$200 billion worth of Syria’s economy moved abroad

The complex economic path in Syria has extended for more than 15 years of war, the repercussions of which were not limited to the flight of large capital, but also included small and medium investments, which found a more stable environment and clearer opportunities for growth abroad, as thousands of Syrian companies operate outside Syria.

Data from chambers of commerce and industry in Türkiye, Egypt, and Jordan indicates that Syrians established thousands of small and medium-sized enterprises (SMEs) during the years of war.

In Türkiye, they topped the list of foreign investors between 2016 and 2017, according to the Union of Chambers and Commodity Exchanges of Türkiye.

In Egypt, Syrians established more than 30,000 businesses between 2012 and 2022, according to the Egyptian Ministry of Investment.

These figures not only reflect the extent of the losses suffered by the Syrian economy, but also highlight the gains made by the economies of the host countries, which benefited from the influx of Syrian expertise and capital.

From a financial exodus to a fully integrated external economy before the outbreak of the crisis in 2011, unofficial estimates indicated that the volume of Syrian capital invested abroad ranged between $60 billion and $100 billion.

Despite the government’s attempts at the time to attract expatriate investments, the results remained limited.

According to the Ministry of Tourism, expatriate investments in the tourism sector didn’t exceed 1% of the total projects under implementation in 2010.

As the war intensified, capital began to flee rapidly, followed by broad segments of industrialists, merchants, and even individuals who sold their assets to establish small businesses abroad.

Some studies estimate that the amount of money that left Syria ranges between $100 and $150 billion, including productive and commercial funds, savings, and even illicit funds generated during the war years.

Despite the outflow of this enormous sum, remittances continued into the country, reaching approximately $35 billion during the war years, at a rate of $2.5 billion annually.

Taking into account the foreign currency reserves, which were close to $20 billion in 2011, the total amount of money that left the Syrian financial system, directly or indirectly, is estimated at around $55 billion.

Adding non-bank funds and unreported flows, the estimate rises to over $200 billion, equivalent to more than ten times the current GDP.

These funds were distributed across several countries, most notably Türkiye, Egypt, Lebanon, Jordan, and the UAE.

In Türkiye, investments were concentrated in the textile, trade, and restaurant sectors, while in Egypt they focused on light industries and real estate.

In the Arab Gulf States region, investments were primarily in real estate and financial services.

Lebanon presents a unique case, as its financial environment was relatively easy but unsafe, which led to the loss of Syrian funds following the 2019 banking collapse.

According to the 2023 Arab Investment Monitor report, Syrians are among the top ten investing communities in the Arab world in terms of the number of projects, despite the lack of official support from their home country.

Despite the challenges, recent months have seen the signing of memoranda of understanding between Syrian businessmen abroad and the interim government in Damascus to implement projects in the real estate and infrastructure sectors.

Some have also made donations of a humanitarian and political nature.

However, these initiatives remain symbolic and won’t translate into real investments unless a stable and secure business environment is established.

The biggest challenge lies not in recovering funds, but in creating a new economic environment capable of attracting Syrian and foreign investment.

Investors are less concerned with the identity of the political system than with the clarity of laws and the stability of the market.

The proof is that capital didn’t leave Egypt after 2013, nor did it leave the UAE after the improvement of its relations with Damascus.

The lost opportunities and potential capital losses were not only financial but also developmental.

Syrian projects abroad created hundreds of thousands of jobs and contributed to the transfer of accumulated industrial and commercial expertise.

This “Syrian external economy” has become a fully integrated regional production base that could become a future engine of growth if properly utilized.

But that depends on the transitional government’s ability to provide a transparent economic model, free from bureaucracy and corruption, that restores investor confidence and encourages them to return.