The Syrian interim government has adopted neoliberal policies to rebuild the country after the war. The developments raise the question: Will Syria’s potential to become a competitive market player be realized through a combination of strategic effort and determination, or will the neoliberal efforts exacerbate existing poverty and inequalities, potentially leading to further economic collapse?
Trade Minister Ömer Bolat engaged in high-level discussions in Damascus recently. The Turkish government is endeavouring to assist the new Syrian government, following the support they have requested. During the meetings, Bolat expressed their expectations for Türkiye’s guidance and support.
Türkiye’s approach and capacity for this support are evident. Ankara continues to pursue development-oriented cooperation on a global scale. In contrast, it is widely acknowledged that the situation in Syria is highly sensitive and susceptible to external influence. Therefore, it is an important step that Syrian authorities have expressed their expectations for Türkiye’s guidance and support. The developments since Dec. 8, 2024, and the Syrian interim government’s discourses and developments regarding economic policies are particularly significant in this respect.
Integration into global system
It is clear that immediately after Hayat Tahrir al-Sham (HTS) took power in Damascus under Ahmed al-Sharaa’s leadership, there were signs of a transition to a free market economy in Syria. In the context of free markets, economic activities are typically characterized by conditions of full competition, and the price mechanism is generally considered effective in addressing economic challenges. In this market, it has been suggested that a large public sector and state intervention are both undesirable. It may be interesting to consider the elimination of subsidies for bread (which resulted in a price increase of more than 10 times) and layoffs in the public sector from this perspective.
Syria must urgently address its chronic budget deficits, foreign debt and high inflation. These issues frequently emerge in contexts where state intervention in the economy is excessive. Consequently, governments are increasingly turning to neoliberal policies such as austerity measures, privatization and market liberalization as potential solutions. The cause-and-effect relationship is different in Syria, so the solution method must differ.
Syrian Foreign Minister Asaad Hassan al-Shaibani, who is endeavouring to cultivate trust and legitimacy in the eyes of the Western countries that imposed sanctions on Syria, was present at the World Economic Forum in Davos. This forum is a key platform for the promotion of neoliberal policies. Just ahead of the Davos summit, al-Shaibani shared with the Financial Times that the new administration will privatize state-owned ports and factories, including oil, cotton and furniture production. It will also invite foreign investment and increase international trade. He confirmed that the government will “explore public-private partnerships to encourage investment in airports, railways and roads.”
Timing not right
The neoliberalist policies targeted by the Syrian interim government and their success rate are significant aspects of the current process.
While the domestic economic situation in Syria is sound, it is important to acknowledge that achieving its neoliberal goals may present significant challenges in the current global context, which is characterized by a resurgence of mercantilist protectionism, as evidenced by the U.S.’ trade policies.
Secondly, after 14 years of destruction, it is important to consider whether the potential of the Syrian economy is sufficient for this liberalization objective. Even if there are no obstacles to integrating into global markets, there is also the issue of the impact of forcing the Syrian economy to compete with its current (insufficient) potential without addressing its problems, as this may further compound the existing challenges.
However, the global order has its own imperfections. To compete at the global level, it would be advisable for Damascus to take protective measures.
Cost of war, reconstruction
The report “Syria at the Crossroads: Towards a Stable Transition,” a joint publication of the Economic and Social Commission for West Asia (ESCWA) and the U.N. Conference on Trade and Development (UNCTAD), provides a comprehensive overview of the war’s economic impact over the past 14 years.
The country’s gross domestic product (GDP) fell by a third between 2011 and 2024. Half of the physical infrastructure serving production is now completely out of service. Prices have increased (200 times) exponentially. It is an indisputable fact that 90% of the population is in poverty and 66% in extreme poverty. Food insecurity is at critical levels. Another hard-to-recover loss in this process is qualified human capital. Likewise, Syria’s reconstruction will cost between $250 billion and $400 billion.
The report also highlights the importance of the humanitarian situation in Syria. It is unequivocal in its assessment of Syria: two-thirds of the population need assistance, governance problems are deep-rooted, the environment is degraded, and widespread poverty is rife. This is reflected in Syria’s ranking of 158th out of 160 countries in the 2024 ESCWA Global Development Challenges Index.
Failures of Bashar Assad
Attempting to liberalize without the necessary infrastructure is inevitably destructive. When Bashar Assad came to power in 2000, he introduced neoliberal policies. Between 2001 and 2010, the Assad regime used macroeconomic indicators such as an average annual GDP growth rate of 4.5% and a relatively low unemployment rate of 8%. However, the period was marked by a decline in the labor force participation rate from 52% to 43% and stagnation in real wages.
The consequences of these policies were clear: Wealth was concentrated in the hands of a select few, while the welfare of the broad masses declined drastically. Social inequality has deepened. This situation was undoubtedly an important factor in the impact of the Arab Spring on Syria.
To-do list
The market must be opened to foreign competition in a way that protects domestic interests; otherwise, Syria’s economic collapse will be accelerated. For this reason, it is vital to eliminate the fragility of the Syrian economy and reduce social inequalities. In addition to physical infrastructure investments, efforts to increase productivity and institutionalize best practices should be given priority. These measures will provide confidence to international investors. One of the most important steps to be taken to increase human capital is to prioritize social equality and justice.
To achieve this, the vision and plan for sustainable development should be designed and implemented in a way that encompasses the entire society. Therefore, the Syrian authorities’ expectation for Türkiye’s guidance and support is significant. From this, it can be deduced that the economic policies in Syria are undergoing a measured and positive shift.