💰 From Openness to Subjugation: How Gulf Aid Has Reshaped Syria’s Economy One Year On

One year into the seismic upheavals of the so-called “Liberation Phase”, Syria’s economy stands at a crossroads—caught between the lure of external revitalisation and the risk of internal stagnation. Financial lifelines from the Gulf—principally Saudi Arabia and Qatar—have proved vital, plugging holes in state coffers and sustaining the salaries of a strained civil service. Yet, as economist George Khazam warns, these generous injections risk morphing into a gilded trap: in the absence of structural reform, they may tie Damascus to the whims of far-off capitals, rather than empower self-reliance. Gulf Aid: Lifesaver or Looming Liability? In a sharp analysis of Syria’s post-liberation fiscal landscape, Khazam acknowledges the urgent necessity of Gulf backing amid a near-bankrupt treasury. These injections—ranging from direct salary payments to debt relief and infrastructure pledges—embody both fraternal solidarity and strategic positioning, offering Riyadh and Doha leverage over a fledgling order unmoored from Iranian influence.

Qatar’s $87 million allocation to cover three months of public sector wages, alongside a joint Saudi-Qatari $89 million channel via the UNDP for essential services, helped stave off immediate fiscal collapse. Meanwhile, Saudi Arabia’s $2. 9 billion infrastructure pledge, coupled with Qatar’s $7 billion energy deal, signals a tilt toward reconstruction. Their combined clearance of $15 million in legacy debt earlier this year could also unlock future World Bank loans. Yet in a widely circulated Facebook post, Khazam cautioned that these stopgaps, lacking domestic policy anchors, risk deepening structural dependency. He accused the transitional authorities of pursuing a “destructive” economic agenda—dismantling a weakened public sector while flinging open the gates to imports, with little regard for local production.

This liberalisation, he argued, has gutted domestic revenue streams, replacing them with unstable external flows. Lax customs policies, he warned, have become a fiscal black hole: tariff reductions on goods that could be produced locally have crippled minor-scale manufacturers, entrenching a consumption-driven model that undermines Syria’s industrial base. World Bank figures highlight the danger: GDP contracted by 1. 2% in 2023 and is expected to shrink by another 1. 5% in 2024. Residual sanctions—including frozen assets and banking restrictions—continue to hamper energy imports and trade recovery.

A Landscape of Economic Ruin The consequences are already visible. Dozens of factories have shuttered in the face of cheaper imports, sending tax revenues from domestic business into freefall. A more protective industrial policy could have generated jobs, enhanced state bargaining power and rose sovereign revenues. Instead, Syria has become increasingly reliant…