Syria today presents a uniquely structured investment climate after long years of conflict that caused severe damage to infrastructure and the economy. Interim President Ahmad al-Sharaa stated during the “Future Investment Initiative” conference in Riyadh that his country holds vast and diverse investment opportunities. He said he does not support what he called a “policy of aid,” emphasizing that the amended investment law is among “the ten best in the world,” and noting that the government aims to attract investments worth up to one trillion dollars. In this context, Damascus signed investment memorandums of understanding valued at approximately 14 billion USD with foreign companies covering transport, housing, and infrastructure sectors.
Yet, investing in Syria carries substantial risks that cannot be overlooked. Despite optimistic statements, analyses indicate that the announced investments cover only a small fraction of the real needs, as reconstruction costs are estimated to exceed 400 billion USD, while current investments represent only about three percent of that amount. Moreover, foreign investors face “hidden risks,” including requirements for government guarantees and insurance rates reaching 15–25 percent of the investment value annually, reflecting the magnitude of risk embedded in the Syrian environment.
Thus, investment in Syria appears to be a blend of major incentives, given that the country is in a rebuilding phase, and high risks associated with political and economic instability, limited transparency, and the gap between announcements and actual implementation. With the increasing participation of foreign investors, questions arise about the Syrian market’s ability to provide a clear and stable investment environment, ensure investor rights, and guarantee the real execution of declared projects.
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Security First
Dr. Pierre Khoury, Dean of the Faculty of Business Administration at the American University of Technology in Lebanon, told +963 that foreign investment decisions interact directly and decisively with the security map of Syria. He explained that the country is no longer perceived as an integrated economic unit but rather as a collection of enclaves differing in levels of risk.
He noted that investors, when assessing a location, carefully examine who effectively controls the ground, how durable that control is, and how deeply connected the supply chains are to ports, crossings, and main roads. They also assess the density and cost of security checkpoints as well as the region’s ability to resolve local disputes without political or military intervention.
Khoury added that foreign capital naturally concentrates in relatively stable areas such as Damascus, the coastal region, and parts of the south, where funds are directed toward sectors that do not require large-scale goods movement or foreign dealings, such as food production, pharmaceuticals, maintenance, and small-scale real estate.
In contrast, he explained, strategic sectors such as energy, banking, and telecommunications remain outside genuine investor interest. Hence, capital in Syria moves “like water,” seeking the lowest and safest paths with the least friction with multiple authorities.
He pointed out that local security stability serves only as a temporary incentive rather than a substitute for political stability. Although some relatively stable areas have succeeded in attracting regional companies or local contractors through short-term contracts, the lack of international recognition and restrictions on financial transfers make any investment activity there a limited-range venture.
Transforming a “safe island” into an economic hub, he said, is impossible without a unified legal framework and an effective banking network. Foreign capital needs more than calm; it requires the ability to transfer profits and legal protection recognized across borders. Therefore, security stability is a helpful factor but insufficient to reshape the economy or attract global partners.
Khoury emphasized that ongoing open or frozen conflict zones deeply affect investor confidence in the Syrian government’s ability to protect contracts and ensure project continuity. Foreign investors, he said, add extra risk premiums for each possibility of interruption, confiscation, or change of control. Consequently, companies seek to shield their contracts through external arbitration clauses, phased payments, and escrow accounts abroad.
He further noted that insurance instruments available in international markets to cover political or war risks are extremely limited in Syria because of sanctions, forcing investors to rely instead on “defensive contract engineering” rather than traditional insurance guarantees. The result, he explained, is an increased cost of market entry that limits its appeal to risk-takers or those with political or economic ties to the current system.
Khoury added that disparities in security across governorates create widening economic and social gaps, producing what can be described as an economy of “safe zones” versus an economy of the “marginalized.” Stable regions attract labor, investment, and services, while tense regions suffer from a continuous drain of human capital, declining wages, and rising commodity prices.
He stressed that such imbalances deepen internal division and foster a sense of injustice among provinces, threatening any national attempt at balanced reconstruction. Addressing this distortion, he argued, requires compensatory financial mechanisms and connectivity projects that reduce the “cost of security distance” and ensure a minimum level of economic equality.
Regarding development projects the government seeks to launch in partnership with foreign parties, Khoury warned that these projects risk turning into tools of political or security influence unless governed by transparent mechanisms. He called for publishing bidding terms and award criteria, disclosing the real beneficiaries of companies, separating economic decisions from security agencies, and subjecting contracts to annual external audits.
Projects, he insisted, must also undergo social and human-rights impact assessments that consider human rather than authoritarian security standards, to prevent development from becoming a cover for expanding control. Projects lacking transparency, he said, will merely reproduce the same rent-seeking networks that led to the pre-war crisis.
A sustainable investment environment cannot be created, he argued, without addressing the security roots that undermine trust. Disarmament, border control, the return of displaced people, and settlement of property and housing issues form the basis of any long-term economic stability.
“The economy cannot grow in a vacuum nor thrive under constant fear of explosion,” he said. Security is not only a prerequisite for growth but an internal component of it, as capital prospers only when it trusts that contracts will be honored, roads will remain open, and today’s authority will not be replaced tomorrow by another bearing arms.
Without such trust, Khoury concluded, Syrian recovery will remain confined to limited enclaves living on the margins of temporary calm, while the country as a whole remains captive to an unsustainable balance between quiet and the perpetual possibility of unrest.
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Absence of Guarantees and Transparency
Dr. Talal Mustafa, a Syrian academic and researcher based in France, told +963 that international investors base their decisions on three critical factors: the actual security level that safeguards facilities and workers, the ability of the guarantor, be it a government, a local power, or a foreign protection umbrella to honor contracts, and the capacity to transfer capital through secure financial and legal channels.
He explained that the current Syrian landscape reveals stark regional disparities in these conditions. Most cities and towns under central government control enjoy a relative degree of security that allows limited investment, whereas areas such as northeast Syria or Sweida, controlled by local groups, remain far from any realistic possibility of local or international economic projects.
Mustafa noted that sectors most attracted by this “relative security” include energy, large-scale infrastructure, and high-value agriculture, while small and medium services and real estate remain highly sensitive to any security fluctuation.
Investors, he added, do not necessarily wait for a comprehensive political settlement before entering the market; they seek a reliable security partner and the ability to manage financial and legal risks. However, such investment tends to be short or medium term unless political stability indicators improve.
Local security may serve as an initial draw, Mustafa argued, but it cannot replace political, financial, and credit stability, especially under sanctions and restrictions on financial transfers that block international funding and limit major investors’ capacity to operate under long-term legal systems.
He explained that limited exemptions or facilities do not fully offset the risks of capital exit, and that any window of openness remains fragile without accompanying political and legal reforms.
Isolated yet secure regions may attract regional partners or companies seeking short-term opportunities, but they cannot draw international capital or global banking finance because of the lack of legal guarantees and unresolved sanctions issues.
Ongoing or frozen conflict zones, he warned, sharply raise insurance costs and reduce trust in long-term contracts, prompting global investors to look for less risky environments. Although international tools exist for political and war-risk insurance, their application in Syria remains blocked by legal and political restrictions tied to sanctions.
Mustafa pointed out that internal security disparities in Syria also create growing economic and social inequalities. Resources and investments flow into safer regions, while marginalized areas experience labor and capital flight, service decline, and price inflation. This dynamic threatens social cohesion and undermines the legitimacy of any reconstruction process unless resources are managed fairly to prevent wider inequality gaps.
Protecting projects from turning into tools of security influence, he said, requires transparent funding and implementation mechanisms, impact assessments that include the security dimension, community participation in oversight, and the involvement of international institutions enforcing clear conditions on the government and local partners.
Yet, Mustafa cautioned, these mechanisms face two main obstacles: the refusal of some controlling authorities to apply transparency standards and the absence of enforceable international legal guarantees. Therefore, the success of such approaches depends on genuine political and institutional commitment.
He concluded that achieving sustainable economic stability is impossible without addressing the political and security roots of instability. Large-scale infrastructure, logistics corridors, and long-term contracts demand a unified legal environment and lasting protection that fragile local security cannot provide. The return of displaced people, border stability, disarmament, and the establishment of a single legal authority are essential prerequisites for building stable domestic demand and a reliable labor market.
At the same time, he sees the potential for limited economic programs in safe areas within a gradual strategy combining small and medium projects, confidence-building measures, and reintegration of displaced populations. The most effective path forward, he affirmed, lies in an integrated approach that merges localized economic recovery with security and political reforms paving the way for a comprehensive solution.
