Assad state of affairs: Syria’s shattered, drug export-driven economy is placing its hopes in Turkey — and in the return of refugees

“In the vaults, there are only Syrian pounds, which are worth next to nothing,” the prime minister told Italian newspaper Il Corriere della Sera on Dec. 11. “We have no foreign reserves, and as for loans and bonds, we are still gathering the data. So yes, financially, we are in a very bad state.”

Sanctions also continue to be a significant obstacle to reconstruction. However, they are likely to remain in place, at least while the United States and others monitor the formation of a new government and discern its intentions, notes Delaney Simon, senior analyst at the International Crisis Group.

Unlike Iraq after Saddam Hussein, post-Assad Syria lacks anywhere near the requisite oil to self-finance recovery, making international support essential. However, the fact that power now rests with former field commanders and leaders of radical groups significantly reduces the likelihood of swift sanctions relief — or of large-scale aid.

Keeping sanctions in place for too long, Simon argues, “will be like pulling the rug out from under Syria just as it tries to stand.” Without easing the restrictions, investors will continue to avoid the war-torn country, and refugees will have little incentive to return.

Proceed with caution

Syria’s new government has announced plans to implement a free market economy and integrate the country into the global economic system. Its first step toward liberalization involved lifting the ban on using U.S. dollars. Assad had criminalized the use — and even the possession — of foreign currency, an offense punishable by imprisonment. The second step was scrapping the complex state regulation of imports, which had caused weeks-long delays. “Everyone who registers at the chambers will be able to import the goods they want into the market, within a specific system,” Bassel Hamwi, head of the Damascus Chamber of Commerce, told Reuters on Dec. 10.

Stability and openness are crucial to attracting investment and encouraging the return of millions of Syrian refugees, many of whom belong to the middle class. “Syria has a huge, educated, relatively wealthy diaspora which will want to rebuild the country. They could be growing double digits for years,” a senior Syrian official told Reuters on condition of anonymity.

However, the political dimension may complicate matters. Refugees, exiled Syrian businesspeople, and foreign governments remain wary of the new administration, now led by the Islamist group Hayat Tahrir al-Sham (HTS), whose origins trace back to Al-Qaeda. Many are waiting to see how HTS leader Abu Muhammad al-Julani (real name Ahmed al-Sharaa) will govern.

Doubts over HTS's commitment to property rights are already surfacing. On Dec. 8, during HTS’s offensive, al-Julani personally evicted the residents of his childhood apartment in Damascus. Accompanied by armed guards, he reportedly told the current occupants: “Would you mind vacating this apartment? You see, my parents have fond memories of this place and would like to move back.” The tenants — mechanical engineer Ahmed Suleiman and his wife — were given a few days to collect their belongings and leave the premises.

The U.S. intelligence services stopped pursuing al-Julani in 2018, former U.S. Special Representative for Syria James Jeffrey told PBS News, as HTS had become the “least bad option” among Syria’s armed factions.

Syria may find support from neighbors like Turkey and Jordan. Financial markets, often early indicators of future developments, responded positively to Assad’s fall. Turkish steel, cement, and construction stocks surged the next day, as investors anticipated Erdogan securing contracts to rebuild Syria’s major cities.

Turkey, in particular, stands to benefit by facilitating the return of 3 million Syrian refugees to their homeland. Meanwhile, Jordan — once a key trade partner for Syria — could reclaim its role as a transit hub between North Africa and the Persian Gulf, supplying Syria with fuel and other critical resources.

Western officials, however, remain cautious. “I've tasked a European top diplomat in Syria to go to Damascus to make the contacts with the new government and people there,” EU foreign policy chief Kaja Kallas announced on Dec. 16. “First we have to discuss on what level we are engaging with the Syrian new leadership,” she noted. “For us it is not only the words, but we want to see the deeds going in the right direction.”

The prospects for aid are further weakened by the unstable political situation of Syria's key supporter in the EU, French President Emmanuel Macron, who is grappling with a government crisis at home. Meanwhile, Donald Trump has shown no inclination to support Syria's new leaders, who are still designated as terrorists by the U.S.