Syria's economic reckoning: The greatest test yet for al-Sharaa

Damascus, Syria - Syria witnessed its largest protests last week since the fall of Assad’s regime in 2024. Across northern Syria in the government’s heartland of Idlib, and in Aleppo and Hama, large crowds protested against a recent decision by the government to lift subsidies on fuel.

This comes amid lingering economic collapse and, according to analysts, growing anger from much of the population at the government’s failure to address their economic grievances.

On 13 September, the Syrian government lifted Assad-era fuel subsidies, citing “higher global procurement costs,” due to the Iran war. The changes were set to see diesel prices rise by 40%, and petrol to increase by 25%.

In a country in which, according to UN estimates, 90% of the population remain under the poverty line, such increases, and their inevitable knock-on effect in the wider economy, were clearly deemed unacceptable by large parts of the population.

Over four days, large crowds took to the streets, where they blocked traffic and set fire to tyres in anger. The protesters were calling for the reversal of the decision to lift subsidies and the resignation of Mohammed Al-Bashir, the Minister of Energy.

Economic headwinds and liberalisation

According to analysts, Syria is facing twin pressures contributing to rising fuel costs - a global rise in energy prices, compounded by the government’s liberalisation strategy.

The government has argued that rising global energy prices have burdened the import-dependent country with steeper energy bills, necessitating the lifting of subsidies.

It is true that energy prices are climbing, driven primarily by the Iran war, but also by Ukrainian strikes on energy infrastructure in Russia - which is Syria’s largest energy provider. 

However, the government’s explanation is not the full story. Price increases are also resulting from the government’s post-Assad economic vision.

The Syrian government has committed itself to unwinding Assad’s ‘Baathist’ economic model. In a meeting of the Arab Media Summit in Dubai last week, President Ahmed al-Sharaa said that Syria is undergoing “a shift from a system resembling socialism, dominated by corruption and bureaucracy, to a more liberalised system based on a free market economy”.

Under Assad, the economy was defined by “corruption, bureaucratic bloat and inefficiency,” Benjamin Fève, a Senior Consultant at Karam Shaar Advisory, tells The New Arab.

The government has sought to liberalise the economy by slimming down overstaffed state institutions, cutting subsidies, and opening the Syrian market to foreign investment.

These reforms have created a positive impact in some sense, with the IMF forecasting more than 10% growth in 2026. However, “this growth has not translated into a lower cost of living or reduced poverty rates,” Caroline Rose, a senior director at the Soufan Centre, explains to The New Arab.

Rose explains that much of the significance of lifting fuel subsidies comes from the major knock-on effects it has in almost every aspect of the economy, causing a cascade of price increases - perhaps most impactfully in the price of food.

Food insecurity remains widespread, with 7.2 million Syrians acutely food insecure according to the World Food Programme - an issue compounded by rising prices for foodstuffs and a cut in humanitarian aid budgets globally.

The rising fuel costs are also “a byproduct of Syria’s broken energy system,” says Rose. Although Syria has natural reserves of fossil fuels, “its energy infrastructure is damaged by years of war and sanctions, exacerbated by reductions in local refining capacity with Baniyas [Syria’s sole refinery] currently under repair”.

Fève, whilst recognising the importance of correcting the Assad-era economic model, acknowledges that “every lever to fix the economy has a first-order regressive impact”.

Prices in Syria have increased dramatically over the last two years, but “wages have not kept pace with rising cost of living,” he explains to The New Arab. In November 2025, previous protests broke out following the government’s decision to lift subsidies on electricity, which sent electricity prices skyrocketing by 6,000%.

Such decisions have meant that “the economic reality remains brutal for most Syrians, and there is an increasing sense that people's economic situation has worsened since the fall of Assad”.

An empty narrative

The Syrian government has also struggled to match its narrative of progress with the reality experienced by most.

“Whilst the removal of sanctions, the injection of foreign capital and the stabilisation of the exchange rate have projected a positive narrative,” explains Fève. “It hasn't translated into more disposable income.”

“There is a widening gap between the story the government tells about the recovery and what ordinary Syrians feel,” adds Fève.

The Syrian government frequently touts large instances of foreign investment into Syria, but many of the Memorandums of Understanding are not actually materialising as real investments.

There has also been a spate of investment in high-profile projects that will do little to benefit ordinary citizens. For example, in August, the Syrian Sovereign Wealth Fund and a number of investors from Saudi Arabia announced a joint investment project to construct the five-star ‘Narcissus Hotel’ in an upmarket neighbourhood of Damascus.

Furthermore, some proposed reconstruction projects appear to favour investors over displaced residents.

A planned redevelopment of the destroyed neighbourhood of Jobar in Damascus’ suburbs sparked protests after it emerged that under the deal, valued at $21bn, residents would only be provided 50% ownership shares in their former homes - and 30% for those whose homes were classed as ‘informal’.

Equally, there is a “legitimacy gap” regarding the optics surrounding the new government. Syrian government officials can be frequently seen travelling around with large entourages in large convoys of imported SUVs.

Many government ministries have been extensively refurbished to match Syria’s new ‘visual identity' - a coherent design launched by the Syrian government last year. 

“Such optics convert an economic grievance into a moral one about who this post-Assad transition is actually for,” argues Fève.

It is this sense of moral grievance that has contributed to the intensity of the anger around these protests, which represent the first real test of the government’s legitimacy on bread-and-butter issues.

Government revises its position

These protests are the largest since the fall of Assad’s regime, and a major test for the government’s governance strategy.

“The government decided not to react aggressively,” Issam Al-Reis, a researcher with ETANA, a Syrian research organisation, tells The New Arab. “They understand that this is a red line for the Syrian people, and so they allowed the protests to take place without a strong response.”

“However, the protests represent an early alarm for the government about the problems in their governance and economic management of the state,” explains Al-Reis.

He notes that much of the protest movement has been centred on Idlib - the government’s former heartland - which feels increasingly marginalised as the government “moved all its officials and institutions to the capital to run the country, leaving Idlib behind,” he says.

“Whilst much of the progress is commendable, for example, managing to increase the availability of electricity to 20 hours a day, which was only a dream under Assad,” Al-Reis adds. “If no one can afford to pay for it, then what is the overall benefit?”

The government has also shifted its policy as a result. Last Thursday, Syria’s Minister for Energy, Mohammed Al-Bashir, said that “exceptional and complicated circumstances” had forced the government to remove subsidies.

He announced the decision would be revised and instead diesel would see a partial subsidisation of certain types of diesel used in agriculture and heating - as well as for consumers eligible for government support. However, the standard grade would remain the same and prices at the pump would not be affected by the revision.

“This is certainly not a U-turn,” says Fève, “as fuel prices will still increase on average.”

Although it seems that the government is receptive to the public mood, it remains equally committed to its broader economic strategy and so unwilling to entirely walk back its reforms.

However, according to analysts, without targeted social support, the burden for these reforms will continue to be borne by the poorest for whom essential costs like food and transport make up the largest share of their expenditure.

Rose believes that “the government has sought to address this” through its revisions, creating exceptional subsidies for agriculture and heating, but that ultimately “this will not address the broader feedback loop of nationwide cost of living increases”.

As a result, this is likely not the last protest movement that Syria will witness as the government seeks to navigate the country through the perilous post-conflict phase.

How the government responds and how successful its economic vision is will ultimately determine the fate of millions of Syrians.

Cian Ward is a journalist based in Damascus, covering conflict, migration, and humanitarian issues

Follow him on X: @CP__Ward

Edited by Charlie Hoyle