Syria stands at a critical juncture in its economic history. The transition from the Assad regime’s economic model—characterized by state-controlled capitalism and cronyism—to a so-called free-market economy presents significant challenges. The new government, led by President Ahmad al-Sharaa, is promoting economic liberalization as a panacea for Syria’s financial woes. However, this shift risks deepening the country’s existing economic distortions rather than addressing its structural weaknesses. The following analysis is based on recent economic reports published in Syrian media. It explores the complexities of Syria’s economic transformation, the pitfalls of privatization, the currency crisis, and the urgent need for genuine reforms.
A Misdiagnosed Economic Past: The Myth of Socialism
The new Syrian leadership insists on categorizing the Assad-era economy as socialist, blaming it for the country’s economic failures. In reality, Syria never functioned as a purely socialist state. Under Hafez al-Assad and later Bashar al-Assad, Syria operated under a hybrid model that blended elements of state capitalism with cronyism.
- During Hafez al-Assad’s rule, state control over key sectors was balanced by preferential treatment for business elites loyal to the regime. This led to the emergence of a “crony capitalist” system in which economic power was concentrated among regime-affiliated businessmen.
- Bashar al-Assad’s introduction of a “social market economy” in 2005 was little more than a façade for deeper corruption. It allowed regime-linked capitalists to dominate Syria’s industries while dismantling state subsidies and protections for ordinary citizens.
- By the time the Syrian revolution erupted in 2011, economic disparities had reached extreme levels, with wealth concentrated in the hands of a few, while poverty and unemployment soared.
The current government’s narrative of “breaking from socialism” ignores this historical reality. The problem was not socialism per se but the systemic exploitation of Syria’s economy by an entrenched ruling elite. Without addressing this legacy, any shift to a market-based system is unlikely to yield equitable economic growth.
Privatization: A Solution or a New Crisis?
One of the central pillars of the new economic vision is privatization. Government officials argue that privatization will attract foreign investment, stimulate competition, and generate economic growth. However, in fragile and corrupt economies like Syria’s, privatization often serves to transfer public assets to politically connected individuals rather than fostering genuine market competition.
Risks of Premature Privatization:
- Unclear Boundaries: The government has yet to clarify which sectors will be privatized. Will strategic sectors like energy, telecommunications, and infrastructure be handed over to private investors? If so, Syria risks losing control over essential national assets.
- Job Losses & Inequality: Historically, privatization has led to mass layoffs and growing economic inequality. Given Syria’s already dire unemployment situation, further job losses could exacerbate social tensions.
- Dependence on External Funding: If privatization fails to generate sufficient state revenue, Syria may be forced to rely on foreign loans, deepening its financial dependency and vulnerability to external political pressures.
The path to privatization must be carefully structured, ensuring that industries remain competitive, workers are protected, and the state retains control over key national resources. Otherwise, Syria could transition from a state-run oligarchy to a privately owned one.
A Currency in Freefall: The Syrian Pound Crisis
The Syrian pound is in freefall, with the exchange rate crossing 11,000 SYP per USD in February 2025. This dramatic depreciation is driven by a combination of factors:
- Severe liquidity shortages, worsened by government mismanagement.
- Uncontrolled money printing, with recent reports revealing that new batches of Syrian pounds are being printed in Russia. This monetary expansion is fueling inflation rather than addressing the underlying economic stagnation.
- A lack of investor confidence, forcing businesses and individuals to hoard foreign currency, particularly US dollars, further devaluing the Syrian pound.
Liquidity Without Growth: A Dangerous Trap
The injection of newly printed money might provide short-term relief, but without productive economic activity, this will likely lead to further devaluation of the currency. When citizens lose faith in their national currency, they turn to foreign currencies for transactions, accelerating dollarization and further weakening the Syrian economy.
For stability, Syria must implement policies that restore confidence in the Syrian pound, including:
- Transparent monetary policies that regulate currency supply.
- Encouraging foreign investment in productive sectors, rather than speculative markets.
- Building electronic payment systems to reduce dependence on cash transactions, which currently encourage hoarding and speculation.
Without these measures, the currency crisis will continue to deepen, making economic recovery increasingly difficult.
The Real Economy: A Nation Paralyzed by Stagnation
While the government discusses economic reform, the reality on the ground tells a different story. Syria’s real economy—its agriculture, industry, and trade—is paralyzed.
Suweida: A Case Study in Economic Stagnation
Recent reports from Suweida highlight the severity of the crisis. Despite falling prices for essential goods like fruits and vegetables, demand remains weak because purchasing power has collapsed. Families simply cannot afford to buy, and businesses struggle to survive in an environment where cash flow is nearly nonexistent.
This crisis extends beyond Suweida:
- Factories operate at reduced capacity, if at all, due to supply chain disruptions and lack of capital.
- Delayed salary payments in state institutions exacerbate financial insecurity.
- Industrial output is declining, while imports continue to dominate the market.
These symptoms are not signs of an economy in transition but of an economy in decline. If Syria hopes to reverse this trend, it must prioritize domestic production, particularly in agriculture and industry, rather than focusing solely on market liberalization.
The Road to Recovery: What Must Change?
A successful economic recovery requires more than just rhetoric about free markets. The new government must take concrete steps to address the root causes of Syria’s economic dysfunction:
- Tackle Corruption and Cronyism
- Economic liberalization will fail if wealth and power remain concentrated in the hands of regime-affiliated businessmen.
- Transparent policies and anti-corruption measures must be implemented before privatization.
- Stabilize the Syrian Pound
- Control money printing to prevent further inflation.
- Regulate financial markets to reduce speculation.
- Promote electronic payment systems to increase liquidity circulation.
- Invest in Production, Not Just Services
- Strengthen agriculture and industry to achieve food security and employment.
- Provide incentives for local businesses to compete against imports.
- Avoid over-reliance on external loans that deepen Syria’s financial dependency.
- Strengthen Economic Institutions
- The interim government should avoid making long-term economic decisions without electoral legitimacy.
- Economic reforms must be embedded in a broader political transition to ensure sustainability.
Conclusion: A False Dawn or a Genuine Transition?
Syria’s current economic shift is not a transformation but a rebranding of old policies under new leadership. Without addressing the fundamental issues of corruption, production decline, and financial instability, any attempt at economic liberalization will only deepen existing inequalities and create new crises.
The path forward is not about choosing between socialism and capitalism but about ensuring economic justice, transparency, and long-term sustainability. If Syria fails to take these steps, the so-called economic transition will amount to little more than a redistribution of wealth from one elite to another—leaving ordinary Syrians behind once again.
This article was translated and edited by The Syrian Observer. The Syrian Observer has not verified the content of this story. Responsibility for the information and views set out in this article lies entirely with the author.
