Situation assessment

News over the past 72 hours shows two intertwined tracks in Syria. Economically, the repercussions of opening the market after import restrictions were lifted continue: cheap goods have flowed in, leading a yarn factory to close and lay off 110 workers, while energy and labor costs have risen and bank financing remains weak and equipment outdated. The Central Bank governor’s decision to terminate the assignments of dozens of branch employees and require them to return to Damascus has also caused controversy, amid foreign currency shortages, inflation, and SWIFT-related obstacles. This coincided with cuts to fuel and bread subsidies and widespread protests. On security, Israeli operations in southern Syria continued: artillery shelling in the western Daraa countryside, incursions by vehicles and tanks in Quneitra, random gunfire, patrols toward the Yarmouk Basin, and arrests. Domestically, Wiam Wahhab warned against takfiri discourse after the Alawite workers’ bus incident, alongside reports of inflammatory sectarian speech, while an LBCI report described the situation as fragile with 'messages by fire.'

Syria appears to be passing through a turbulent transition in which economic restructuring intersects with a security vacuum and external pressure. Rapid trade opening, without adequate safeguards or financing, deepens local industry’s inability to compete, especially with the continuing effects of sanctions and outdated equipment. The new customs policy and stricter quality standards may give some factories room for limited resumption, but they do not address the structural problems of energy and financing. The Central Bank decision is additionally sensitive because most of those affected are from the Alawite community, which may fuel a sense of marginalization and weaken staff confidence, at a time when the Bank faces foreign currency shortages. On security, Israeli strikes and incursions in Daraa, Quneitra, and the Yarmouk Basin are consistent with the expansion of Israeli operations in Syria since Assad’s fall; they weaken state authority and create pressure on local communities. Domestically, takfiri and sectarian incitement, alongside incidents such as the Alawite workers’ bus, threatens to erode the state’s monopoly on violence and push citizens to seek alternative protections, as Wahhab warned. These factors are interconnected: economic hardship fuels protests, the security vacuum facilitates interventions, and sectarian polarization increases fragility.

In the near term, economic pressure is likely to continue, with more factories closing or scaling back if energy and financing costs are not addressed, and protests may recur if subsidy cuts persist. Expected growth may remain heavily dependent on international support, making it fragile. On security, Israeli operations in southern Syria are likely to continue periodically, concentrated in Quneitra, Daraa, and the Yarmouk Basin, unless undisclosed understandings emerge. Domestically, sectarian tensions may remain high if incitement is not criminalized and targeting incidents are not addressed, with the possible emergence of local protection networks. The Central Bank decision may also face administrative or legal challenges and affect staff morale. The new customs policy could ease some pressure on local producers, but its impact will remain limited without stability in energy and financing.