies to open up shop in Syria.
“Syria is moving to a free market, competitive economy. This is one of the clear policies from the government,” says Dr. Razi Mohialdeen, a consultant and adviser to Syria’s minister of economy. “It’s our responsibility to take advantage of this historic opportunity and not get left behind again.”
Obstacles, foreign and domestic
In the meantime, Syrian business owners continue to navigate layers and decades of sanctions.
U.S. measures that barred Syria’s central bank from using the SWIFT financial communications network have had the biggest impact.
To maneuver around U.S. sanctions, Syrian business owners have had to open up companies in Lebanon, Jordan, and the United Arab Emirates to import and export basic goods and final products. Payments have been made through black market money exchangers.
Such work-arounds add 15% to 35% to the cost of goods in Syria.
Having to pay cash for everything up front has stifled businesses’ ability to grow. Several owners described losing tens of thousands of dollars to corrupt money exchangers.
But even before sanctions are lifted, Syrian entrepreneurs are thrilled to be rid of the Assad family’s mafia-like dictatorship, which relied on a system of bribes and protection money and shakedowns of local businesses.
“We industrialists were hostages of the regime,” Feras Adem, manager of Ultra Medica Pharmaceuticals, says from his factory producing heart medicine outside Damascus. “Now everyone is relaxed and upbeat at the factory. We are now rid of that mafia; the sky’s the limit.”
No place like home
Days before Mr. Trump’s announcement, optimism was buzzing at the SINEX Syrian Industrial Expo held in Damascus last week.
Amid humming equipment put up at a convention center at the edge of Damascus, Syrian business owners old and new showcased Syrian know-how and products that have managed to thrive despite sanctions and war: reverse osmosis water filters, cereals, laser printers, soundproof booths, insulation.
Their message: You name it, Syria can make it. And Syrians now eye bringing these goods to the world.
“With sanctions uplifted we can help rebuild Syria again through economic investment,” Kamal Al Harash, general manager of Power Contracting Electro-Mechanical, says from his booth. “Syrian business owners remain tied to their homeland; I’d prefer to take a $100,000 project in Syria than take a $14 million project in Iraq.”
The interim government’s embrace of a free market economy and the opportunities of a postwar boom are starting to entice a return home for some of the thousands of Syrians who successfully opened businesses in Europe, Jordan, Egypt, and elsewhere after fleeing during the war.
Safwan Harbi, who left for Jordan with his family in 2012 and opened an electronics factory in Amman, browsed the expo while on a fact-finding visit to relocate his factory back to his homeland.
“I am very optimistic that things are moving in a positive direction and that we can come back and open a factory here,” he says at an energy pavilion. He aims to make the transition in the next two years, he adds.
“We have to help and try to open businesses here in our homeland; the market is resilient and the climate is attractive. There is no place like home.”
Still, there are challenges
Challenges remain. Syria’s gross domestic product is less than half its prewar level; 90% of Syrians are in poverty.
The country faces an energy crisis, and fuel is expensive; state-provided electricity is limited to a few hours a day.
Energy costs are hurting the competitiveness of locally made goods compared with cheaper imports now flooding the market from Turkey, Jordan, and Saudi Arabia.
Due to the sanctions, few are willing to put money into Syrian banks, exacerbating an already-existing liquidity crisis in the country with an estimated $200 million in cash reserves.
Some Syrian industrialists are wary that the country’s drive for foreign investors may put local investors and businesses at a disadvantage.
But the trend is pointing upwards.
Within days of President Trump’s announcement, the UAE’s DP World, a multinational logistics company, signed an $800 million investment in the port of Tartus. Earlier this month, French shipping and logistics company CMA CGM signed a 30-year, $260 million deal to develop the port at Latakia.
With the threat of being blacklisted by the U.S. now lifted, Arab and Turkish investors are bullish on Syria, with economic deals big and small reportedly on the horizon.
“Syria’s economy is about to take off like a rocket,” predicts Mohamed bin Marwan Ourfahli, who runs food manufacturing and real estate companies and heads the Damascus Chamber of Industry’s energy committee.
“We have talented human resources; a strategic location linking Europe, Asia, and Africa. We already know how to succeed under difficult circumstances,” he says. “Right now, the best bet is to invest in Syria.”
