What Lifting Sanctions Could Mean for Syria’s Recovery
By the Basilinna Team
December 17, 2024
Your Talking Points
Lifting sanctions on Syria could signal a turning point for the country’s economic and social reconstruction after years of conflict.
Syria’s prewar economy was diverse, heavily reliant on merchant trade, but years of sanctions and war reduced it to subsistence levels, with a shadow economy dominated by illicit trade.
Statements from Hayat Tahrir al-Sham (HTS) leadership signal a commitment to forming an inclusive government, avoiding conflict with neighboring countries, and transitioning to a free-market economy.
While sanctions relief remains uncertain, direct U.S. contact with HTS and discussions by the UN and EU suggest a shift in international approaches toward Syria’s post-Assad governance.
Sanctions reform could empower Syria’s new leadership to stabilize its economy, rebuild industries, and re-enter global markets, though trust and governance challenges remain significant obstacles.
The State of The Economy
Syria’s prewar economy was a regional hub for trade, energy, and agriculture which accounted for 25% of the GDP which exceeded $60 billion in 2010. Historically, the country’s strategic location at the crossroads of Europe, Asia, and the Arab world made it a center for merchant trade, particularly through its bustling markets in Aleppo and Damascus. Textiles, food products, and pharmaceuticals were key exports, while trade routes facilitated the flow of goods across the Middle East.
However, over a decade of war and sanctions targeting the Assad regime has contracted the economy by more than 75%, leaving over 80% of the population in poverty. The traditional trade economy has been replaced in recent years by the illicit Captagon trade, with Syria becoming a global hotspot for the production and smuggling of the amphetamine-like drug. This shadow economy exacerbated corruption and further isolated Syria from legitimate international markets.
The Possibility of Lifting Sanctions
The fall of Bashar al-Assad has opened the door for discussions on lifting sanctions, but the current leadership under HTS faces significant obstacles. Despite HTS’s designation as a terrorist organization, U.S. Secretary of State Antony Blinken confirmed direct communication with the group, emphasizing the importance of governing responsibly during Syria’s transition. The UN Special Envoy for Syria, Geir Pedersen, called for a quick end to sanctions to enable rebuilding, stating, “We can hopefully see a rallying around building Syria.”
The EU and UN have also signaled a willingness to reconsider sanctions but stress the need for measurable progress on minority rights, women’s rights, and inclusive governance. The UK also announced £50 million in humanitarian aid, reflecting cautious international engagement.
Meanwhile, HTS has attempted to rebrand itself as a governance entity, with leader Ahmad al-Sharaa (formerly Abu Mohammed al-Golani) making public commitments to pluralism and reform. Sharaa has also vowed to avoid conflict with neighboring countries and transform Syria into a free-market economy to attract investment and rebuild industries.
Digging Deeper
What Sanctions Relief Could Mean
Removing sanctions could unlock international funding for reconstruction and restore critical infrastructure. Investments in energy, agriculture, and digital transformation could stabilize the economy while addressing power shortages and modernizing sectors like healthcare and education. Syria’s merchant trade routes, long dormant, could be revitalized, reconnecting the country to regional and global markets.
HTS leaders have pledged to embrace a free-market economy, a significant shift from the pseudo-socialist system entrenched under Assad. This transition could open the door for Syrian industries—such as textiles, construction, and food production—to attract foreign investment and re-establish themselves as regional players. By fostering trade relations and easing restrictions on entrepreneurship, Syria could begin rebuilding its shattered industrial base and create jobs for millions.
HTS Leadership & International Hesitation
HTS has sought to present itself as a legitimate governing entity, with statements from Ahmad al-Sharaa emphasizing inclusivity and economic reform. The group has pledged to form a government that represents all Syrians, including minorities and women, and to distance itself from its extremist past. Sharaa has also reiterated that Syria under HTS leadership would not seek conflict with neighboring countries, focusing instead on rebuilding and stabilizing internally.
While the U.S. and EU remain cautious, the fact that HTS has secured U.S. communication and international dialogue is a step forward. This recognition suggests a pragmatic shift in international strategy, prioritizing stability and reconstruction over ideological rigidity. Yet, leaders like EU foreign policy chief Kaja Kallas emphasize that actions, not words, will determine future sanctions relief.
Challenges
Lifting sanctions alone will not solve Syria’s issues. Persistent fragmentation, governance inexperience, and public distrust of HTS remain critical challenges. Additionally, geopolitical tensions involving Türkiye, Israel, and the U.S. risk further destabilization. Nonetheless, a re-engaged international community can serve as a stabilizing force, provided Syria demonstrates tangible progress in governance and human rights.
Trust-building measures, such as HTS fulfilling its promises of pluralism and transparency, will be critical in attracting foreign aid and investment. Without these, sanctions relief could falter, leaving Syria’s economy in limbo.
The Road Ahead
Whether sanctions are lifted or not, the international community’s willingness to engage with Syria’s new leadership marks a turning point and thus cautious optimism for recovery. HTS’s focus on transitioning to a free-market economy offers unprecedented opportunities for growth. Reconnecting Syrian industries to global markets and attracting international investment could revive sectors like agriculture, manufacturing, and energy.
However, the group must balance economic reform with inclusive governance to build trust domestically and internationally. Ultimately, while challenges remain immense, the potential to rebuild a stable, inclusive Syria is within reach. The months ahead will determine whether this opportunity is seized or squandered.
Published by Basilinna Institute. All rights reserved.
