Sanctions no more? Syria’s war-torn economy braces for life after Assad

Nevin Al Sukari - Sana'a - People walk near the Syrian flag, as US President Donald Trump announced that he would order the lifting of sanctions on Syria, in Aleppo, Syria May 14, 2025. — Reuters pic

LONDON, May 16 — US President Donald Trump has said he will lift long-standing sanctions on Syria that severed the country from the global financial system under toppled former President Bashar al-Assad.

The European Union and Britain have already lifted some of their sanctions, but if Washington now goes ahead with a wholesale removal it will pave the way for others to follow.

Below is a round-up of the current state of Syria’s economy and how 14 years of civil war, ending with Assad’s fall in December, reshaped trade and government finances.

What is the state of Syria’s economy?

The World Bank estimates Syria’s economy is worth around US$21 billion (RM90 billion) — that is roughly on par with Albania and Armenia, which both have more than 20 million fewer inhabitants than Syria.

Official Syrian data shows the economy more than halved in size between 2010 and 2022. The World Bank believes even that is likely to be an underestimate given that nighttime light emissions — a proxy for overall economic activity — indicated an even sharper 83 per cent contraction between 2010 and 2024.

Syria was reclassified as a low-income country in 2018, with more than 90 per cent of its near 25 million population living below the poverty line, according to UN agencies.

What has happened to Syria’s currency?

Syria’s economic turmoil worsened in 2019 when neighbouring Lebanon, with which it has extensive economic and financial ties, also descended into crisis. Damascus then introduced a plethora of exchange rates for different transactions to safeguard scarce hard currency.

Following the new government’s takeover in December, the central bank pledged to adopt an official unified exchange rate for the Syrian pound.

It also appointed Maysaa Sabrine as central bank governor — making her the first woman to head the bank in its more than 70-year history.

On Wednesday, the exchange rate was at 11,065 pounds to the dollar. That compares to black market rates of around 22,000 around the time of Assad’s fall last year and just 47 to the dollar in March 2011 when civil war engulfed the country. SYP=

How much debt does Syria owe?

The government has stated its owes between US$20 billion and US$23 billion mostly in bilateral loans, although it could be considerably higher given it may face claims from Iran and Russia for between US$30 billion to US$50 billion.

Leading sovereign debt lawyers say those Assad-era obligations could be struck off as “odious” war debt — debt incurred without the consent of the Syrian people or for their benefit given much it went to funding arms for the Assad government.

The composition of Syrian obligors — such as the government, central bank, state-owned enterprises, or commercial organisations — also needs to be pinned down, a recent Peterson Institute report adds, as different types of debt may need to be treated differently when restructured.

What are the central bank’s reserves?

The central bank only has foreign exchange reserves of around US$200 million in cash, sources previously told Reuters, a huge drop from the US$18.5 billion that the International Monetary Fund estimated Syria had before its civil war erupted.

It also holds nearly 26 tonnes of gold too, worth over US$2.6 billion at current market prices.

The new government has said it expects to retrieve up to US$400 million of its frozen assets to help fund reforms, including recent sharp increases in some public sector salaries.

Western governments froze the assets during Assad’s rule, but the exact value and location of them now, and how quickly they could get repatriated, remains unclear.

Switzerland has said some 99 million Swiss francs (US$118 million) worth are currently in banks there. The Syria Report newsletter also estimates that 163 million pounds worth (US$217 million) are in the UK.

How have war and sanctions affected trade and the economy?

Dwindling oil and tourism revenues decimated Syria’s exports from US$18.4 billion in 2010 to US$1.8 billion in 2021, according to the World Bank.

The pressured government finances prompted it to pay for some key imports with illicit cash from sales of an addictive amphetamine-like stimulant commonly known as captagon, or from fuel smuggling, experts say.

Captagon production became the most valuable economic sector, with World Bank last year putting the total market value of the drug originating from Syria as high as US$5.6 billion.

What are the energy challenges?

In 2010, Syria exported 380,000 barrels per day (bpd) of oil. This source of revenue all but evaporated after the civil war began in 2011. Various factions — including Islamic State and Kurdish fighters — seized oilfields. While the latter signed deals with US companies, sanctions made other legitimate exports difficult.

The loss left Syria reliant on energy imports — mostly from allies Russia and Iran. Rachel Ziemba, senior adviser on sanctions with risk consultancy Horizon Engage, said the roughly 1-3 million barrels of fuel per month Syria had been getting from Iran stopped in late December as Tehran pulled back.

How has agriculture suffered?

Conflict and drought reduced the number of farmers, damaged irrigation and cut access to seeds and fertilizers.

Agricultural production sank to record lows in 2021 and 2022, with wheat alone falling to a quarter of the around four million tonnes per year pre-war.

Syria imported around one million tonnes of cereal annually from Russia. Flows paused when the government changed but resumed last month. Ukraine has also signalled willingness to supply wheat, but it is unclear how Syria could pay. — Reuters