After years of economic isolation and Western sanctions, both the United States and the European Union have simultaneously announced the lifting of economic sanctions on Syria. The move, described as “historic,” responds to Syria’s ongoing political transformation following the fall of the former regime.
While many Syrians have welcomed the decision as a long-awaited opening for economic recovery and a real beginning for reconstruction after more than a decade of war and devastation, political and economic circles have raised critical questions: Can this step alone revive Syria’s economy? Preliminary indicators suggest that lifting sanctions—important as it is—will not be sufficient unless it is accompanied by genuine reform across political, security, and socio-economic domains. Endemic corruption, weakened state institutions, chronic insecurity, and compounded post-war crises continue to weigh heavily on the country’s future.
This report explores the key challenges facing Syria’s reconstruction and examines why sanctions relief, though essential, cannot deliver recovery in isolation.
Political Inclusion as a Prerequisite for Revival
The removal of Western sanctions is undeniably a positive step toward easing daily hardships and opening the door to foreign investment and international aid. However, as seen in post-conflict experiences elsewhere, economic recovery alone cannot succeed in the absence of inclusive political reform.
Observers note that sanctions, though burdensome, were never the sole obstacle to Syria’s development. Rather, decades of political exclusion, power centralization, and the marginalization of broad segments of society are what crippled the country and led it to collapse.
Political analyst Nader Al-Khalil told Syria TV that the lifting of sanctions is a critical but insufficient measure: “It’s a necessary component within a broader framework that must include institutional reform, rule of law, and political inclusion.”
This emphasis on reform echoes conditions set by the United States and EU for lifting sanctions. Both demanded concrete steps from Damascus—chiefly, inclusive political participation and a transparent transitional process involving all Syrian communities.
Following President Donald Trump’s announcement in Riyadh lifting U.S. sanctions, the EU followed suit on 28 May. EU foreign policy chief Kaja Kallas described the decision as “the right move at a historic moment to support Syria’s recovery and a political transition that meets the aspirations of all Syrians.”
Security as the Foundation for Investment
Perhaps the greatest threat to Syria’s economic revival is not policy, but insecurity. As economists note, a favourable investment climate depends not only on regulatory ease or tax incentives, but on trust—on the belief that capital and projects are safe from extortion, seizure, or disruption by armed groups.
A 2024 World Bank report on post-conflict investment climates concluded that “security is the top determinant of investor confidence in post-war countries—more critical than tax policy or administrative reform.”
UN Special Envoy Geir Pedersen echoed this in a Security Council briefing, warning that “no real economic recovery is possible without addressing security challenges, especially the proliferation of weapons and fragmented control.”
Human rights advocate Zaid Al-Azm said that lifting sanctions puts Syria on the right path—but the government must now foster a secure environment that genuinely welcomes investors. “No investment can succeed amidst lawlessness and the visible spread of arms,” he told Syria TV. “Stability is not achieved by rhetoric, but through action—by unifying security decisions and building professional police and intelligence institutions that reassure investors.”
On 24 May, Syria’s Ministry of Interior announced a comprehensive reorganisation aimed at strengthening internal and border security, including the creation of new departments.
Interior Ministry spokesperson Nour Al-Din Al-Baba also revealed plans to issue new legislation, in coordination with the Ministry of Defence, to tackle the widespread presence of unregulated weapons. The ministry, he added, is already carrying out daily operations across provinces to apprehend wanted individuals who still pose threats to public safety.
Fighting Corruption and Rebuilding Institutions
Years of war and sweeping sanctions have severely eroded Syria’s public institutions and fuelled rampant corruption. According to Transparency International’s 2024 Corruption Perceptions Index, Syria ranked among the top three most corrupt countries in the world.
Past experiences from post-war reconstruction globally show that transparency and inclusive governance are the most effective antidotes to corruption and economic stagnation.
A recent Foreign Affairs report on the lifting of U.S. sanctions in Syria warned against repeating the mistakes of Lebanon and Iraq, where reconstruction became a windfall for elites and war profiteers. The broader public, meanwhile, was left mired in broken infrastructure and economic crises. According to the report, published 27 May, corruption, foreign interference, and the dominance of non-state actors led to weak institutions and failed transitions.
Economist Dr. Firas Shaabo agrees that the sanctions relief is a vital opportunity—but insists that without deep institutional reform, real recovery will remain elusive. Syria, he says, “needs updated regulations, sound economic restructuring, and restored trust in the state—all anchored in transparency and free from nepotism.”
Speaking to Syria TV, Shaabo recommended merging overlapping institutions, privatising unproductive sectors, and empowering the private sector as essential steps, especially given Syria’s depleted resources and dilapidated services. “The state can’t rebuild everything on its own,” he said. “The scale of destruction in health, education, and public infrastructure is simply too vast.”
Shaabo concluded: “If we manage to resolve the economic and security challenges, we will have covered 70% of the path to recovery. Economic revival can unlock political and social stability.”
Signals of a New Economic Vision
Recent government actions suggest a shift toward genuine reform. At the Arab Media Summit in Dubai on 28 May, Economy and Industry Minister Dr. Mohammad Al-Shaar announced unprecedented investment opportunities for local and international stakeholders. He revealed plans for four new industrial cities in resource-rich areas and confirmed that a new investment law—free from the restrictions of the previous regime—will be issued within weeks.
Finance Minister Mohammad Yusr Barniya also outlined a broad reform agenda in a televised interview, including overhauling public financial management, enhancing the central bank’s independence, reforming tax and customs systems, and establishing a financial integrity framework to combat money laundering and terrorism financing. He further emphasised the expansion of digital banking and financial services as part of Syria’s economic modernisation.
If Syria’s leadership can seize this moment—not only by inviting investors, but by delivering transparency, security, and inclusive governance—then the lifting of sanctions may indeed prove to be the turning point the country has long awaited. Otherwise, the gates to recovery, once cracked open, may close 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.
