The collapse of Bashar al-Assad’s regime, symbolized by his flight to Russia on December 8, sparked extensive discussions about the political and geopolitical ramifications of this event, including the diminished credibility and influence of Iran’s regime in the region. However, the economic consequences for Iran’s regime were no less severe than the political ones.
The Congressional Research Service and the Stockholm International Peace Research Institute (SIPRI) report that Iran’s regime spent between $30 billion and $35 billion from the start of Syria’s civil war in 2011 until 2023.
The Center for Strategic and International Studies (CSIS) and the Middle East Institute report that Iran’s regime maintained seven airbases, 15 missile depots, 22 forward command centers, and 85 kilometers of underground tunnels in Syria.
These infrastructures and military bases, following the collapse of Assad’s regime, imposed a heavy burden on an economy already struggling to meet the basic needs of its citizens.
According to the Eurasia Foundation, Iran’s regime spent around $2 billion between 2012 and 2022 on renovating and maintaining Shia religious sites in Syria. This was part of a strategy aimed at expanding soft power and ideological influence in the region, with shrines serving as symbols of this soft power.
With Iran’s funding and initiative, the Zaynab Palace Hotel was reopened in 2016 near the shrine of Sayyida Zaynab. The Middle East Institute estimated the cost of constructing this hotel, which includes 150 rooms, prayer spaces, and hospitality services, at approximately $35 million.
For a few years, Iran’s regime earned income from pilgrimage tourism to these shrines while also promoting its fundamentalist ideology. However, with Assad’s regime’s fall, Iran’s investments in Syria’s religious tourism faced significant risks.
IRGC-affiliated companies invested billions of dollars in key Syrian sectors such as energy and urban reconstruction, thereby expanding their economic and political influence.
Housing Foundation of Islamic Revolution and Investments in Aleppo’s Reconstruction
The Housing Foundation of the Islamic Revolution (Bonyad-e Maskan) made substantial investments aimed at reconstructing housing in Aleppo, Syria.
The Syrian Air Force, with Russian support, extensively bombed and destroyed Aleppo between 2012 and 2016 to recapture it from opposition forces. According to Syria’s Central Bank, Bonyad-e Maskan spent up to $1.5 billion from 2016 to 2021 to rebuild residential neighborhoods in Aleppo.
In another project, Khatam-al Anbiya Construction Headquarters, the largest engineering firm affiliated with the IRGC, participated in reconstructing several strategic roads, such as the Homs-Damascus highway, at a cost of $500 million. Another IRGC-linked company, Iran’s Sadra Marine Industrial Company, invested over $1.2 billion between 2015 and 2020 in renovating the Port of Tartus.
Energy Projects and Strategic Infrastructure
Another major investment was the Iran-Iraq-Syria gas corridor, launched in 2013 at an estimated cost of $8 billion. According to the Middle East Energy Association, the project aimed to transport Iran’s energy resources to the Mediterranean Sea. However, it was halted in 2022.
The goal of these investments was not only construction but also strengthening ties with Syria and expanding Iran’s influence in this key region. However, following the fall of Assad’s regime and the potential alignment of Syria’s new rulers with rival countries, the sustainability of these investments is now at risk.
According to the Tehran Trade Statistics Office, trade between Iran and Syria reached its historical peak of $475 million in 2010.
Syria was a critical market for Iranian goods such as textiles, electrical equipment, and food products, particularly because it allowed Iranian goods to bypass international sanctions and enter other regional markets. Syrian companies acted as intermediaries, exporting Iranian products to Lebanon and even Eastern European countries. This complex operation generated revenue for Iran’s regime.
The Tehran Center for Economic and Trade Research reports that in 2012, nearly 15% of Iran’s manufactured exports to the Middle East were transited through Syria.
The Tehran Trade Statistics Office estimates that Iranian companies could face losses of up to $300 million due to changes in trade policies under Syria’s new government.
The closure of the Syrian market is not just a loss of an export destination; it also disrupts supply chains for goods essential to Iran’s economy. Middle East Trade Monitor speculates that the management of the Port of Latakia, which served as a transit hub for Iranian goods, might be handed over to Turkish or Saudi companies.
Iran’s Central Bank reports that Iranian banks and financial institutions played a central role in financing projects in Syria, extending over $5 billion in consortium loans.
The Central Bank estimates that losses from unpaid loans could amount to 3% of Iran’s GDP.
The collapse of the Assad regime not only cost Iran its sole geostrategic ally in the region but also inflicted enormous economic losses and eliminated a key avenue for generating revenue by circumventing sanctions.
