Analysis of Import Restriction Policies and Industry Financing in the Syrian Economy: A Comprehensive Vision for the Post-Assad Era

Introduction:

The Syrian economy witnessed unprecedented deterioration during decades of rule by the Assad regime — both father and son — with GDP declining by 86% between 2011 and 2021. According to World Bank estimates, the war between the revolutionary people and Bashar al-Assad’s authority, along with international sanctions (such as the “Caesar Act”), led to the destruction of infrastructure, the collapse of key productive sectors such as agriculture and industry, and an increase in poverty rates to 90% of the population.

With the fall of the Assad regime in December 2024, the transitional government faces a threefold challenge: reconstruction, lifting sanctions, and reforming the distorted economic structure.

Import Restriction Policies: Objectives and Challenges

The policies proposed by some economic advisors to impose financial restrictions on the import of luxury goods aim to achieve several objectives:

1. Stimulating local production by reducing dependence on imports, especially with the diminished ability to secure foreign currency following the collapse of foreign reserves to $2 billion in 2014.
2. Improving the trade balance, as imports reached about $5.6 billion in 2017 compared to exports that did not exceed $1.7 billion.
3. Redirecting resources toward productive sectors, such as agriculture and manufacturing industries, which accounted for 20% and 19.6% of GDP respectively before the war.

However, we see that there are three challenges that must be taken into account:

1. The classification of goods, as it is difficult to determine what is considered “luxury” amid the deterioration of purchasing power, with 69% of Syrians relying on humanitarian aid.
2. The rise in prices, as restrictions may exacerbate hyperinflation, which reached 300% in 2017 and 99.7% in 2024.
3. The impact on trade relations, especially with neighboring countries such as Turkey and Lebanon, on which Syria relies for importing essential goods.

Industrial Financing Fund: Implementation Mechanisms and Risks of Failure

The establishment of the fund relies on the idea of “self-financing” through importers’ deposits in dollars, with loans granted at an interest rate of 1% per month (12.65% annually). While the idea appears attractive in theory, its implementation faces fundamental obstacles, such as the high cost of financing, as the proposed interest rate is higher than the global average for small project financing, burdening industrialists amid a fragile economic environment. Additionally, there is a lack of transparency, as historically, government funds in Syria have been exploited to support corruption networks, as happened with public sector companies that lost 70% of their value. Moreover, the fund’s capital is insufficient, with the cost of reconstruction estimated at more than $400 billion, while the fund’s revenues remain limited amid shrinking import volumes.

Historical Experiences and Lessons Learned

Syria’s experience in the 1970s indicates that centralized socialist policies (such as nationalization and import restrictions) led to capital flight and a decline in investments. In contrast, the experience of industrial zones (such as Adra Industrial City) succeeded in facilitating production clusters when infrastructure and tax exemptions were provided. This, in our view, confirms that success depends on creating an attractive investment environment, not merely on imposing restrictions.

Conclusion:

Based on the above, we at the Economic Office of the Syrian Future Movement recommend the following:

• Reforming the banking system to restore confidence and attract Syrian deposits held abroad, which are estimated at billions of dollars.
• Public-private sector partnerships through the privatization of loss-making companies while ensuring sound governance, as suggested by the Syrian Minister of Finance in one of his proposals.
• Supporting small and medium-sized industries through facilitated financing and training programs, drawing on the experience of industrial zones in Damascus and Aleppo.
• Regional integration with countries such as Iraq, Jordan, Turkey, and Lebanon to establish alternative supply chains, particularly in the textile and agriculture sectors.

Economic Office

Research Team

Research and Studies Department

Studie

Syrian Future Movement