What does Syria’s re-admission to the Arab League mean for business?
The majority of Syrian territory is consolidated under Bashar al-Assad’s rule. The President rules a country that is damaged and destroyed after twelve years of war and civil war. Entire villages were wiped out, and inhabitants resettled. Syrians are a nation of businessmen, entrepreneurs, and builders who deeply love their homeland but have no means to rebuild it. Millions of people hope for foreign investments and imports, which could help them restore their pre-war level of life. Although people more than welcome foreign investments, several issues must be overcome.
As of December 2023, Syria is divided into several regions. The Syrian government, since 2000 represented by President Bashar al-Assad, rules two-thirds of the country, with its capital in Damascus. The remaining one-third of the territory is divided between various actors:
In the northeast of the country, behind the Euphrates River, lies the Autonomous Administration of North and East Syria (AANES, internationally known as Rojava), ruled by the Kurdish Syrian Democratic Council with the support of the international society. It is defined as a Libertarian socialist federated semi-direct democracy. The north of AANES is a Turkish-controlled territory, taken during three operations between 2016 and 2019. Turkey and Turkish-sponsored Syrian rebels claim it to be a safe zone against Kurdish militias, ISIS, and the Syrian government. European Union and the USA repeatedly called on Turkey to cease its activities in Syria without success. In the northwest of the country, the city of Idlib is controlled by different groups (both Islamist and secular) with the support of Turkey.
The south of the country is strongly influenced by pro-government militias (even some former members of the Free Syrian Army) and anti-government militias (most notably in the city of Daraa), while Central Syria is still influenced by the presence of the Islamic State, which remains a threat to the Syrian army, its main target. Most attacks occur in Raqqa, Homs, and Deir ez-Zor provinces, known for their semi-desert, uninhabited, and porous environments.
The long war wrecked the economy of the country. Since 2011, the Syrian pound has lost about 98 % of its value; nowadays, circa 80% of its inhabitants live in poverty. International isolation (mainly from the West), sanctions (most notably the 2019 USA/Ceasar Act), corruption, absence of foreign investment, and conflict leave the country dependent on its allies: Russia, Iran, and China. But despite restrictive measures, the EU remains Syria’s biggest trade partner, although since 2011, bilateral trade volumes have significantly decreased. According to European Commission numbers, Syria is the EU’s 136th largest trade partner.
In 2023, Syria was re-admitted to the League of Arab Nations, which might eventually lead to normalization and, as many Syrians hope, to investments not only from wealthy Arab countries (diplomatic relations with Saudi Arabia were restored in the same year). Sanctions are the most significant limit to assets and, unfortunately, negatively influence the country’s reconstruction, where a lack of material and machinery obstruct after-war (and after-earthquake) works. The issue is also the lack of workers – 10 million people fled Syria, and many neighborhoods and villages remain empty.
Concerning European businesses, Syria, despite sanctions, represents excellent market potential. The amount of destruction in the country is monumental, and there is not a single sector that would not be touched. Among them, four sectors were most affected. Since shelling was often unselective, many urban areas must be reconstructed and rebuilt, including debris removal (and recycling) and rebuilding buildings and infrastructure, since approximately one-third of the local infrastructure was destroyed. Syria does not own machinery and tools to remove debris or supply the required construction and housing materials (inc. furnishing). Much interest is also in rebuilding healthcare: about half of the Syrian hospitals and medical centers are closed or have a limited capacity. Import of equipment and medicament is imperative.
In a water-deprived country, the water management and the agriculture sectors require deep reconstruction and modernization. Lack of clean and potable water is an issue of the whole region, where water management is often insufficient. Syria must rebuild wells, water treatment plants, garbage disposal, and recycling infrastructure. In agriculture, the restoration of water channels and water distribution is a priority, but the whole sector needs investment. Foreign companies might find a market for agriculture machinery, fertilizers, farming, and dairy products production.
Although investment opportunities in Syria are remarkable, potential investors face many challenges. The first is the different cultural environment, influenced not just by local religion (primarily Islam) but also by Arab traditions. Networking is fundamental. Personal contact cannot be missed since sympathy and intuition play a significant role in creating business relations – preferably above a tasty lunch or dinner. Business meetings can take hours, including several ritual greetings, small talks, or discussions about family and politics. The Arabic language is poetic and exalted, and so is Arab culture. Do not be surprised if your local partner recites some poem written by his favorite poet or himself. Although Syrians are often open-minded, caution is recommended concerning personal religious/ethnic/political ideas, dress code, alcohol, jokes with sexual subtext, etc. Since most Syrian businessmen speak English, in most dealings, an interpreter is not needed; a consultant might be a wise option, notably if one lacks deep experience with Arab/Muslim culture. Another challenge might be the timing of business trips – Syrians celebrate many religious holidays, so prepare your trip wisely. Last of all, in Syria, every foreign investor must have a local partner.
Finding a suitable partner (which nowadays will probably have connections to the ruling family or potent Alavis) will take some time. Remember that Syrians do not rush; they enjoy rhetoric and rhetorical promises, and getting angry or emotional at them will not change their attitude. Last advice? Have enough time and find your inner peace.
Damascus is a safe city where you can find many housing opportunities. While modern hotels such as Four Seasons or Sheraton are entirely Western-looking, you can find many luxurious traditional hotels in the old town, mainly in the Bab Touma (Christian) neighborhood. Be aware that Booking.com doesn’t work in the country.
Every year, the Damascus International Fair takes place in the city. Although attendance is not exceptionally high, it might be a great starting opportunity.