This analysis was written for a Spring 2026 Special Report on the repercussions of conflict on local economies
On March 30, 2026, acting president of Syria Ahmed al-Sharaa, flew to Germany to discuss the return of Syrian refugees, post-war reconstruction, and economic cooperation with Chancellor Friedrich Merz and President Frank-Walter Steinmeier in a visit aimed to strengthen bilateral relations and secure investment, focusing on Syria’s economic stabilization.
It was only the second visit of a Syrian head of state to Germany after then-chancellor Gerhard Schroeder afforded a controversial welcome to Syria’s now-deposed Bachar Al-Assad to Berlin in 2001. At the time, a German proposal for “change through [economic] collaboration” and a peace plan for the “Near East” were discussed amidst ruckus over reported anti-Semitic ranting by the Syrian ruler. In hindsight, there can be no denying that subsequent progress towards peace through an immediate halt to violence and “essential” restoration of trust between the government of Israel and the Palestinian Authority along the lines of a Sharm-El Sheikh agreement from 2001 (referred to in Germany as Mitchell plan) didn’t come to be. Instead, the official German ambassadorial presence in Damascus was suspended from 2011 to 2025 and economic sanctions were imposed in response to brutal oppression of the Syrian population by the Assad regime.
This time, the hope was for a very different outcome, even as the regional context was deteriorating from severe to disastrous. Around the time of al-Sharaa’s Berlin visit, US President Donald Trump started threatening Iran with a bombardment “into the stone age” and an erasure of Iranian civilization overnight. Closer to Syria, the Israeli settler assaults against their Arab neighbors in the West Bank were reaching fever pitch. The number of civilian casualties under the Gaza ceasefire remained unconscionable. The IDF targeting of Hezbollah operatives in Lebanon was relentless and far beyond the scope of international law precedents with destruction and damage of 62,000 housing units between March 2nd and April 22nd, according to the Lebanese National Council for Scientific Research (this is in addition to the Ministry of Environment’s estimate of 200,000 damaged and decimated homes between 2023-2025) and mounting civilian casualties beyond measure. And Iran tightened its grip on Hezbollah decision-making in Lebanon.
From a big picture perspective, things this April 2026 look very different for al-Sharaa’s Syria, in sharp contrast to the regional turmoil. The country was mostly spared not only cross-border military assaults; the risks of new conflict seem subdued and the investment climate appears the most benign in many decades.
The new narrative of Syria is, however, still untested. When the Assad regime collapsed on 8 December 2024, Syria stepped out of 13 years of civil war and economic isolation and into what its transitional president has hyperbolically called “a land of opportunities.” Prospective investors, primarily from the Gulf states, are presumably well aware that the gap between the promise and the reality of Syria’s economic reconstruction is vast. Moreover, so far there are no signals of Arab investor reticence in face of a regional context that has become increasingly complicated, as a result of the joint US-Israeli war on Iran and its complexification of the very regional dynamics that were supposed to hasten the development opportunities for the new friends of the hegemonic power axis Washington-Tel Aviv-Riyadh.
Meanwhile, prospects for regional integration with Lebanon are simultaneously and paradoxically poised for growth and weighed down by the Israel-Hezbollah war systematically demolishing its south, devastating more than just the southern suburbs of its capital city, and shoving the country towards deeper internal divisions amid mass displacement and extreme loss of lives, land and livelihoods. Geography and history indicate that future investments into Syria will have massive implications for the – significantly smaller but also significantly more mature – Lebanese economy. This suggests that Israel’s actions in Lebanon make for an additional complication of any Syria investment gambit. Syria’s position of cautious neutrality might be safeguarding new investments, but the turbulence of the region at large is raging ever closer.
The Gulf bet
One challenge for investors looking to gauge the Syrian economy is that it cannot be confidently measured. A March 2026 policy brief released by the Syrian Center for Policy Research (SCPR) found that the Sharaa government presents indicators of economic performance which imply a rapid recovery of GDP and an imminent return to pre-conflict levels. These governmental data, published without a clear methodology, did not distinguish between GDP at current prices and constant prices, or clarifying the effect of multiple exchange rates and inflation on the announced value. According to SCPR, the use of undocumented macroeconomic indicators hints at possible exaggeration of potential investment returns. It reveals the marginalization of the national data system and the treatment of GDP as an instrument of political discourse, which is not likely to improve investor confidence or public trust.
The SCPR estimates that real GDP in 2025 achieved only nominal growth of about 0.3 percent compared with 2024, while real GDP per capita declined by about 6 percent. The less than impressive bottom-line performance of the first full year under a new government is owing to weak organic growth combined with strong population growth associated with the return of refugees. The actual size of GDP in 2025 did not exceed about 45 percent of its 2010 level at constant prices.
Absence of recent organic growth (coming from investments of domestic savings and/or governmental budgets and economic stimuli), expanding, youth driven market size, and massive demand for anything from housing and infrastructure to consumables in principle denotes both a vacuum of unmet household needs and a fantasy scenario of virgin investment. Into this void, Gulf states have moved in speedily and ambitiously. Qatar, Saudi Arabia, and the UAE were among the first nations to endorse Syria’s new leadership, with President al-Sharaa invited to visit all three countries multiple times since taking office in a bid to secure economic support. Major commitments include a $7 billion energy infrastructure deal led by Qatar’s UCC Holding, a $6.5 billion aid pledge from international donors, and an $800 million port development agreement with Dubai-based DP World.
Already in the first half of last year, Syrian investment projects by potent Arab economies were piling up impressively into aggregate numbers not previously reported from Syria. At the Syrian-Saudi Investment Forum in Damascus in July 2025, 47 initial agreements and MoUs were signed between Syrian state institutions and Saudi companies, with a total value of $6.4 billion, covering infrastructure and real estate development, telecommunications, information technology, industry, tourism, and health. This is according to a September 2025 report by the New Zealand-based consultancy Karam Shaar, which covers Syria’s political economy.
Not only Gulf governments but also Arab-led transnational development action forums such as the Future Investment Initiative (FII), a sort of desert power play on the tiring Davos paradigm of the World Economic Forum, have shifted into high investment promotion and readiness gear. At the FII conference in Riyadh in October 2025, al-Sharaa announced that Syria had attracted foreign investment pledges estimated at around $28 billion during the year, with signed contracts nearing $14 billion, focusing on infrastructure, transport, and several major development sectors according to North Press Agency.
BOX
Perhaps the ambitious scope of Arab corporate investment into future Syria is most physically visible at Damascus International Airport, the country’s primary gateway. Qatar-based conglomerate UCC Holdings’ $4 billion redevelopment and expansion program of the crucial aviation facility — one of the flagship deals anchoring the investment surge — is already underway. Younes Sayed, a Paris-based architect who is serving as program manager and lead architect on the project, describes an endeavour that is self-consciously about more than runways and terminals.
“The objective is not only to re-establish Damascus as a regional hub, but to position it at a continental and even international level, by aligning with global standards in terms of capacity, connectivity, and passenger experience,” Sayed tells Executive. The project is a phased modernization of Terminals 1 and 2, with a future Terminal 3 designed in collaboration with Zaha Hadid Architects and Dutch aviation consultancy NACO — a pairing that signals the al-Sharaa government’s intention to project international-class ambition to potential investors and diaspora returnees alike.
Sayed acknowledges that the project is “evolving in a complex environment,” deploying a fast-track approach that runs design and construction in parallel to maintain momentum despite what he calls “ongoing changes,” an understatement for the US-Israel war on Iran which is hurting Gulf Cooperation Council (GCC) economies and could threaten their investment commitments. He is pragmatic about timelines: “All stakeholders are making every effort to ensure that the current situation does not lead to delays. We are continuously adapting to evolving conditions and adjusting our planning as needed.” Asked about the project’s connection to the country’s broader reopening, Sayed is optimistic, stating that the airport’s renovation and expansion is “a strategic catalyst that, if aligned with broader stabilization, can significantly contribute to reviving tourism and restoring Syria’s position internationally.” But, he emphasizes, that outcome depends on a set of preconditions — stability and security, resumed airline connectivity, and, crucially, restored investor confidence in tourism, hospitality, and services.
The issue of underdeveloped economic infrastructure is a heavy caveat. The scale of announced investments far exceeds Syria’s underlying economic capacity: the value of MoUs ($25.4 billion) dwarfs total government investment expenditures between 2010 and 2024, which, according to Karam Shaar’s September 2025 report, stood at $16.6 billion. These are not the conditions of an economy on the cusp of absorbing tens of billions in foreign investment.
END BOX
The war on Iran, Syria’s precarious insulation, and Gulf disillusionment
No factor has more immediately reshuffled Syria’s investment calculus than the US-Israeli war on Iran, which erupted in early 2026. But already before this regional and global shock event, Sharaa-led Syria has taken steps to curtail Tehran’s influence within and without its territory, including limiting Iran-aligned armed groups, tightening controls along Lebanese and Iraqi borders, and cracking down on smuggling networks long used to move weapons, cash, and supplies to Hezbollah.
Caution was also evident on the part of prospective Arab partner states such as the Gulf Cooperation Council (GCC). The GCC’s approach has been deliberately conditioned: the first GCC-Syria joint ministerial meeting in Makkah in March 2025 emphasized that disarming militias and concentrating weapons in state hands would be an important part of Syria’s reintegration into the Gulf’s security architecture. Gulf investment is based on a wager that a stable, Gulf-oriented Syria is worth the political risk. It must not be forgotten that Syria’s relations with many Arab states have historically been no less complicated than those with states in the EU, such as Germany.
While the successful recalibration of Syrian external relations cannot be seen as a cut and dry affair – far from it – there are signs that this rapprochement strategy is bearing fruits not only in big infrastructure projects but also in vital services, such as the financial services sector. Lebanese banker Riad Obegi, a senior executive at Bank Bemo Saudi Fransi — Syria’s largest private conventional bank — offers a banker’s reading of Damascus’s position in the regional constellation. “Apparently, the Americans have said that the Syrians should be left out [of the conflict],” he tells Executive. “The whole region is in turmoil but Syria — it is as if it is in Europe.” From his vantage point, Syria’s deliberate distancing from the Iran axis, and the tacit US endorsement of the transitional government, is providing a degree of fortuitous geopolitical insulation.
The economic disturbances from the Iran conflict, however, are harder to insulate against. The conflict has driven a sharp rise in global energy prices and disrupted key shipping routes through the Strait of Hormuz. But old export routes for Syrian hydrocarbons, which could ride profitably on the Hormuz conundrum, have been degraded over the decades that the Assad regime had been sanctioned and negligent in preserving fossil fuel assets. Amid this maelstorm, Syrian media organization Enab Baladi reported that as of March 31, 2026, Iraq has reopened the al-Waleed border crossing with Syria, enabling crude oil to be transported across Syrian territory to the Mediterranean, with an estimated 500 tankers expected to pass daily via the al-Tanf crossing towards the Baniyas terminal for onward export.
Activation of Syrian oil was also proposed in a presentation by US Special Envoy to Syria (and US ambassador in Ankara) Tom Barrack during a March 26 conference in Washington hosted by the Atlantic Council and Syrian American Business Council. The idea floated by Barrack – and also reported by Enab Baladi – was to revive the concept of Syria and Turkiye as joint energy centers in The Four Seas corridor first theorized in 2009. A dual Turkish-Syrian hub for transporting crude oil and gas would theoretically link the Arabian Gulf, the Mediterranean Sea, the Caspian Sea and the Black Sea, and—conveniently for Washington-affiliated opportunists—serve as an alternative to the Strait of Hormuz.
The broader context of the Iran conflagration is not only major hits to GCC economies, but also a fracturing of the strategic architecture that ties Gulf states to the US government and, by extension, to American-backed regional security. With the launch of the first missiles and bombs on February 28 of this year, Gulf states were dragged into a war they never chose, to serve an agenda that was never theirs, while their security was traded away to protect Israel rather than them — a reality that has fundamentally exposed the true nature of Washington’s alliances in the region. This erosion of trust in American reliability might be, paradoxically, a structural tailwind for Gulf investment in Syria. As the US security umbrella proves unreliable and Israeli aggression generates its own blowback, the Gulf states’ incentive to build self-sustaining regional economic architectures — with Syria as a key node — has intensified.
Syria’s Banking System: The Foundational Bottleneck
If geopolitics frames the macro-context, the banking system is one of Syria’s most immediate structural bottlenecks. No reconstruction investment can be effectively deployed, and no investor can repatriate returns, without a financial sector that meets international compliance standards. The International Monetary Fund (IMF) warns that lifting legal sanctions does not automatically translate into Syria’s return to the global financial system — due to ongoing de-risking policies whereby international banks avoid dealings with post-conflict countries because of weak compliance systems, money-laundering risks, and a lack of institutional transparency. The IMF’s February 2026 staff visit to Syria cited a small fiscal surplus and tentative stabilization, as well as improved exchange-rate conditions alongside authorities’ steps toward introducing a new currency framework to address distortions in the monetary system.
Bank Bemo Saudi-Fransi’s Obegi has a front-row seat to this transition. Bank Bemo Saudi Fransi — a joint venture between Lebanon’s Bank Bemo, Saudi Arabia’s Banque Saudi Fransi, and Syrian shareholders — is the largest private conventional bank in Syria, and holds stakes in two other Syrian banks. His assessment of the current landscape is guardedly optimistic. “Syria is no more sanctioned. The Caesar Act has been withdrawn,” he says. “It is true that international banks are not yet coming; they are waiting a little bit. But things are improving by the day.” He draws an analogy that practitioners will recognise from any frontier banking market: “We take our decisions quite slowly, but the day we take the decision we like to act fast. It is a necessary inertia, but it will come. International banks are going to come in droves to Syria.”
“The regulations are much better in Syria than they are in Lebanon,” says Obegi, who is intimately familiar with both regulatory regimes. “You do not have as much professionalism [in Syrian banks] as in the banks in Lebanon. And what is strange is that on the other hand, the regulations are much better in Syria than they are in Lebanon.” The implication is that Syria’s banking framework, while underdeveloped in human capital and balance sheet depth, has not been embroiled in a state level corruption scheme the way Lebanese banks have. Crucially, he notes that Syrian depositors, unlike their Lebanese counterparts, “did not lose any deposits” in the crisis — a distinction that preserves a baseline of institutional trust that Lebanon has catastrophically squandered.
Syria’s reconnection to global payment system SWIFT in November 2025 after a 14-year suspension is also a step forward. The demand side of the equation, however, is a work in progress. “The Syrian clients were not accustomed to working with banks,” Obegi explains. “Until 2004, there were very few banks. Syrian clients preferred either to be their own bankers or to bank in Lebanon. After 2004, Syrians began to work with banks but the rate of bancarisation was not very high.” He sees mobile telephony as the accelerant that will compress the timeline for broader financial inclusion: “If you look at the penetration of mobile phones in Syria, it happened relatively fast. You have to expect that banking will follow. It will take maybe 4-5 years before bancarisation is comparable to Lebanon.”
His broader prediction, taking stock of Gulf investment movement into Syria is that,”what is going to happen to the banking sector in Syria is going to be the locomotive for the finances in the Levant.” According to SCPR’s March 2026 report, gaining sustained investor confidence will require a credible anti-money laundering framework that is implemented rather than merely promulgated; transparent and enforceable property and contract rights backed by a genuinely independent judiciary; consistent regulatory practice by the central bank freed from political interference; and the reconstruction of an independent and transparent national data system as a primary precondition for recovery.
Global Competition, Regional Integration, and Lebanon
Syria in April 2026 occupies a paradoxical position: simultaneously the most talked-about investment frontier in the Arab world and one of the least investor-ready economies on earth. The SCPR’s data are unsparing: real GDP at 45 percent of its 2010 level, agricultural output in near-collapse, manufacturing at one-fifth of pre-war capacity, and governance structures treating economic statistics as propaganda instruments. The $28 billion in pledged investment is a signal of regional intent, though not necessarily a bankable pipeline.
What Syria has working in its favor is a convergence of factors that did not exist three years ago: full sanctions relief, Gulf patronage now marked by deepening disillusionment with American reliability, a transitional government that has adopted the rhetoric and some of the substance of reform, and a regional conflict that has, so far, spared Syrian territory while possibly elevating its value as a transit corridor. Flagship projects like the Damascus airport expansion demonstrate that serious international professionals are betting on Syrian recovery, even while managing the contradictions of a fast-track approach in a still-fragile state.
Factors of attractive investment return potentials, strategic territorial alliances, and cultural affinity have visibly positioned public and private (and public-private) Arab investments on advantageous starting blocks for capitalizing on the Syrian economy. Within the opacity of conflict timelines, what can be predicted is that competitors for the Syria-plus development opportunity will hit the ground running from the moment that the lose-lose logic of regional war will be overtaken by the more pragmatic logic of economic competition and political coexistence. The question of whether political signals by European governments will be strong enough to overcome perception risks on the Syrian side and old or new colonial attitude barriers on the European side, cannot be reliably gauged.
Syria’s most consequential if not deeply complex near-term economic relationship is with Lebanon, and both Sayed and Obegi point to signs of pragmatic re-engagement even amid political complexity. Strictly segregated development paths in the face of synergetic development needs do not seem to make sense. Banking and financial services on the other hand could offer entry points.
Obegi notes that Lebanese banks were the dominant private foreign players in Syria after the 2004 liberalization — Bank Byblos, Bemo, and others moved in on the assumption that Syria was Lebanon’s natural hinterland for financial services. For the experienced banker, this historical flow of financial interest is now on the cusp of being inverted.
Sayed, working on the Damascus airport project, describes what he sees from the ground level of a practical cross-border professional: “There are clear signs of a gradual and pragmatic re-engagement between Lebanon and Syria, although it remains complex and cautious. Recent dynamics suggest a willingness on both sides to rebuild more institutional, state-to-state relations based on mutual interests such as border management, economic exchange, and security coordination.” He qualifies this carefully: “At this stage, it is more a form of pragmatic cooperation than a fully structured strategic alignment.”
Obegi, whose bank sits at the intersection of Lebanese, Saudi, and Syrian capital, points to the deep financial interdependencies that predate the political rapprochement. “There is a lot of closeness between Lebanon and Syria. In the banking sector, if you look at the 40 banks in Lebanon, you have at least five banks owned by Syrian-origin people. There are also a lot of trading companies in Lebanon that are Syrian-owned.” The directional flow of capital, he suggests, is about to reverse: “Before the problems in Lebanon, Syrians banked in Lebanon. I guess now Lebanese will bank in Syria.”
Energy integration may be the most tractable entry point. Lebanon, currently deadlocked by bombardment and delayed reform, could, in a so far still distant peaceful future, explore the potential of joining interconnection initiatives with Syria, Jordan, and Egypt, and reviving negotiations on electricity connectivity — projects previously strangled by Caesar Act sanctions that penalised any entity transiting Syrian territory.
Meetings between Lebanese Prime Minister Nawaf Salam and President Sharaa in April 2025 in Damascus and July 2025 in Qatar, as well as a September 2025 meeting with Lebanese President Joseph Aoun, among other phone calls and videoconferences, have convened on border management, refugee affairs, and economic cooperation, reflecting a strategy of pragmatism and institutionalism focused on practical issues directly affecting security, economy, and society. Unresolved grievances persist, such as the over 2,000 Syrian detainees held in Lebanese jails, though local news reported that Lebanon has begun a process of returning around 300 of them in mid March 2026.
Obeji flags a macro constraint that overhangs all of these dynamics: “The war with Iran is not a small thing. Not only because Iran is a large country of 100 million inhabitants with a lot of natural resources, but also because it has repercussions with China. As long as this is not resolved, we are not going to have clear-cut advances.”
