Syria’s deep economic reliance on neighboring Lebanon, a byproduct of years of conflict and isolation, has left regime-controlled areas highly vulnerable to the ripple effects of instability across the border. This fragility has been starkly exposed as Israel escalates its military campaign against Hezbollah in Lebanon, severely disrupting the flow of goods that have long served as a critical lifeline for Damascus. These interruptions have worsened existing shortages, triggering sharp increases in the prices of essential commodities.
The crisis has been further aggravated by a significant influx of people fleeing from Lebanon into Syria. As thousands cross the border seeking refuge from the escalating violence, already strained resources are being stretched to their breaking point. This sudden surge in demand has driven up the cost of living, adding to the pressure on Syrian households already struggling under economic hardship.
Economic disruption and price hikes
Israel’s ongoing military operations in southern Lebanon have severely disrupted the movement of goods to Syria, which has served as a vital economic lifeline for Damascus since the Syrian conflict began in 2011. The threat of further disruptions to these essential supply chains has caused panic among Syrian business owners, prompting sharp price increases as they brace for worsening conditions.
One of the most immediate effects has been the dramatic surge in fuel prices. In Damascus, black market gasoline rates have skyrocketed, jumping from 12,000 Syrian pounds per liter ($0.81) to as high as 30,000 pounds ($2.30) in just a few days. This sharp rise in fuel costs has had a ripple effect on those for other essential goods. For example, the cost of transporting staples like fruits and vegetables has doubled, leading to price hikes of 15-25% in many areas, further straining household budgets.
Even everyday commodities have not been spared. The price of imported cigarettes has surged by 20-30% within a week, with some brands disappearing from shelves altogether. Other products, such as charcoal and hookah tobacco, have also become more expensive, with prices rising by 20%.
Trade barriers and export challenges
The trade disruption has affected not only consumer goods but also the supply of essential raw materials critical to Syria’s manufacturing sector. Many of these materials are typically brought in via Lebanon, and their scarcity has led to a surge in production costs for local manufacturers. Syrian industries, already grappling with the impact of sanctions, increasing costs, low domestic purchasing power, and restricted access to global markets, now face yet another obstacle to their survival. This additional strain threatens to further erode the country’s industrial base, which has been struggling to stay afloat amid prolonged economic instability.
The situation for exports has been equally dire. Before the recent escalation, approximately 30 to 40 Syrian commercial trucks crossed into Lebanon each day, transporting a range of goods, including clothing, cotton products, plastic items, and foodstuffs. However, Israel’s targeting of border crossings and transportation routes has brought this trade to a near standstill. Losing Lebanon as a primary export destination is a significant blow to the economy, as it was one of the few remaining active foreign markets and a vital source of foreign currency for the state’s treasury. Without this income, Syria’s already fragile productive sectors face further isolation and decline, making economic recovery an even more distant prospect.
A growing housing crisis
The war in Lebanon has led to a massive flow of people into Syria, causing significant disruption in the housing market across regime-controlled areas. Official data shows that over 425,000 individuals have entered Syria within the past month alone. This sharp increase in demand for housing, combined with minimal regulatory oversight and an existing lack of housing persisting from the civil war, has allowed landlords and real estate brokers to exploit the situation, leading to a dramatic surge in rental prices. In many regime-held regions, particularly in Damascus, rents have increased by 50-100%. In certain neighborhoods, landlords are even insisting on payments in US dollars, a reflection of the growing scarcity of housing. Additionally, tenants are now being required to pay up to six months’ rent upfront, further compounding the difficulties for those seeking affordable accommodation.
The rapid rise in rent is driven not only by increased demand but also by the disparity between rental prices in Syria and Lebanon. Although the escalating rents are high relative to the local purchasing power of Syrians, they are still lower than average rates in Lebanon, which gives landlords leverage to demand prices well above market rates from incoming refugees. Consequently, long-term Syrian tenants are finding themselves priced out of their homes. Reports indicate that in areas with a high influx of refugees, landlords have informed existing tenants that they must either accept higher rents or face eviction, adding to the burden on ordinary citizens.
Impact on the people
For average Syrians, the situation has become increasingly dire. Stagnant wages, already insufficient to meet basic needs, are falling even further behind the relentless rise in the cost of essentials such as food, fuel, and housing. The minimum monthly cost of living for a family of five has skyrocketed to 8.5 million Syrian pounds ($575), while the minimum wage remains stuck at a mere 278,910 pounds — equivalent to less than $19 per month.
As supply chains collapse and prices skyrocket, countless families are being driven deeper into poverty, struggling to secure even the most basic necessities. For many, survival has become a daily battle, eroding what little stability remains for those already on the edge. As citizens face impossible choices, discontent in regime-controlled areas is steadily rising. This mounting pressure threatens to intensify grievances and cultivate a pervasive sense of hopelessness among ordinary Syrians.
Potential for protests?
Economic hardships have previously sparked public dissent in regime-controlled areas. This has been evident in Sweida, where protests erupted in August 2023 in response to fuel subsidy cuts and have since evolved into a broader political movement calling for regime change. The persistence of these protests, largely driven by worsening economic conditions, reflects a deeper undercurrent of frustration that could spread to other regions.
While Sweida’s unique social and political dynamics make it somewhat of an exception, it is not implausible that prolonged socio-economic strain could spark similar protests elsewhere. Areas where discontent has been simmering beneath the surface — such as Daraa, rural Damascus, and even traditionally loyal coastal regions — are particularly vulnerable. Should the economic crisis deepen, these areas could witness renewed waves of dissent, challenging perceptions of the regime’s stability. Moreover, the economic downturn is no longer confined to the poorest segments of society; it is now affecting middle-class families and small businesses, widening the base of discontent.
Impact on the regime
Despite the potential for unrest, significant destabilization of the regime in the short term appears unlikely. The government has consistently shown a readiness to use force to suppress dissent, as demonstrated by its swift crackdowns on localized protests in the past. For instance, following the eruption of protests in Sweida last year, the regime swiftly targeted other areas showing signs of unrest to contain the spread of demonstrations. Within days, the regime reportedly made over 100 arrests in Aleppo and 70 in coastal areas, and it imposed blockades on former rebel-held zones in Aleppo and rural Damascus.
The regime’s extensive security apparatus remains deeply entrenched, and any emerging unrest would likely face immediate and potentially harsh repression. However, while force can temporarily contain dissent, it does not address the root causes of economic suffering. Over-reliance on repression could ultimately backfire, as seen during the 2011 uprising, especially if public anger reaches a tipping point where fear no longer outweighs desperation.
In the longer term, the regime’s inability to mitigate the economic repercussions of the ongoing conflict in Lebanon — particularly given the lack of a foreseeable resolution — poses a significant threat to its stability. Continued deterioration in living conditions could strain the loyalty of key supporters, deepen rifts within the regime’s inner circle, and expose cracks in its authority, potentially setting the stage for deeper socio-political turmoil.
Dr. Haid Haid is a Syrian columnist and a consulting fellow with the Middle East and North Africa program at Chatham House.
Photo by Louai Beshara/AFP via Getty Images
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