The Role of Natural Resources in Syria’s Economic Recovery: An Analysis of Opportunities within Economic Reform Policies

 Dr. Ibrahim Naeef koshaji

Syria is experiencing one of the most severe economic crises in modern history, where a decade-long war has transformed the country from a developing economy into an unprecedented economic collapse.

Despite this catastrophic situation, Syria still possesses enormous natural wealth that could form the nucleus of economic recovery – from oil and gas reserves to phosphate mines and fertile agricultural lands that once met the region’s needs for wheat and cotton. However, exploiting these resources faces significant challenges, most notably the destruction of productive infrastructure and scarcity of foreign direct investment.

Thus emerges the fundamental question: How can Syria achieve economic recovery by utilizing its natural resources in the post-conflict phase? This requires setting priorities and directing resources toward sectors most impactful for economic and social stability.

1. The Current State of Syria’s Economy

Syria’s GDP has declined from $60 billion in 2010 to approximately $12 billion in 2023, according to World Bank estimates (World Bank, 2023). Employment rates in industrial and agricultural sectors have decreased by 75% compared to pre-crisis levels (IMF, 2023).

 1.1. Inflation and Exchange Rates

Syria is experiencing high inflation levels, with an annual inflation rate reaching about 150% in 2024 according to IMF reports (IMF, 2024). The Syrian pound’s exchange rate against the US dollar deteriorated to 15,000 pounds per dollar, then dropped to 11,000 pounds after the political regime change, severely impacting citizens’ purchasing power (CBOS, 2024).

Table 1: Macroeconomic Performance Between 2010 and 2023/2024

 1.2. Reconstruction and Foreign Investment

Estimates indicate Syria’s reconstruction costs exceed $400 billion – a massive challenge requiring foreign investment and international partnerships (World Bank, 2024). This necessitates innovative financing programs to attract foreign capital that could help rebuild infrastructure while investing in national capacities to promote sound economic growth and efficiency.

1.3.  Syria’s Natural Resources and Economic Importance

Syria possesses significant natural resources that could support national economic recovery if effectively managed, including oil, gas, phosphates, agriculture, and other mineral resources.

 1.3.1 Oil and Natural Gas

Syria is an oil and gas producing country, though production has declined due to conflict and political conditions. According to BP’s Statistical Review (2024), Syria produced about 385,000 barrels daily before 2011, but production fell below 25,000 barrels daily by 2023 due to investment declines and lack of infrastructure. Oil reserves are estimated at 2.5 billion barrels (EIA, 2023), with natural gas reserves at 8.5 trillion cubic feet (BP, 2024).

Revitalizing Syria’s oil and gas sector could increase production to 100,000 barrels daily within five years, providing crucial budget support (IMF, 2024).

 1.3.2 Phosphates and Minerals

Syria has substantial phosphate reserves and is among the region’s top producers. The USGS (2023) estimates Syrian phosphate reserves at 1.8 billion tons, primarily in Khneifis and Al-Sukhna deposits formed over 30 million years. Syrian phosphate contains over 18% P₂O₅ and is rich in uranium and rare elements like cadmium, lithium, and barium (Saeed, 2010).

While production was 3.5 million tons annually in 2010, it fell below 500,000 tons by 2023 due to infrastructure deterioration (World Bank, 2024). European and Asian markets could absorb about 70% of projected production after mine rehabilitation (UNCTAD, 2024).

Phosphate sector reinvestment could generate $1 billion annually, especially with improved refining and export processes.

 1.3.3 Agriculture and Related Natural Resources

Syria is among the Middle East’s most important agricultural countries due to its climate diversity and fertile lands. Agriculture constitutes 20% of GDP and provides over 40% of direct and indirect employment (FAO, 2024). Key crops include wheat (1.7 million tons annually, down from 4 million in 2010) requiring imports to cover shortages, and olives (700,000 tons annually) making Syria a global leader. Syria’s high-quality cotton production has declined from 300,000 tons to 80,000 tons (FAO, 2024).

Agricultural investment starting with land reclamation and irrigation technology could boost wheat production, enhance food security, and provide raw materials for food industries. Increased cotton production would supply raw materials for textile manufacturing, reducing import dependence and saving foreign currency.

Table 2: Natural Resource Production 2010 vs. 2023 with 2027 Targets

 1.3.4 Phosphate and Minerals Sector

The phosphate sector represents a strategic opportunity to support Syria’s economy through import substitution and value-added production. Developing this sector could meet agricultural needs, reduce fertilizer import costs, and enhance chemical industry inputs by replacing imports with high-quality local materials.

A. Phosphate’s Role in Supporting Local Industry

Syria holds one of the region’s largest phosphate reserves (1.8 billion tons) concentrated in Khneifis and Eastern mines (USGS, 2023). However, domestic production has declined due to weak investment and infrastructure, creating heavy dependence on imported fertilizers and detergent materials.

Modernizing extraction technologies could restore pre-crisis production levels, meeting 90% of domestic fertilizer demand and 70% of detergent industry needs.

B. Enhancing Value Addition Through Local Fertilizer Production

Rather than exporting raw phosphate at low prices, Syria could produce phosphate fertilizers domestically to meet farmers’ needs and reduce import spending:

– Local fertilizer production could save over $500 million annually (IMF, 2024)

– Existing plants operate below 40% capacity due to funding/material shortages (UNCTAD, 2023)

– New plants could multiply mineral value by 5-7 times compared to raw exports (World Bank, 2024)

This strategy would achieve agricultural self-sufficiency and reduce fertilizer imports. With improved production, Syria could become a net exporter, boosting foreign earnings and trade balances.

C. Infrastructure Development and Mining Investment

Achieving these goals requires mining sector investments to improve extraction and refining through:

1. Advanced chemical processing technologies to increase productivity
2. Local phosphate fertilizer plants instead of raw exports
3. Mine rehabilitation and foreign investment for industry expansion

UNCTAD (2024) estimates such investments could yield $3-5 billion annually if systematically implemented.

Table 3: Projected Impacts of Proposed Investments

D. Phosphate as Raw Material for Detergents

Beyond fertilizers, phosphates are used to produce sodium tripolyphosphate (STPP) – a key component in laundry detergents and cleaning products. Global STPP production exceeds 3.5 million tons annually (UNCTAD, 2024). Local STPP production from Syrian phosphates could save hundreds of millions in imports (World Bank, 2024).

Syria currently spends about $200 million annually importing STPP and phosphate compounds (IMF, 2024). Developing plants to convert raw phosphates into industrial compounds could:

– Reduce raw material imports by $200 million annually

– Generate $500 million annually through value-added exports (WTO, 2024)

– Create jobs through local plant development and industrial expansion

 Conclusion

Optimal utilization of Syria’s natural resources – including oil, gas, phosphates, and agriculture – could mark a turning point toward economic stability. This would improve the Syrian pound’s exchange rate through increased exports and reduced imports, strengthening central bank reserves. Investments in resource-based industries would enhance citizens’ purchasing power, stimulate public investment, and create employment opportunities.

However, achieving these objectives requires fundamental governance reforms, an attractive investment climate, and international support to ensure successful economic recovery. If these conditions are met, Syria could witness promising economic revitalization restoring hope for millions within few years.

 References

1. Saeed, Ibrahim Ahmed (2010). “Phosphates in Syria and Their Role in Economic Development”. Damascus University Journal, Vol. 26, No. 3+4.
2. BP Statistical Review of World Energy (2024). Oil and Gas Production in Syria
3. Central Bank of Syria (2024). Syrian Pound Exchange Rate Data.
4. Food and Agriculture Organization (2024). Reports on Syria’s Agricultural Production.
5. International Monetary Fund (2023, 2024). Reports on Employment, Inflation, and Oil Production.
6. Saeed, Ibrahim Ahmed (2010). “Phosphates in Syria and Their Role in Economic Development”. Damascus University Journal, Vol. 26, No. 3+4.
7. S. Energy Information Administration (2023). Estimates of Syria’s Oil Reserves
8. S. Geological Survey (2023). Syria’s Phosphate Reserves.
9. UN Conference on Trade and Development (2023, 2024). Analyses on Phosphate Exports and Investments
10. World Bank (2023, 2024). Reports on GDP and Reconstruction Costs.