In and around the Ottoman-era structure can be found links to Syria’s and the broader region’s history. The metal roofing covering the market’s galleries has bullet holes from battles fought against French occupiers. Outside, the remains of the Roman temple of Jupiter lead into the Umayyad Mosque, one of the oldest in the world. The nearby Citadel hosts the tomb of Saladin, one of the most iconic fighters against European crusaders in the Levant.

Nowadays, the market is witnessing another historic phase. The crowds have gotten bigger, as thousands of Syrians visit the capital for the first time in years. Besides the normal goods on display, they find newly minted merchandise celebrating the fall of the Assad regime, toppled on Dec. 8 by a coalition of rebel fighters led by the Islamist militia Hayat Tahrir al-Sham, or HTS. The sweaters, wrist bands and beanies emblazoned with Syria’s revolutionary flag are a testament to the civic enthusiasm and pride generated by the fall of one of the region’s most ruthless dictatorships.  

But the crowds at Al-Hamidiyah market don’t signal an improvement in buying power. A more accurate indication of the state of the Syrian economy can be seen outside the market itself.

Since the fall of the Assad regime, large swathes of central Damascus have become filled with street sellers, with the city’s sidewalks showcasing an unusual assortment of products ranging from canned tuna and chocolate bars to napkins and used shoes.

This street trade is another sign of the country’s post-Assad transitional period. Old laws are no longer enforced, and the new administration has yet to regulate informal commerce. But the huge numbers of sellers illustrate two key things about the current state of the Syrian economy.

First, the collapse of the Assad regime has reduced some domestic trade barriers and made a range of products cheaper and more readily available. Second, and more importantly, the lack of employment and broader economic prospects is forcing many Syrians to make ends meet by selling whatever they can.

According to the United Nations World Food Program, an estimated 90 percent of Syrians currently live below the poverty line, and as many of 12 million people out of an estimated pre-war population of 25 million do not know where their next meal will come from.

With much of the country’s infrastructure and housing destroyed, rebuilding Syria will take years and billions of dollars. But in the short term, stabilizing the economy and improving the living standards of Syria’s poorest will be crucial.

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Rebuilding Syria will take years and billions of dollars. But in the short term, stabilizing the economy and improving the living standards of Syria’s poorest will be crucial.

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The transitional government, headed by HTS leader turned interim President Ahmed al-Sharaa, has vowed to jumpstart the economy and rebuild the country.  But much of what it will be able to accomplish over the coming months depends on external factors.

A major obstacle is the volley of international sanctions levied against the previous regime by Western countries in 2011, as former dictator Bashar al-Assad violently repressed peaceful protests against his rule. While Assad and his entourage have escaped to Moscow, most of these sanctions remain in place, weighing heavily on economic activity.

“Sanctions hinder Syria’s ability to interact with the rest of the world, limiting investment prospects,” Karam Shaar, a political economist and independent consultant, told WPR.

In January, the United States temporarily eased some its restrictions on transactions with Syria for a period of six months. Although Washington opted to maintain overall sanctions, it created exemptions to allow for the entry of humanitarian aid, the transfer of personal remittances from Syrians living abroad and certain commercial transactions related to the energy sector. These will now help in the short term. But six months is not nearly enough for what needs to be done.

A similar move was announced by the European Union in late February. EU foreign ministers agreed to suspend sanctions on the energy and transport sectors, while easing restrictions on several financing institutions, including the Central Bank of Syria. Impediments on delivery of aid to Syria were also removed. These measures are set to last one year.

Both the U.S. and EU leaders want to make sure, however, that mechanisms are in place that allow for a quick re-establishment of sanctions if need be. That Western countries would use sanctions-relief to try to push Syria’s transition toward an inclusive political system is to be expected. Keeping sanctions against individuals linked to the Assad regime’s corruption and human rights abuses, and even some targeting individuals affiliated with the HTS to shape its future behavior, makes sense.

But restrictions that impede Syrian businesses from trading internationally or the government from rebuilding the country’s electricity sector, in particular, only extend the misery inflicted by the previous regime. “By allowing trade you would bring prices down, because sanctions are merely externalities that add to the price of goods,” Assaad Alachi, an economist and executive director of the Baytna nonprofit organization supporting Syrian civil society, told WPR.

Energy provision is a key challenge. Due to infrastructural damage, Syria’s electricity supply remains intermittent, making businesses dependent on private generators. At night, many parts of the capital remain in the dark. “Without a working electrical grid, nothing can happen: no agricultural or industrial development,” says Alachi. “Removing obstacles to electricity provision would impact Syria at the street level,” he adds.

For the time being, the exemptions accorded by Washington have opened the door for budget support mechanisms to be pledged by foreign donors. These will help beef up the state’s ability to implement urgently needed measures. Qatar has vowed to help finance the 400 percent increase in public salaries promised by Syria’s new rulers last month, for instance. Saudi Arabia will likely also provide financial support.

With state salaries averaging $25 a month, the hikes will help stimulate the economy by boosting livelihoods. But salary increases alone are expected to cost $127 million monthly. For the moment, Syria’s interim government cannot fulfill its financial obligations with its own resources.

According to Shaar, during the last few years of the Assad regime, the Syrian state used deficit spending—essentially printing money—to make up for about a third of its expenses in the areas of the country it controlled. 

“State spending has been $2 billion to $3 billion over the past four or five years,” Shaar says. “So, if you look at how much Qatar is willing to provide, that is already over half of the budget.”

Supporting the Syrian state’s ability to pay salaries and run its dilapidated services is essential to restarting the economy. Many state workers have been laid off, and many factories and private businesses have shut down. Public employees who managed to keep their jobs have had much of their pay delayed, and in many cases they and private-sector workers can’t even retrieve money due to a currency crunch.

As of early March, financial support by Gulf countries still hadn’t made it to Damascus, because Qatari authorities were reportedly unsure of whether or not these transfers would violate U.S. sanctions. In Washington, the Trump administration’s position regarding Syria’s new rulers remains unclear. All over Damascus, however, lines outside bank branches remain a daily sight.

In the short term, authorities are hoping that meager budgetary resources can be boosted through a combination of regional support, new investment flows and eventually access to Syrian assets frozen abroad due to the account holders’ links to the Assad regime.

Another challenge will be for the government to unify the currency in use. In Damascus, goods can be purchased using either Syrian pounds or U.S. dollars. Further north, the Turkish lira is also accepted. This creates challenges for businesses and affects the government’s ability to implement monetary policy to stabilize the Syrian pound, which has seen high fluctuations in value that present additional problems for businesses and households.

The economic recovery will also be influenced by politics. Sharaa, who led the military offensive against the Assad regime, has stated it will take four to five years to organize elections.

Despite his unifying rhetoric, however, Sharaa has yet to communicate a comprehensive vision for the political transition and showcase how it will include all Syrians, irrespective of gender, religion or political affiliation. A promised national dialogue took place last week, but it was hastily organized to meet a March 1 deadline previously announced by Sharaa. As a result, it offered little clarity on the path forward.

In the meantime, authorities are trying to incorporate Syria’s multiple rebel militias into a unified army. Despite the acquiescence of other armed factions, negotiations between the interim government in Damascus and the Kurdish-led Syrian Democratic Forces in the northeast have stalled, resulting in the SDF being excluded from last week’s dialogue.

In the city of Homs and its surrounding province, insecurity and the risk of score-settling threaten to precipitate a new wave of fighting. “No one will invest in Syria without knowing whether the country will be united or not,” warns Shaar.

After half a century of dictatorship under the Assad family and 14 years of a destructive civil war, Syria’s political transition is a historic opportunity that was unthinkable only a few months ago.

But for the informal sellers trying to make a living around Damascus as well as for Syrians at large, the political transition will only be as sustainable as the economic recovery that underpins it. And the timeframe for that is more urgent.