In a major landmark moment for Syria as it moves on from the Assad-era dictatorship, the United States announced it will lift economic sanctions that have weighed heavily on the country for many years. US President Donald Trump announced the end of the measures on Wednesday during his visit to Saudi Arabia, shortly before he met Syria’s new leader, Ahmed al-Sharaa.
Trump called the sanctions “brutal and crippling”, but also said they had served “a really important function”. For his part, al-Sharaa welcomed what he described as a "historic and courageous" decision and thanked his host, Saudi Crown Prince Mohammed bin Salman and Türkiye’s Recep Tayyip Erdoğan for their role in backing the US decision.
Sanctions on Syria date back to 1979, but most were introduced gradually between 2004 and 2019. Their end is a victory for al-Sharaa and his new government. It proves that despite his jihadist background—leading Hay'at Tahrir al-Sham (HTS) and before that Al-Nusra Front, an offshoot of Al-Qaeda—he is capable of scoring key diplomatic successes for his country and building relations with regional and international powers.
In Syria, people took to the streets to celebrate, in what many see as a great opportunity for hope, and Syria’s national currency, the pound, rallied on the news.
Here, Al Majalla looks at the clear benefits to the country, while flagging wider problems that will linger. We also look at some problematic policies the transitional government implemented, including austerity measures, subsidy reductions and public sector job cuts, which have sparked backlash.
Widespread benefits
There will be a series of benefits for Syria’s economy. Cross-border deals will be easier. The speed of projects already agreed will increase, including initiatives already cleared by the US for Qatar to invest generally and in Syria’s energy sector, via the United Nations Development Programme.
The Arab Gas Pipeline will be used to provide Syria with 2 million cubic meters of natural gas per day via Jordan, according to Qatari officials. There are plans to boost electricity production at the Deir Ali power plant, according to Syria’s Minister of Electricity, Omar Shaqrouq, enough to boost supply to households from two hours a day to four.
There have also been talks over the potential involvement of Western firms to develop Syria’s gas resources, involving al-Sharaa and a Republican activist close to Trump, Jonathan Bass, who runs the company Argent LNG.
More generally, Syria will now be able to re-integrate its economy and trade more freely with international partners, as well as seek out new Foreign Direct Investment (FDI) sources, including organisations within the Syrian business diaspora of the Assad years. Damasucs will now be looking for ways to attract regional and international companies to invest in the country and help rebuild it after more than a decade of war that ravaged the country.
Some deals have already been inked. In May, a $260mn, 30-year deal over the development of the Latakia port was signed with French shipping giant CMA CGM, which has been operating there since 2009. The government will take 60% of the revenues and the firm 40%.
For its part, the Islamic Development Bank (IDB) officially reinstated Syria’s membership in mid-March, which serves member states of the Organisation of Islamic Cooperation (OIC), and funds various projects, including social and economic development programmes.
In April, Syria’s central bank governor and finance minister attended the International Monetary Fund and World Bank Spring meetings for the first time in more than 20 years. Saudi Arabia and Qatar announced that they would settle Syria’s arrears with the World Bank, totalling roughly $15mn. The settlement of the country’s arrears will enable it to resume accessing the bank’s financial support and technical advice.
Lingering hurdles
But lifting sanctions takes time. While the country will once again be able to carry out dollar-denominated transactions and will be reconnected to the dominant global payment system known as Swift, detailed processes are involved. Some of the most severe sanctions Syria has faced are written into US law, in the Caesar Act of 2019. That means Congress must approve measures to lift them. In the meantime, Trump could issue a waiver, and in practice, some specific measures may simply no longer be implemented.
Read more: Caesar Act architect: lifting Syria sanctions is "complicated”
The Washington legislature must also back Syria’s removal from the US list of state sponsors of terrorism. Without it, Syria’s central bank cannot take out loans from the World Bank and the International Monetary Fund. And there are also sanctions imposed by the United Nations. They are a matter for the Security Council. But a deal to lift them is likely to follow Washington’s lead.
Nonetheless, there is a lack of clarity in the meantime, and it will delay the response of financial institutions, businessmen and traders in the weeks and months ahead. It is likely to take even longer for Syria’s pound to stabilise. Currency volatility is set to remain a deterrent to investment, and the country’s significant current account deficit will continue to weigh on the pound. It is also exposed to the financial crisis in Lebanon, while Turkey’s lira is widely used as an alternative in Syria’s northwest, and dollars continue to circulate widely across the country.
During the Assad years, productive sectors of the economy were destroyed, particularly manufacturing and agriculture. Infrastructure and transport networks remain damaged. Production costs are high, particularly for electricity, and there is a shortage of key commodities as well as basic energy. Oil supplies have improved, especially from Russia, but remain insufficient.
Skilled labour is in short supply, and there are no expectations yet of the mass return of workers to the country. Plans to increase salaries for public sector employees, with Qatari funding, are a step in the right direction, but wages still do not cover living costs as the economic crisis continues.
The private sector is mostly composed of micro, small and medium-scale enterprises (MSMEs) and has limited capacity. It still requires significant modernisation and rebuilding after more than 13 years of war and destruction.
Read more: Syria begins to piece together a country and economy in ruins
A decision in Damascus to cut customs duties on over 260 Turkish products has harmed national production. Turkish exports to Syria in the first quarter of 2025 reached $508mn according to the Turkish Ministry of Commerce, up by over 31% year-on-year.
State resources are also severely restricted, further limiting investment in the economy. The political and economic orientation of the transitional government leans toward neoliberalism with a financial model, seeking short-term profit over long-term investment in the productive sectors of the economy.
There are clear signs that the new government wants to accelerate the process of privatisation of state assets. Prior to a visit to the World Economic Forum in Davos, Syria’s Foreign Minister Asaad al-Shaibani, told the Financial Times that the new rulers plan to sell off state-owned ports and factories, invite foreign investment and boost international trade. He added that the government “would explore public-private partnerships to encourage investment into airports, railways and roads”.
Oil and austerity
Syria's main oil resources are in the northeast. The region is currently controlled by the Kurdish-led Autonomous Administration of North and East Syria (AANES). A deal between Damascus and AANES in March gave the transitional national government partial access. However, oil and natural gas production have continued to decline drastically since 2011. Oil production has fallen from 385,000 barrels a day in 2010 to around 110,000 at the start of 2025, vastly insufficient for local needs and not enough to attract significant foreign investment.
The government has also taken action to reduce its exposure to the cost of subsidies. The price of subsidised bread was raised from 400 pounds for 1100 grams to 4000 pounds, initially for 1500 grams and then for 1200 grams. The end of bread subsidies was announced within the following months, aligning with the liberalisation of the market.
