The control of the “Deterrence of Aggression” and “Dawn of Freedom” operations over the provinces of Aleppo, Idlib, and Hama, and their approach to the city of Homs, as part of Operation “Deterrence of Aggression,” represents a strategic turning point in the Syrian landscape, after a period of uneasy stability since 2018. This threatens the dynamics of engagement that had been reconciled with the reality of control and influence that prevailed at the time.
The recent military operation represents a major blow to the regime economically, not only through the loss of resources and revenues, but also by undermining its political influence and the narrative of stability, recovery, and reconstruction contracts it had been promoting. Conversely, this shift poses a strategic challenge to the forces of change, which must begin developing a national economic approach based on the principles of effective resource management, contributing to improving the conditions of the local population, and supporting stability.
Therefore, the economic question constitutes a key link within the system of central questions posed regarding several issues, especially in light of the regime’s intransigence. The following are some initial indications of the nature of the economic landscape, especially as the battles are still raging.
Rapid Depreciation of the Syrian Pound
The black market exchange rate for the US dollar reached approximately 17,000 Syrian pounds in Damascus markets on December 6, 2024, while the official rate at the Central Bank of Syria was 13,668 Syrian pounds. This represents a gap of up to 24% after nearly a year of attempts by the Central Bank to close the gap and bring it very close to the black market rate. In contrast, the gap between Aleppo markets and the Central Bank rate reached 68%, with the dollar buying price in Aleppo reaching approximately 23,000 Syrian pounds. This gap is attributed to several reasons, including: the separation of Aleppo markets from Damascus markets, the interruption of the flow of Syrian pounds to Aleppo, the closure of banks and government institutions operating in the city, the cessation of industries and trade in Aleppo, which previously fueled the local economy with Syrian pounds, the increased demand by residents to exchange their Syrian pounds for any foreign currency, the loss of confidence in the Syrian pound, and the uncertainty surrounding the city’s administration and the future form of governance. All of these factors have contributed to the decline in the circulation of the Syrian currency in the markets and led to its collapse. It is expected to disappear from circulation in Aleppo’s local markets in the coming weeks.
Among the signs indicating the impact of recent events on the regime’s economy are the decline in demand for the Syrian pound due to the decline in circulation, which increases pressure on its value in the market, the loss of foreign currency cash flows used to finance imports and defend the pound’s exchange rate, and the diminishment of the regime’s economic sovereignty on the ground.
Loss of Revenue and Decline in Exports
The loss of Aleppo—Syria’s largest industrial city, which includes nine industrial cities and zones, in addition to the entire Idlib Governorate—from regime control will result in a loss of tax revenues and customs duties imposed on nearly thousands of operating industrial facilities. Aleppo is also a major gateway for foreign trade, especially with neighboring countries. Its loss would mean a decline in exports, a widening of the trade deficit, and a further weakening of the regime’s position in regional markets.
Disruption of Supply Chains and Loss of International Routes
The loss of these areas from regime control, along with the M4 and M5 international highways, will disrupt the supply chains for many raw materials and manufactured products that previously reached other Syrian governorates. This will negatively impact industrial and commercial activity and lead to a general increase in commodity prices in local markets, due to a shortage of imported goods and reliance on other routes.
Loss of Resources and Food Security
Aleppo’s thermal power plants are among the most important sources of electricity in the region. The regime, in cooperation with Iran, previously sought to repair two thermal power plants with a total capacity of 480 megawatts. Loss of control over these plants weakens the regime’s ability to generate electricity locally. With reduced production capacity, the number of power outages will increase in regime-controlled areas, negatively impacting the daily lives of citizens. In addition, the loss of agricultural land in the southern countryside of Aleppo and Idlib will place significant pressure on food production, leading to a significant increase in prices.
The Financing Crisis
The regime will face significant difficulties in compensating for the quantitative and qualitative losses it has suffered since the launch of Operation Deterrence of Aggression, including weapons, equipment, and ammunition, not to mention military infrastructure such as airports, factories, and barracks. This is due to its financial deficit, the sanctions imposed on it, and the inability of its allies, Russia and Iran, to restore its military capabilities during this operation due to geopolitical constraints and circumstances that prevent this. Furthermore, the regime will lose one of its most important channels of financial support in foreign currency, represented by the support provided by organizations affiliated with the Syrian Trust for Development and the Red Cross operating in the areas it has lost. The share of international funding it previously received will decrease compared to the allocations for those areas and their residents. This will also impact the decline in the militias’ share of funds generated by illicit activities, such as smuggling, extortion, and drug trafficking, exacerbating the funding crisis for the regime’s local networks.
