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ALEPPO, Syria — To understand the shakedown empire that was once Syria under former President Bashar Assad, consider the notorious Al-Khatib prison and torture center.
Nestled in a leafy neighborhood of Damascus, a so-called financial crimes unit of Syria’s intelligence services would track down successful businessmen and sardine them in fetid cells at Al-Khatib until they handed over a cut of their profits.
“Al-Khatib wasn’t about being guilty or not,” said Mustafa Nana’, a 38-year-old jeweler from Aleppo accused by Al-Khatib last year of selling gold at inflated prices. “They didn’t care. They just wanted cash. If you had it, they would grab you and blackmail your family.” He spent months in a cell, sharing a potato with two cellmates for breakfast and lunch before his family paid tens of thousands of dollars to get him out.
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A rebel coalition brought a swift end last month to Assad’s corrupt regime. But erasing its grim legacy is likely to take much longer, as the country’s new leaders contend with an economy hobbled by nearly 14 years of war, deep-rooted corruption and international sanctions.
Those factors have left Syria in shambles. Of its 23 million people, 69% make do on the equivalent of $3.65 a day, according to the World Bank. The Syrian pound suffered a 300-fold depreciation against the U.S. dollar between 2011 — when anti-Assad protests began — and 2023. A similar contraction hit gross domestic product, which shrank from a high of $67 billion to less than a sixth of that.
Millions of working-age Syrians remain abroad, while wide swaths of the country lie in ruins. Reconstruction has been estimated to cost anywhere from $350 billion to $500 billion. Foreign reserves are reported to have plummeted from $17 billion before the war down to a few hundred million.
Reversing any of those numbers will be no easy task, experts say.
“The main economic relations of the country are based on conflict, whether in terms of the military directly controlling industries, or relying on humanitarian assistance or smuggling,” said Rabie Nassr, co-founder of the Vienna-based Syrian Center for Policy Research. He added that the economy would need a wholesale reorientation rather than a redistribution of resources in favor of the victors.
In the time of Hafez Assad, Bashar’s father, Syria was a socialist economy, with Soviet-style nationalization and tight regulation. His son took a neoliberal tack, and though some initiatives succeeded, they came with higher corruption and inequality. Oil accounted for half to two-thirds of exports, while the country could produce annually 4 million tons of wheat, making it a net exporter (though a series of droughts before the crisis lowered that figure).
The conflict changed all that, forcing Syria to import oil from Assad allies such as Iran — which is owed an estimated $40 billion — and wheat from Russia. The fighting destroyed much of the country’s industrial base, and pushed out some 4.85 million people as refugees. Economically vital parts of the country, such as the resource-rich northeast and the rebels’ bastion in the northwest, remained out of Assad’s control. By 2024, the World Bank estimated that one of the biggest contributors to Syria’s economic sector was captagon, a low-grade, illicit amphetamine.
The caretaker government’s priority now is to raise cash, and bring enough stability to attract investments. Though it has pinned its hopes on resurrecting both oil and agriculture, most of Syria’s oil fields and a large portion of its arable land are in the northeast, which is controlled by U.S.-backed Kurdish-led forces that have so far refused to integrate with the new authorities. Redeveloping oilfields in other areas is difficult, with some observers saying what reserves remain are depleted to the point where further extraction would be economically unfeasible.
Several governments — including Saudi Arabia, Ukraine and Qatar — have promised to give aid that should cover shortfalls temporarily, while the new authorities have made overtures to the Syrian business community, both locally and among the diaspora.
They can point to some immediate improvements. The Syrian pound has stabilized and even improved against the dollar compared to its nadir under Assad. And his regime’s more extortionist practices — including protection payments to pro-government militias for transporting shipments, bribes to pass checkpoints, double-charging customs fees and the shakedowns in Al-Khatib — have ceased.
Once Syria’s most influential minority, Alawites struggle to move on from their association with a hated dictator.
Another measure is loosening restrictions on imports, which should give local firms a chance to access materials at cheaper rates. But factory owners counter it’s a double-edged sword, since locally made products stand little chance against foreign counterparts.
“If they fully open up the market, we’re doomed,” said one Damascus-based manufacturer who refused to give his name so as to speak freely.
Other resentments remain. The new authorities want to ensure industrialists who sustained Assad’s war machine are punished, while pro-rebel business owners hope for an economic reorientation in their favor. At the same time, people who ran businesses under the old regime fear for their place in the current landscape, especially in the hands of an inexperienced government.
Authorities are untangling Assad’s footprint from the economy ahead of what they say will be a privatization drive. In the final years of his rule, Assad commandeered revenue-producing public infrastructure, including the Damascus airport, the port of Latakia and cellphone operators, by having them forge contracts with companies fronted by his cronies.
A complication facing investors will be ownership stakes for firms attached to Russia, Iran, the Lebanese militant group Hezbollah and even the United Arab Emirates.
Officials plan to reduce expenditures by removing other parts of Assad’s legacy, including a bloated public sector and the nation’s social safety net.
In recent weeks, the government said it was evaluating ministry employment rosters, removing ghost employees and those with multiple salaries, and suspending payments to military and security personnel of the old government. Subsidies on staples such as bread have stopped, triggering a 10-fold price increase. Those moves have already introduced a sour note to the post-Assad euphoria among the population.
Beyond those concerns, anyone dealing with Syria must navigate sanctions from the U.S., the U.K., the European Union and the United Nations. Though they target a regime that no longer exists, Western powers have conditioned removing them to the behavior of Syria’s new rulers, who themselves are sanctioned as part of Hay’ah Tahrir Al-Sham, the Islamist faction that ousted Assad.
In an interview at the World Economic Forum in Davos last week, Syrian Foreign Minister Asaad Al-Shaibani said lifting sanctions was “the key” to Syria’s stability.
“The reason for these sanctions is now in Moscow,” Shaibani said, referring to Assad, who escaped to the Russian capital.
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