Syria’s New Economic Rules

Who Wins, Who Loses, and Why

In nearly every Syrian business gathering these days, the same scene repeats itself: one person speaks enthusiastically about opportunities, another warns of risks, and a third remains silent, thinking about an experience he—or someone he knows—has already gone through. All three are right. The problem is that the conversation tends to swing between optimism and pessimism, while the real question lies somewhere else entirely. The question is not whether opportunities exist in Syria. The answer is clearly yes. The real question is this: Why do smart people with capital and good intentions still lose money?

The Big Numbers—and What They Hide

In 2025, Syria signed investment memoranda of understanding (MOUs) with a reported total value exceeding $25 billion. That figure is striking—until it is placed in context. Total Syrian government investment spending between 2010 and 2024 amounted to approximately $16.6 billion. In other words, the value of investment announcements made in just a few months exceeds what the state invested over the previous fifteen years. Yet Karam Shaar, an independent Syrian platform tracking economic activity and investment flows, has documented that most of these agreements remain non-binding expressions of intent, and that only a single project among those monitored has actually begun implementation on the ground. For anyone familiar with the concept of an economy’s absorptive capacity, this gap between announcements and execution is hardly surprising. According to World Bank assessments, Syria’s economy has contracted by more than 50 percent since 2010. An economy with damaged infrastructure and a banking sector still largely disconnected from global financial systems cannot absorb tens of billions of dollars overnight. These structural bottlenecks restrict the flow of capital even when investors are serious and well-intentioned. The result is predictable: large headline numbers create inflated expectations among both foreign investors and local entrepreneurs.

Three Structural Barriers—By Their Real Names

1. The Market Rewards Insiders, Not Necessarily the Most Efficient

In mature economies, investors succeed primarily because they have a sound business idea and sufficient capital. In institutionally fragile environments, other assets matter just as much—if not more: _Networks of trusted relationships _The ability to resolve disputes outside formal courts _Exclusive access to information that is never made public Researchers often describe this dynamic as the insider-outsider problem. Established local actors do not succeed solely because they are more capable. They succeed because they possess intangible assets built over years of experience and relationships. A foreign investor may arrive with substantial financial capital, but in a weak institutional environment, capital alone offers limited protection. This dynamic is especially visible in real estate, where expatriates frequently pay what locals call the "diaspora premium"—overpaying because they benchmark valuations against the markets where they currently live rather than against actual local conditions. A 2025 Arab Reform Initiative report, Projects Without Details, further documented that many large investment contracts were signed with no transparency regarding partner selection or long-term ownership structures—meaning information itself has become a commodity that some possess and others lack entirely. Without a trusted, neutral reference point, independent verification becomes extremely difficult.

2. The Real Costs Never Appear in the Investment Pitch

Many investors prepare financial projections based on reasonable assumptions—only to discover on the ground that critical costs were either underestimated or omitted entirely. Electricity is a clear example. Syria’s power generation capacity remains far below national demand, forcing many businesses to rely on diesel generators. This alone can significantly increase operating expenses in ways that are nearly impossible to estimate accurately from outside the country. The banking sector presents a similar challenge. Many local banks remain largely disconnected from international payment systems, requiring investors to use alternative channels through regional financial hubs such as Amman or Dubai. Each workaround introduces additional costs and risks. But the most overlooked burden is what economists call transaction costs—the full cost of executing, protecting, and transferring a deal: negotiation time, logistical uncertainty, informal payments, and administrative delays that appear in no contract and no pitch deck. A 2025 UN report found that 92 percent of Syria’s small and medium enterprises operate outside formal regulatory frameworks—a figure that says everything about the environment any new investor is stepping into. In conditions like these, the cost of completing and protecting a deal can ultimately exceed the cost of producing the underlying product or service itself.

3. The Information Gap—No One Knows the True Price

The World Bank’s Middle East director described Syrian economic data as "extremely scarce and difficult to obtain"—an official acknowledgment that investors are making decisions under conditions of structural information absence, not personal negligence. Prices move rapidly. Inflation spiked between 53 and 55 percent in the first half of 2025 alone, according to the Syrian Economic Monitor, even before the latest electricity tariff increases. Over the same period, the Syrian pound fluctuated between 10,000 and 12,000 to the dollar within a single year. Business plans built on a fixed exchange rate or cost structure can become obsolete within months—leaving investors facing an entirely different equation than the one they planned for. In such conditions, even experienced investors struggle to determine what assets, inputs, or businesses are truly worth.

What This Means for You

If You Are a Foreign Investor

The question is not simply whether to invest. The real question is whether you possess enough resources to overcome the true costs of entry—not only financial capital, but also the time required to build trust, absorb local learning, and sustain operational patience. Investors who enter expecting speed leave disappointed. Syria’s current market rewards patience and adaptability more than money alone.

If You Are a Local Entrepreneur

Foreign capital is not necessarily a threat. But it becomes one if outside investors find better local partners before they find you. In today’s Syria, local knowledge and trusted relationships may be the most valuable assets in the market—assets that no investor can bring in a suitcase.

If You Run a Small Business or Workshop

Inflation and exchange-rate volatility affect your business directly. Understanding the forces behind them can help you make better decisions about pricing, inventory, and purchasing. Those who understand the rules of the market adapt. Those who do not are repeatedly caught off guard.

If You Are a Policymaker

The greatest obstacle to turning investment announcements into real projects is not a lack of interest. It is the absence of the institutional infrastructure that makes transactions possible: efficient commercial courts, functional banking channels, and reliable, transparent information. Each improvement in this ecosystem may be worth more than billions of dollars in announced investment.

Three Questions to Ask Before Making Any Decision

These are not generic tips. They are diagnostic questions that reveal whether an investor understands the market itself—or merely its image.

Do You Have a Real Local Operating Partner?

A true local partner is not simply a friend or a distant relative in Damascus. It is someone actively working in the target sector, with firsthand knowledge of actual prices—not listed ones—and the practical ability to resolve disputes when they arise.

Have You Calculated Structural Costs—or Only Visible Prices?

Add to your projections the real cost of electricity, alternative banking arrangements, the exchange rate volatility margin, and the time required to complete administrative processes. If the numbers still make sense after these adjustments, your analysis is grounded in reality. If they don’t, that is a more valuable discovery now than later.

Is Your Investment Horizon at Least Twice as Long as Expected?

Projects in economies rebuilding after conflict almost always take longer than planned. This is not unique to Syria. But investors with unrealistic timelines are often forced to exit at precisely the wrong moment.

The Bridge That Changes Everything

Syria is not a trap. But neither is it a conventional market that can be approached with tools designed for stable economies. After more than fourteen years of economic contraction, the country still contains enormous latent potential. That is what makes the opportunity real. But this potential will not be unlocked simply by lifting sanctions or signing memoranda of understanding. It will be unlocked when a bridge is built between external capital and internal knowledge—when the institutional foundations exist to make transactions executable, not merely announced. Those who understand the rules of this market may find genuine opportunity in a rare historical moment. Those who enter with assumptions borrowed from a different market will pay for their education out of pocket. And the difference between the two is neither intelligence nor capital. It is understanding the rules of the game before it begins.

ABDULLAH HAJ HUSSAIN