A Tesla Cybertruck rolls through Damascus as investors hatch plans to build a Trump Tower and McDonald’s franchises – this is the future some are predicting for Syria under President Ahmad Al Shara, a former Al Qaeda insurgent turned statesman.
With western sanctions lifted to great fanfare and Mr Al Shara winning praise from US President Donald Trump as a “young, attractive guy”, Syria’s Islamist rulers now have almost free rein to steer the once-isolated economy into the global marketplace.
But while the removal of sanctions has rejuvenated Syrians battered by 14 years of civil war, officials have warned in interviews with The National that recovery is “not like flipping a switch” and hinges on a series of crucial reforms.
“If we manage to design a reliable legal environment, inject capital into productive sectors and free the market from bureaucratic constraints, we will begin to see signs of improved economic activity in less than a year,” said Hassan Al Ahmed, a spokesman for the Ministry of Economy.
“However, reaching stable and sustainable growth rates will take longer, depending on how quickly reforms are implemented.”
Officials said the priorities for economic recovery include reforming laws and administrative procedures to attract investors, securing capital for major infrastructure projects, and overhauling the banking sector.
In two signs of progress on Wednesday, a deal was revealed between Syria and four companies to expand its electric grid by 5,000 megawatts – potentially doubling supply – and a ship carrying almost 30,000 tonnes of wheat arrived at Syria's Tartus port, the first such shipment under the new regime.
However, Syria's recovery could be undermined by its volatile political landscape and simmering sectarian tensions. Uncertainty also surrounds the economic path Syria will follow as it transitions from a system of cronyism to a market economy, a tricky process that involves redefining the state’s role and opening the private sector to international markets while protecting domestic industry.
“Reforms are not an instant miracle,” Mr Al Ahmed said.
'Hundreds' of investment proposals
While achieving sustainable growth may take time, Mr Trump’s surprise announcement on sanctions relief has made an immediate impact by piquing the interest of foreign investors. “The visits that used to be exploratory turned into actual investment proposals,” said Ayman Hamawiye, head of Syria’s Investment Authority.
The organisation told The National it has received hundreds of letters expressing interest, including from dozens of western companies. “We’re currently in negotiations on several projects with them,” Mr Hamawiye said.
Some major firms established a foothold immediately after the sanctions were lifted. DP World, the port operator in Dubai, signed a deal worth $800 million with the Syrian government to rebuild the port of Tartus and manage operations.
Now, the government’s main focus is on restructuring the legal framework – including rolling out a new investment law – as well as streamlining administrative procedures to ensure transparency and provide investors with clarity.
Economy Ministry spokesman Mr Al Ahmed said the government is issuing new directives and rescinding old ones every day in a bid to foster a more business-friendly climate.
The task is considerable: under former president Bashar Al Assad, who was toppled by rebels in December, the economy had been controlled by a small network of warlords close to the regime, with businesspeople constantly at risk of being expropriated in favour of better-connected cronies.
Another top priority for Syria is the recovery of its banking sector. In an interview with The National, Central Bank Governor Abdul Kader Husriyeh said restoring financial transfer channels and reintegrating the banking system into global payment networks are vital components of the recovery plan.
The lifting of sanctions does not mean correspondent banks will automatically resume ties with Syrian banks, which they severed years ago, complicating the flow of foreign capital into the country.
“It’s been more than a decade since Syrian banks were completely cut off from the international financial system, so everything related to anti-money laundering is potentially out of date,” said Benjamin Feve, a senior research analyst at Karam Shaar Advisory. “International banks may need time to assess compliance before re-establishing ties.”
To protect or not to protect
The transition to a market economy could take different paths; from a radical embrace of free-market principles to a more mixed approach that retains some level of protectionism to shield key sectors of the economy.
Officials who spoke to The National appeared to favour a more gradual approach, advocating some protective measures to remain in place to support Syrian production.
“We are heading towards a free market, but there are still protective measures for local production during this transitional phase, maybe for a few years, such as maintaining tariffs on imports, so that local products can retain a reasonable margin and mature to become competitive in the global market,” said Investment Authority chief Mr Hamawiye.
But others close to the Ministry of Economy are pushing for a more aggressive leap towards a fully free-market system, lured by the siren of endless profits in an economy where everything needs rebuilding and demand appears limitless.
“Businessmen are now joking about who’s going to bring McDonald’s into Syria,” said Thaer Laham, managing director of the Syrian Business Council, which advocates for the Syrian private sector at both the national and international level.
“But reviving the economy isn’t about this, it’s not about who lands the brand names that will soon flood the market – it’s about empowering the Syrian economy to survive.”
He called for the launch of national dialogue to help channel investment towards sectors that align with Syria’s needs. So far, he said, the nation appears indecisive about which policy path to take.
“We need a strategic plan – right now, we don’t have one. There’s no shared vision among the key stakeholders,” he said.
Cautious optimism
Potential pitfalls litter the road to recovery. Some US restrictions on trade remain in place, and others, imposed under the Caesar Act, a US sanctions law adopted in 2019 to punish the regime of Mr Al Assad, have been lifted only temporarily under a six-month waiver.
The temporary nature of the sanctions relief may dampen enthusiasm for the kind of long-term investment needed for major infrastructure projects.
The West has hinted at what it expects the new Syrian government to deliver. During a brief meeting with Mr Al Shara this month, Mr Trump urged Syria to establish ties with Israel, assist the US in preventing a resurgence of ISIS and deport “foreign terrorists”.
Additionally, western governments have reaffirmed the need for an inclusive government in a country still fractured by more than a decade of civil war.
“But what does that mean in concrete terms? And if these are not achieved, could the sanctions return?” said Mr Feve.
Another major concern is security. In March, a spree of sectarian killings shook Syria's coastal region, home to the Alawite minority to which former president Mr Al Assad belongs. While the violence has subsided, instability lingers in the area, which has tourism potential.
“Are international companies really going to invest in tourism along the coast?” Mr Feve said. “It’s far from certain, given the risk of renewed tensions. We also still hear reports about the Islamic State [ISIS] cells and persistent security threats in other areas.”
Despite all the challenges, Syrian businessman Mr Laham is optimistic, though cautiously.
“We need to be mindful of what the next steps are going to be,” he told The National. “But we also need to keep in mind that just six months ago, saying the word ‘dollar’ out loud could land you seven years in prison. Now, it’s everywhere.”
