Syria’s New Cabinet: A Free-Market Vision Amid Uncertainty
By the Basilinna Team
December 13, 2024
Your Talking Points
Syria’s new transitional government signals a significant economic shift, pledging a free-market model to revive the war-torn nation’s shattered economy.
The Hayat Tahrir al-Sham (HTS)-led government faces skepticism due to its extremist roots but aims to secure domestic and international investment.
Rebuilding Syria offers vast opportunities in infrastructure, trade, and technology but requires navigating sanctions and geopolitical risks.
What Happened
Syria’s interim government, formed after the collapse of the Assad regime, has announced plans to transition to a free-market economy. Led by Prime Minister Mohammed al-Bashir and backed by Hayat Tahrir al-Sham (HTS), the administration is dismantling decades of state-controlled trade practices.
Al-Bashir, an electrical engineer by training, brings a technocratic approach to his role as interim prime minister. After leaving the Syrian Gas Company in 2021 to join the opposition, al-Bashir has prioritized streamlining customs systems, legalizing foreign currency trade, and encouraging investment to stabilize the economy, which has been battered by years of conflict.
Riad Abd El Raouf, an economist and the acting finance minister under the interim government, outlined plans to overhaul Syria’s corrupt and inefficient pseudo-socialist system. Abd El Raouf, formerly a professor and long-serving official in the Ministry of Finance, has stated that the new leadership is committed to re-evaluating monetary and economic policies, revisiting agreements with foreign powers, and addressing Syria’s crippling public debt. He emphasized the need for caution in renegotiating deals with Russia, which had propped up the Assad regime through military aid and credit lines.
HTS, formerly affiliated with al-Qaeda, has rebranded itself as a governance entity, claiming a commitment to pluralism and economic reform. The group has instructed all public employees to return to work, regardless of prior loyalties, to prevent a collapse of government services. It has also pledged to evaluate roles based on efficacy as it seeks to transition Syria into a functioning state.
As Syria navigates this transition, the road to recovery will depend on its leaders’ ability to balance reform, governance, and international engagement to rebuild trust both domestically and abroad.
Digging Deeper
1. Implications for the Economy
Syria remains in dire economic straits, with more than 70% of its population living below the poverty line amid soaring unemployment and inflation. The Syrian pound, which initially devalued to S£30,000 to the dollar following Assad’s ousting, has stabilized at S£15,000.
The Nasib border crossing with Jordan, one of Syria’s key trading points, has emerged as a critical test of the new government’s ability to manage trade and reduce food shortages. Abd El Raouf noted that reopening trade routes and addressing corruption—long entrenched in Syria’s ministries—are vital for recovery. He revealed that public sector salaries average around $25 per month and that tax revenue, amounting to 70% of public spending, has been plagued by bribery and favoritism, distorting the economy to benefit a select few close to the former regime.
Despite these small gains, Abd El Raouf acknowledged the scale of the challenges ahead, stating that international sanctions must be lifted to facilitate development. However, HTS must first be delisted from terrorist organizations, a step that, according to statements by world leaders including the G7, hinges on its ability to form an effective non-sectarian government built on inclusive policies.
Syria’s transition to a free-market economy offers unprecedented opportunities for growth, but businesses must tread carefully. Rebuilding Syria offers opportunities in renewable energy and digital transformation, both critical for rebuilding a sustainable and modernized economy. Investments in renewable energy could address the nation’s power shortages while aligning with global sustainability goals, making it an attractive sector for international stakeholders.
Similarly, the integration of digital infrastructure promises to revolutionize sectors such as healthcare, education, and governance, laying the foundation for long-term growth and efficiency. The Syrian diaspora, comprising skilled professionals, is a potential catalyst for recovery, bringing expertise and capital to key areas like infrastructure and trade.
However, significant challenges remain. Navigating the complex legal and financial landscape, should sanctions on HTS-led governance remain, requires sophisticated expertise.
Regulatory uncertainty and fragmented governance structures further increase risks, particularly for long-term projects, potentially slowing economic recovery. Persistent instability, including clashes among rebel factions and the presence of extremist groups, heightens the unpredictability, further threatening the fragile economic recovery process. Strategic reforms to establish a transparent, predictable framework will be essential to attract meaningful international engagement and support Syria’s path to stability.
2. Geopolitical Shifts
The shift to a free-market model represents not only a domestic economic overhaul but also a broader effort to reshape Syria’s global relationships. Western nations, while maintaining a cautious stance due to the extremist roots of Hayat Tahrir al-Sham (HTS), have signaled that sanctions relief could be on the table if the new government demonstrates a genuine commitment to non-sectarian governance, respect for minority rights, and adherence to international norms. Such steps would be critical in fostering trust and opening doors to international aid and investment, which are indispensable for Syria’s long-term recovery.
Regional players, including Türkiye and the Gulf states, see Syria’s reconstruction as a strategic opportunity to assert influence in shaping the post-Assad era. Türkiye has a vested interest in stabilizing its southern neighbor to manage refugee flows, curtail Kurdish armed movements, and enhance trade routes.
Similarly, Gulf nations, with their vast financial resources and growing focus on regional partnerships, are likely to invest in key sectors such as infrastructure and energy to secure political and economic footholds in Syria. This interplay between Western skepticism and regional ambitions underscores the delicate balance Syria must navigate as it seeks to rebuild while fostering diverse partnerships.
Regional Risks
Fragmentation Risks: Assad’s fall may leave power vacuums, enabling extremist groups or militias to exploit the instability and further fragment Syria.
Geopolitical Tensions: Competing interests from powers like Iran, Türkiye, and the U.S. risk turning Syria into a proxy battleground, destabilizing the region.
Governance Challenges: HTS’s extremist past raises doubts about its ability to form an inclusive government, risking internal resistance and international rejection.
Regional Spillover: Syrian instability may exacerbate refugee crises and border tensions in neighboring countries, straining regional stability.
Humanitarian Crises: With over 12 million displaced Syrians and widespread infrastructure destruction, the transitional government faces the monumental task of addressing immediate humanitarian needs.
Published by Basilinna Institute. All rights reserved.
