Turkish firms see promise and peril in sanctions-free Syria

Reuters

4 days ago

ISTANBUL, May 29 (Reuters) - Turkish companies see big opportunities in neighbouring Syria as a lifting of U.S. sanctions clears the way for investment in post-war reconstruction, but they remain wary of challenges, from lingering insecurity to banking and tax headaches.
President Donald Trump's decision to end long-standing restrictions that severed Syria from the global financial system under former President Bashar al-Assad is seen as a lifeline for a nation decimated by 13 years of war.
Construction, transportation and manufacturing firms from Turkey - a close ally of Syria's new administration after backing anti-Assad rebels - are poised to play a major role in repairing the damage, which the U.N. estimates at nearly $1 trillion.
"The lifting of sanctions was just an urban legend, rumours for a time. But with Trump's announcement, everything has suddenly changed," said Omer Hot, a director at Istanbul-based Formul Plastik.
Syria's Finance Minister Yisr Barnieh has called his country "a land of opportunities" and said the government plans to overhaul the tax, customs and banking systems to foster foreign investment and facilitate donor funding pledges.
Interviews with officials from two dozen Turkish companies reflect both optimism over the potential of a previously sealed off market with vast needs and caution over rushing investments in a country where even money transfers can be difficult and banknotes scarce.
Formul Plastik has received the first plastics orders from Syria, Hot told Reuters. He estimated that Turkish companies could end up with a quarter of Syria's reconstruction pie.
But he is already facing hurdles.
"Rather than banks, there are brokers such as exchange bureaus that mediate trade payments. This model will have to be used for now," Hot said.
Other Turkish companies at the Buildex construction materials expo in Syria's capital Damascus this week said demand from Syrian counterparts was very high, even as they listed worries over tax rates, customs snarls and creaking transport infrastructure.
"We are taking a calculated risk, let's say," said Burak Serim, regional export manager at construction materials producer Entegre Harc.
In the wake of Assad's December ouster and the establishment of a government under new President Ahmed al-Sharaa, Turkey is already feeling economic benefits.
Ankara has pledged to help rebuild Syria's economy, including by providing natural gas. And Ziraat, Turkey's top state bank, told Reuters it would step in to support its banking sector when conditions are right.
Turkish firms Kalyon GES Enerji Yatirimlari and Cengiz Enerji are set to expand Syria's power grid under a new deal.
Syria's trade with the rest of the world all but dried up during the war. But Turkish exports to its neighbour were up 37% year on year in the first four months of 2025, official data show.
In an indication of its gaping needs for construction materials, Syrian imports of Turkish machinery more than tripled and non-ferrous metals doubled. Glass and ceramics were up 73%.
Pledges of financing have, meanwhile, come in from wealthy Western nations, multilateral donors, and the likes of Saudi Arabia and Qatar.
But for the most part, those are still largely promises. And Turkish company managers voiced concern there may not be enough for all the roads, bridges, dams and power plants that must be rebuilt.
Syria's economy shrank dramatically during the war years. And with over 90% of its 25 million people now living below the poverty line, according to U.N. agencies, the government has scant resources.
Volkan Bozay, chief executive of the Turkish Cement Manufacturers' Association, told Reuters that much hinges on which lenders finance the reconstruction projects but added that Turkish companies would play a major role no matter what.
"It is out of the question that we will not take advantage of the opportunities," he said.
Beyond construction, Turkish manufacturers are also eyeing Syria as a possible hub for low-cost production.
"Lower production costs in Syria are an advantage," said Ahmet Oksuz, a board member at Turkish textile manufacturer Kipas.
"But Turkish and Syrian authorities should coordinate to establish organised industrial zones that will ensure entirely safe areas for manufacturers," he added.
Questions of security in a country still awash with arms where the new central government wields only tenuous control remain at the top of the list of concerns for many would-be investors.
Hakan Bucak, former Turkish-Syrian business council board director, said Syria will likely need six months to ensure security and set up bureaucratic systems.
"Security risks should be fully eliminated and investors need to feel it," said Bucak, who is already looking to open a quarry near the northern Syrian city of Aleppo.
"If we feel safe, we have plans to invest."