Overview of Economic Activity

Nearly 90% of the population in Syria lives below the poverty line, with around 70% or 15.3 million people requiring humanitarian aid this year. Acute food insecurity affects 12 million people, with an additional 1.9 million at risk. Displacement camps face severe conditions; 57% lack access to primary education, and 80% to secondary, with frequent disruptions. Moreover, over 2 million Syrians reside in makeshift camps, struggling to survive with limited income opportunities.

• The cost of living is at an all-time high, and Syrians are struggling to afford the cost of basic daily needs. 
• The integration into the Turkish ecosystem makes the region vulnerable to its cycles, including inflation and hikes in interest.
• Today, the production-based economy in Syria is shattered. A productive based economy requires plentiful labor, capital, goods, and services as inputs to produce goods or services. 
• Currently, local communities are reliant on trade only, with little wealth generated from production output, i.e., manufacturing and agriculture.
• The dependence on trade and lack of control over imports/exports to/from adjacent markets are further increasing the vulnerability of Syrian markets. 
• Imported produce is cheaper, and what is left of Syria’s national production capacity is not able to compete in the market. 
• With the inability to export, manufacturers are either moving abroad or closing, and farmers and landowners are either selling lands or relying on high-value yields but with low labor and no food security values.
• At the moment we are witnessing a vicious cycle of deindustrialization, making any future attempt at reconstruction a harder and near-impossible job. 
• Syrians are also increasingly dependent on remittances from loved ones and family members abroad. It is estimated that $10M is wired daily to Syria. This money is vital to put food on many families’ tables, but it is also feeding the vicious cycle of deindustrialization, making any future attempt to reconstruct a harder and nearly impossible job.

Micro, small, and medium-sized enterprises play a key role in providing jobs, reducing poverty, and fostering social cohesion, preserving Syria’s economic capital essential for the reconstruction phase.Bharti Airtel, for example, has been preparing for 5G roll out by upskilling its professionals and offering them certification courses such as CCNA (Cisco Certified Network Associate) and CCNP (Cisco Certified Network Professional). The courses are offered based on skill and eligibility level free of cost.

Main Industries

• Textiles and Handicrafts: Textile production has traditionally been significant, including the manufacturing of clothing and other fabric products. The sector is mostly suffering from the migration of talent to Türkiye, and difficulties in exporting locally manufactured products. Today, the textiles and handicrafts sector serves the local market and northern Iraq.
• Construction Materials: Industries such as cement and other construction materials were historically active, driven by domestic demand. Today the market is dependent on Turkish, Iranian, and Chinese raw materials.

Agricultural Activities

Agricultural Activities

• Wheat and Barley: Northern Syria is known for its production of wheat and barley, vital for both domestic consumption and export. Current production is at 40% of pre-2011 capacity because of high production costs and no equivalent increase in market price.
• Cotton: The region is a significant producer of cotton, an important cash crop for the local economy. Cotton production in northwest Syria has nearly stopped mainly due to marketing difficulties and a lack of complementary industries. 
• Olive Oil and Fruit: Syria was the world’s 4th olive oil producer before the war. Its olive oil is still widely recognized for its superior quality.
• Livestock: Sheep and cattle rearing is also prevalent, contributing to the dairy and meat markets.

Significant Markets

• Local Trade: Bazaars and open markets are central to economic life, the trading of local agricultural produce, textiles, and imports. The region does not have enough established distribution and logistics companies significantly increasing the cost of introducing new products to markets. High-demand consumables such as sugar, tea, cement, and flour are monopolized by a handful of businessmen associated with armed groups.
• External Trade: Historically, northwest Syria exported olive oil, agricultural goods, and textiles. The patterns and volume of trade have fluctuated due to sanctions and conflict. The lack of a recognized central government adds complexity to issuing certificates of origin and customs declarations. Alternatively, producers can export to economies that need less bureaucratic requirements such as Libya, Yemen, and Iraq. Exports are done in maritime and traditional routes through Turkey with transit authorization.

Employment and Labor Market:

Accurate and current statistics on employment rates, main sectors of employment, and labor issues in Northern Syria can be challenging to obtain due to the ongoing conflict and the resultant displacement and economic disruptions. However, here are some general aspects based on historical and available data, though it’s important to consult the latest reports for up-to-date figures:

Employment Rates

From a market point of view, after 13 years of conflict, the know-how and experience in the local market are either being depleted or obsolete. It is important to note that experts in different sectors have fled the country; only a few remain, and they are stretched thin. We are currently witnessing the closing of a window for transfer of knowledge to new generations.

Education is part and parcel of economic empowerment. In this context, the type of education offered by our economic empowerment program aims to build new skill sets among younger  members of their workforce to bridge the gap between market needs and talents.

• Unemployment Rate: Historically high, the conflict has exacerbated unemployment rates. The exact figure varies widely between regions and over time due to the dynamic nature of the conflict. It is estimated that the current unemployment rate in Syria is as high as 50%.
• Youth Unemployment: Particularly high among youth, reflecting broader regional trends and the impact of disrupted educational and economic opportunities. 

Main Sectors of Employment: 

Agriculture 

Services 

Construction 

Manufacturing 

NGOs 

The average salary in the region is $150. The minimum monthly cost of living for a family of 4 is $250. A middle class family of 4 has a monthly income around  $350.

Significant Labor Issues

• Displacement: Large-scale displacement has disrupted traditional employment and led to a reliance on informal or irregular work.
• Working Conditions: Conflict and economic collapse have led to poor working conditions, including safety issues, lack of labor rights enforcement, and exploitation, especially among vulnerable populations.
• Access to Employment: Restrictions on movement, destroyed infrastructure, and the breakdown of institutions significantly stifled access to markets and employment opportunities.
• Skill Mismatch and Education Disruption: Years of violence and mass displacement has disrupted education, leading to a skill mismatch in the workforce and a generation of youth with limited employment prospects.

Infrastructure and Development

Northern Syria is plagued with conflict and political fragmentation which have significantly affected infrastructure, including transportation, utilities, and major projects. Here’s an overview of the situation based on available information, though it’s essential to note that facts on the ground are subject to change and varies across different areas:

Finance

• Currency: The Turkish Lira is generally used for daily transactions and the US Dollar for larger transactions including wholesale trade, or the purchase of land and machinery. 
• Banking: The banking sector in northwestern Syria is limited and challenging due to the ongoing conflict, lack of regulatory framework, and economic instability. People largely rely on informal networks or external financial services for transactions and remittances. The banking sector’s development is hindered by sanctions, security issues, and the fragmented nature of governance in the region. Turkey allows only the Turkish Postal Service for wiring transactions and all organizations are obligated to operate through them. The PTT does not allow cash deposits and puts considerable limitations on withdrawals, especially on US dollars. 

Transportation

• Roads: Northern Syria has a vast network of roads connecting major towns and cities, but many have been damaged or become unsafe due to conflict. There are few operational interstate highways, and the majority of routes are one-lane roads. Checkpoints and the division of territory among various groups can also restrict movement. Local organizations such as Syrian Forum, SAMS, and White Helmets are enlarging and rehabilitating some of the major thoroughfares. Qatar also has plans to implement projects that enhance the connectivity of the region. 
• Public Transport: In less affected areas, buses and mini buses might still operate, but services are generally irregular and depend on the security situation.

Utilities

• Electricity: The power supply is highly reliable but dependent on Türkiye. Two local companies monopolize the provision of electricity in northern Syria, AK Energy and The Syrian Turkish Electricity Company. The price of electricity is the same as in Türkiye but is relatively high in comparison to the average local income. Residential electricity is 20% more expensive than commercial, and production facilities are increasingly adopting solar energy to decrease their energy costs.
• Water: Access to clean water is a significant issue due to damaged infrastructure, contamination, and conflicting claims to control on water sources. Efforts to repair and maintain water networks are ongoing, and face many challenges. Significant efforts were put in place to transfer water to Azaz from Afrin. Nevertheless, access to water in Al-Bab is irregular, and dependent on private water tanks for residential consumption. Groundwater is generally found in large quantities at a depth of 150m. The majority of agricultural lands rely on it with the exemption of Jarablus which channels water from the Euphrates River, but the network of irrigation water is archaic and is not engineered to serve a large host population
• Telecommunications: Internet and phone services are available but can be unreliable. Coverage and quality vary significantly, with many relying on satellite connections or services provided by Turkey. Turkcell and Turk Telecom both operate in the region but require an ID issued by the Turkish Ministry of Interior to have access to their services. Local 4G providers operate in the region but without access to GSM. Internet service is relatively stable and is sold by local providers connected to Türkiye’s internet backbone. 

Major Ongoing or Planned Projects

Due to the volatile security situation and economic constraints, major development projects are limited, and often focus on immediate humanitarian needs or basic infrastructure repair. However, there are some exceptions worth noting:

• Reconstruction Efforts: In areas with relative stability, there are efforts to rebuild homes, roads, and public buildings, often with support from international donors or local authorities. The Syrian Recovery Trust Fund enjoys an international mandate working with Friends of the Syrian People states to rehabilitate electricity, roads, agriculture, food security as well as livestock. The SRTF has spent $200M in opposition-held areas including northeastern Syria, which receives the majority of the SRTF’s funding thanks to the US support. The SRTF doesn’t operate in Idlib or Afrin. Syrian NGOs are also active in reconstruction, primarily the Syrian Forum, SAMS, the White Helmets, and Ataa. The first three of those groups recently created a Joint Operational Alliance after the devastating 2023 earthquake to rehabilitate roads, buildings, and hospitals in Afrin and Idlib. 
• Humanitarian Aid Projects: Various international organizations and NGOs are involved in projects to restore basic services like healthcare, education, water, and sanitation. These types of projects are mainly financed by UN agencies under early recovery funds. Early recovery projects are limited in both scope and size, and are prohibited from making significant reconstruction beyond repairing damaged infrastructure. It is worth noting that the US, the biggest international donor, has not directed any specific stabilization funds to northwest Syria since 2017, and its aid is spent on emergency response only. 
• Agricultural Rehabilitation: Syrian and international NGOs have been crucial in rehabilitating the agricultural sector in northwest Syria. Despite facing a challenging operating environment, these organizations have worked to rebuild agricultural infrastructure, provide essential supplies, and restore livelihoods that are critical for food security and economic recovery. The efforts include distributing seeds and tools, rehabilitating land and water resources, and providing training and support to farmers to improve productivity and sustainability. Nevertheless, the efforts of INGOs are filling the void left by the interruption of state subsidies to the sector. However, production costs have increased in proportion to the revenue. 

Governance

• Administrative Structure: Northwest Syria is divided into two semi-autonomous regions: the Salvation Government controls Idlib and parts of Aleppo’s western countryside, while the Interim Government controls the northern Aleppo countryside. These regions have imposed internal borders to regulate the passage of goods and people, influenced by both economic and military decisions. Additionally, critical crossings like Deir Ballout–Atmeh and Miznaz-Maarat al-Naasan are essential for commercial and humanitarian purposes, often managed by groups like Tahrir al-Sham and the General Security Agency, although they face issues of smuggling and lack of coordination between governing bodies. Local councils in northwest Syria play a critical role in governance by providing basic services and local administration, while Türkiye provides support in areas of security and infrastructure, influencing governance structures and economic policies. Türkiye’s role is significant, due to its military and economic ties to the region, shaping the administrative and political landscape. 
• Economic Policies: In northwest Syria, fiscal, trade, and investment policies are largely influenced by internal governance structures and external support, particularly from Türkiye. The region’s economy deals with issues like currency instability, reliance on cross-border trade, and dependence on humanitarian aid. Efforts to push economic reform and bolster local development are constrained by ongoing armed conflict and political instability; but are limited to rebuilding infrastructure, boosting local agriculture, and small-scale manufacturing support. The specifics of these policies and programs are dynamic and closely tied to the evolving political and military landscape. 
• Taxes: Fees on imported goods are relatively low, thus exposing local production to unfair competition with foreign producers. Taxes on businesses are also low and are collected in the form of yearly license fees, but no taxes are imposed on revenue or income. The Salvation Government imposes taxes on goods traded from northern Aleppo, and vice-versa, increasing cross-frontline trade. The same dynamics apply to trade with Northeastern Syria. Trade with regime areas is done through smuggling routes and costs as much as $10K per shipment. 
• International Relations: Northwest Syria’s relationships with neighboring countries and international organizations are complex, characterized by dependence on humanitarian aid, cross-border trade, and occasional diplomatic negotiations. The proximity to Türkiye significantly influences trade and security policies. International organizations are mainly engaged in providing humanitarian assistance and support for infrastructure projects but Türkiye is a major stakeholder in northern Syria. It’s invested in stabilizing the region as a buffer zone and a safe area for the repatriation of Syrian refugees. Ankara is committed to establishing a favorable environment for developing the local infrastructure and private sector. 
• Public Services and Support: In northwest Syria, healthcare, education, and public services are significantly strained due to the conflict. These sectors suffer from underfunding, damage to infrastructure, and loss of professionals. However, local NGOs, international aid, and some government bodies attempt to provide basic services despite these challenges, impacting the economic and social life of the region.

Laws and Regulations:

• Legal System Overview: The legal system in northwestern Syria is fragmented and varies by area, with a mix of civil, criminal, and commercial laws influenced by Islamic law, local customs, and remnants of the Syrian legal code. The judicial structure is affected by the control of different factions and the absence of a unified legal framework, leading to a complex and often inconsistent application of laws. 
• Business Laws: The Syrian legal code is officially implemented in GL-22 areas and the Arabic unified code is applied in Idlib. The area has courts, general attorneys, and lawyers’ unions. Housing, land, and property rights are kept by local deeds registries.
• Labor Laws: Worker rights, employment contracts, minimum wage, and labor unions in northwestern Syria are not well-established due to the conflict and fragmented governance. Regulations, where they exist, are inconsistently applied, and labor protections are minimal. There is little formal recognition or support for labor unions, and employment terms are often informal and precarious.
• Reforms and Changes: Türkiye has recently doubled down on its efforts to centralize the administration of the region under one institution, the Presidency of Migration Management.

Security

• General Security Situation: Northern Aleppo has witnessed relative stability since March 2020, the local administration has acquired cumulative experience, and local businesses have adapted and are looking for opportunities to expand.
• Conflict Zones and Impact: Northern Aleppo security is heterogenous, cities such as Azaz and Al-Rai’ are relatively more secure and stable thanks to the presence of a single authority in opposition to Afrin and Al-Bab with a multitude of armed actors hindering local development despite the large amount of human capital in those cities with significant potential for development. 
• Measures and Initiatives: Turkey via the Syrian interim government has unified the military police that is slowly replacing local armed groups’ roles in security provision. 

US Sanctions and OFAC

General License 22

• US entities, especially those with potential investors from the US, must comply with US sanctions in the region.
• Since 2004, multiple sanctions have been imposed on Syria by the USA.
• On May 12th, 2022, OFAC issued a General License (GL22) exempting certain transactions from these sanctions, enabling investments in specific geographic areas and sectors in Syria.
• Any investment opportunity must be active in the economic sectors listed in GL 22 to utilize this exemption.

OFAC General License 22 Exempt Sectors

• Agriculture
• Construction
• Transportation and warehousing
• Education
• Information and Telecommunications
• Finance
• Water and waste management