In Syria, growing economic distress and frozen reconstruction efforts are threatening the legitimacy of established actors, in turn providing space for extremists to exploit. Fighting in Syria has dramatically declined as the frontlines of the civil war have largely been frozen since 2020. But new fractures have recently begun to emerge behind those established frontlines. Since August, a series of protests and skirmishes have broken out in territory nominally controlled by one of Syria’s major factions. In the government-controlled southern city of Swedia, Druze demonstrators have taken to the streets to protest against President Bashar al Assad’s economic policies, resulting in violence between protesters and government forces. Meanwhile, in the northwest, a dispute over sharing oil revenues triggered bloody clashes last month between ostensibly allied Arab tribes and the U.S.-aligned Syrian Democratic Forces (SDF), leading to the deaths of dozens of fighters. The unrest took place against the backdrop of President Assad’s first state visit to China since 2004, where he attempted to win Chinese aid to help foot his war-torn country’s U.N.-estimated $500 billion reconstruction bill. But he left the visit without any concrete funding pledges, with China only promising to continue supporting Syria, which is a member of Beijing’s Belt and Road Initiative (BRI) member. 

• Sweida remained loyal to al Assad’s regime during the early years of the civil war in the 2010s, in part because the southern city’s ethnoreligious group, the Druze, was worried about an Islamist takeover of the country. Over the years, tensions periodically flared between Sweida and Damascus, including the 2015 assassination of a prominent anti-government Druze leader and subsequent protests. But the region has never experienced a major uprising.
• The SDF is an umbrella group of factions and militias, with long-standing tensions between its Kurdish-dominated groups and Arab ones, particularly over the use of resources like Syria’s limited oil and gas reserves. The SDF’s control of predominantly Arab cities like Raqqa, which the group retook from the Islamic State in 2017, has strained Arab-Kurdish relations as well. 
• Syria remains under U.S. sanctions, which has made it impossible for countries exposed to Washington’s financial pressure to send Damascus reconstruction aid. This is despite recent progress toward Syria’s regional normalization, which has seen Damascus restore diplomatic ties with Egypt, Saudi Arabia and the United Arab Emirates. China is widely seen as a potential source of reconstruction aid due to Beijing’s greater willingness to skirt U.S. sanctions compared with countries like Iran. 

Syria’s economic crisis has hit a new low following the February 2023 earthquakes that struck the country’s north, opening the door to new conflicts. The World Bank expects the Syrian economy to contract 5.5% in 2023, in part because of the impact of the massive earthquakes earlier this year that devastated northern Syria. The Syrian pound has also lost over 50% of its value this year, strained by the higher costs of imports (particularly food and fuel imports) brought on by the fallout from the war in Ukraine and the economic crisis in key trading partner Lebanon, along with the cash-strapped Syrian government’s inability to effectively rebuild key infrastructure. To ease the strain on the country’s finances, the Assad regime has rolled back popular fuel subsidies, causing pushback in places like Sweida and Damascus. This decision affects the country nationwide, though SDF territory also relies on oil and gas sales and trade with Iraq, including reportedly to Damascus, to prop up its local economy. 

• With over half its population displaced, Syria’s agricultural sector has been devastated, making it more reliant on imports from abroad. Over the summer, Syria’s agriculture minister claimed the country would experience a strong harvest. But Syria (and its neighbors) has seen recurrent heat waves, and in September, banned exports of olives (the country’s top export in 2021) after a poor harvest, which suggests that Syria’s wheat harvest may also not be as strong as initially expected due to climatic conditions.
• Lebanon’s ongoing financial instability has also exacerbated Syria’s woes by straining the two countries’ historically close economic ties. Lebanon was previously one of the few countries Syria could openly trade with; exports to the country were also a major source of hard currency for Damascus.

These new patterns of violence and instability will further impede Syria’s ability to secure crucial reconstruction aid. Syria’s recent diplomatic breakthroughs, while substantial, have not resulted in new promises of financial support. Despite Damascus reopening relations with former rivals Egypt, Saudi Arabia and the United Arab Emirates, none of these countries has pledged substantial reconstruction aid, as they remain wary of U.S. sanctions still in effect on Syria. Meanwhile, even as China has a history of skirting or ignoring U.S. sanctions on certain countries, Syria does not meet Beijing’s qualifications for substantial investments because the Middle Eastern country is neither a large destination market for Chinese exports nor a major source of energy resources; Syria’s geography also isn’t essential to the success of China’s BRI ambitions. Moreover, the ongoing civil war, and the fractures now emerging behind the frontlines, means Chinese investments in Syria could be plagued by security incidents, and China has shown very little interest in providing security assistance to the country, let alone deploying troops abroad there. 

• U.S. sanctions on Syria are tied to political reforms (namely, concessions to the opposition, including possible power-sharing) that the Assad government will not make, meaning the sanctions regime will remain in place for the foreseeable future. Moreover, in the United States, there is not a substantial grassroots activist movement or congressional support for lifting sanctions on Syria, given the minimal effect the country’s isolation has had on the U.S. economy. 
• China has shown some investment interest in Afghanistan but has limited that interest based in part on the security conditions there, despite the South Asian country’s large mineral wealth that would otherwise be attractive for Beijing.

Syria’s ongoing economic distress will harm the legitimacy of both the Assad government and the SDF, potentially creating opportunities for extremists like the Islamic State to expand. A widespread rebellion similar to 2011 remains unlikely, as Damascus has largely reimposed its authority in the areas under its control. But Syria’s mounting economic problems will continue fueling violence that will weaken the political legitimacy of the Assad government and the SDF, as their legitimacy often relies on their claims to provide economic and physical security in the aftermath of the civil war. As this trend unfolds, underground groups like Islamic State will be able to benefit — in part because factionalized security forces will be unable to focus on containing their activities, and in part because ordinary citizens will be looking for alternatives to established authorities to provide them with work and address their grievances. While Damascus and the SDF will likely retain the territory currently under their control, Islamic State and other extremist groups could expand their underground capabilities. This could see militants launch more attacks in major cities like Damascus, which would demonstrate their ability to operate in better-defended areas far from their desert safe-havens. Depending on how much they can take advantage of economic frustrations and pockets of insecurity to improve their capabilities, extremist groups may even attempt to carry out cross-border attacks in Turkey, Iraq, Jordan, Lebanon and the Arab Gulf states. 

• The Islamic State has claimed responsibility for at least two bombings near Damascus in 2023, an uptick in activity that demonstrates the group’s continued ability to organize underground. 

The ongoing instability means that many of the Syrian refugees living abroad will also be unable to return home anytime soon, further straining the economies of their host countries. Finally, instability behind the frontlines will also make it more difficult to send home the millions of Syrian refugees currently living in neighboring Turkey, Lebanon and Jordan. For the foreseeable future, these host countries will thus have to continue paying to support their large populations of displaced Syrians and contain the growing risks of unrest from the refugees, as well as the locals upset at their presence.