For Syria’s economy, the way forward starts with sanctions relief

LONDON — Although the collapse of President Bashar Assad’s government in Syria was shockingly quick, rebuilding the devastated economy he left behind will be painfully slow.

After nearly 14 years of brutal civil war and political repression, most of Syria’s oil and gas wells, roads, electricity grids, farmland, and infrastructure are in ruins. Ninety percent of the population is living in poverty. The value of the Syrian pound has plummeted, and the central bank’s reserves of foreign currency — needed to buy essentials like food, fuel, and spare parts — are nearly depleted.

Before the war, oil accounted for two-thirds of Syria’s exports and agriculture made up a quarter of economic activity.

“The whole economic system in Syria is not functioning,” said Samir Aita, a Syrian economist and the president of the Circle of Arab Economists.

Ahmad al-Sharaa, the leader of the rebel coalition that has taken power in Syria, has a daunting task ahead to unify the rebel factions, reconstitute the government, reestablish the rule of law, provide security, and manage essential services like the distribution of water and other scarce resources.

Even so, there is widespread agreement that the single most important step in rebuilding Syria’s economy can be taken only by the United States: lift the punishing layers of sanctions that have effectively cut off Syria from international commerce and investment.

U.S. restrictions imposed in 2019 on financial flows were intended to punish the Assad regime. Now, they are cutting Syria off from the money it needs for reconstruction and economic development. Families and relief organizations cannot send assistance; refugees cannot transfer money from Western bank accounts to invest in a home or business; the International Monetary Fund and the World Bank cannot offer aid. Lifting sanctions, even with temporary waivers, “is a priority,” Aita said.

Ending all financial restrictions would also mean removing the terrorist designation placed on al-Sharaa and his organization, Hayat Tahrir al-Sham, by the US and the United Nations. Washington and its allies are sure to offer that prospect as a bargaining chip.

But ultimately, al-Sharaa, who has a $10 million bounty on his head for his previous links to al-Qaida, cannot effectively function as a head of state if he is labeled a terrorist.

Geir Pedersen, the United Nations’ special envoy for Syria, has said rebel leaders issued “reassuring statements” about forming a government of “unity and inclusiveness.”

The United States has other economic cards to play. The center of oil production and the functioning wells that remain are in Syria’s northeast, a territory controlled by a Kurdish-led militia backed by the United States.

Oil previously provided around half of the country’s revenues, said Joshua Landis, co-director of the Center for Middle East Studies at the University of Oklahoma. Those fields, he said, belong to the government in Damascus and should be returned to its control.

Resurrecting oil and gas production will not be easy. Before the war, Syria produced 383,000 barrels a day. Now it produces less than 90,000, according to the World Bank. Facilities and pipelines, including those that deliver energy to Iraq, Jordan, and Egypt, have been destroyed or damaged. The country has been importing more oil than it exports.

David Goldwyn, a senior energy official in the Obama administration, said Syria’s government would need to establish that it owned and could sell those resources. Then it must be able to ensure security so that infrastructure can be repaired and operated.

The other challenge, he said, will be attracting foreign companies or operators with the resources and know-how to rebuild.

Security is essential not only for oil and gas production but also to draw back many of the 8 million refugees who fled the fighting. Attracting those with education, skills, and resources to return is crucial for Syria’s revival.

“Syrians with money are key,” Landis said, but many of them will not return if there is no electricity or rule of law.

Syria’s neighbors also have a keen interest in the return of refugees and rebuilding. Turkey, which shares a border with Syria and hosts more than 3 million refugees, is best placed and has the most influence.

Turkish President Recep Tayyip Erdogan, who supported the rebels and funded a group allied with al-Sharaa, is looking to extend his influence there. He also has close ties to Turkey’s construction industry, and he is likely to push for reconstruction contracts and provide rebuilding assistance, said Henri Barkey, an international relations professor at Lehigh University.

Stocks in Turkish construction, cement, and steel companies shot up after the Assad government fell.

At the moment, Syria’s economic future depends on the ability of the government in Damascus to consolidate control and establish its legitimacy — to the satisfaction of not only its diverse population but also the United States and allies that have the final word on sanctions.

This article originally appeared in The New York Times.