Reducing Country Risk: The Inevitable Path to Attracting Investment and Rebuilding Syria

The world of finance is unforgiving. If you think investors will enter a country full of chaos and instability out of enthusiasm or humanity, you are living in an illusion. In our contemporary world, a country's weight and true value are measured by its economic strength, not by its slogans or grandiose speeches. Economic power is what places countries on the global influence map. To build a strong economy, investment is essential. However, investment does not come for free. Capital is cowardly, as they say; it seeks safety and guaranteed returns. Syria today urgently needs not only to attract foreign direct investment (FDI) but also to encourage national capital and Syrian expatriates to return to their homeland and invest their savings in it. What applies to foreign investment applies equally to national investment; money is the same—it fears chaos and flees from risk.

What Does Country Risk Mean?

Country risk is the primary obstacle that causes money to flee rather than flow. It is the invisible wall that separates the dream of economic development from the frustrating reality. Think for a moment: Would a global company, or even an ordinary national investor, dare to put their money in an environment drowning in political, economic, and social collapse? Of course not. Capital, whether foreign or national, will not move unless stability is guaranteed. Syrian investors abroad, who represent a significant portion of Syrian capital, along with foreign companies, are watching from a distance and waiting for the moment they feel their money will be safe if invested in Syria.

1. Political Risks: The Foundation of Stability

Political risks come first. Politics is not just an element of country risk; it is the cornerstone of any investment environment. When the political environment is turbulent, investment becomes nearly impossible. Political risks include political instability resulting from conflicts, coups, or widespread protests that threaten ruling regimes. They are also related to sovereign risks, such as the confiscation or nationalization of foreign companies' assets without fair compensation. In Syria, during the years of war, laws were amended randomly and without transparency, keeping investors in a state of constant anxiety. Decisions were made to serve the interests of a small elite at the expense of the national economy and foreign investors. Worse still, the regime's government imposed extortion and levies on capital owners and merchants, leading to capital flight and investors' reluctance to operate in the country.

But the problem is not limited to unstable laws. Political security is also linked to the army and police. Syria needs to restructure the national army as a pillar of political and social stability. The army is not just a military tool; it is a symbol of national unity. The Syrian army cannot remain a collection of conflicting factions serving their own interests or following foreign agendas. It must transform into a unified national force working for Syria and its people. Alongside the army, security and administrative institutions need comprehensive reform. The police and internal security must be recalibrated to become tools for maintaining security and serving citizens, not tools of repression or corruption. Administrative institutions must operate efficiently and transparently to rebuild trust between the state and local and international investors.

Political risks are not just an economic threat; they are a threat to trust. Investors seek a stable political environment and clear laws that guarantee their protection. If these political risks are not radically addressed, any attempt to attract foreign investment or reconstruction will remain a mere fantasy.

2. Economic Risks: Currency and Financial Stability

After politics comes the economy. Investors look for currency stability, low inflation rates, and clear fiscal policies. If the local currency collapses, investors' money evaporates. Syria, during the crisis, witnessed a significant collapse in the value of the Syrian pound, making any investment a losing gamble. High inflation, massive debts, and unpredictable taxes are all indicators that drive investors away.

3. Social Risks: The Hidden Enemy

Then come social risks, the hidden enemy. Protests, internal displacement, and labor strikes all make the investment environment unstable. Investors do not want to hear stories about internal conflicts hindering production. Syria has witnessed massive waves of displacement and an unprecedented rise in unemployment, exacerbating social tensions.

4. Infrastructure: The Foundation That Revives Investment

Infrastructure is the backbone of any economy. Roads, ports, electricity networks, and communications were all destroyed during the war. Investors, whether national or foreign, will not come to build their projects if there is no reliable infrastructure. Rebuilding this infrastructure must be a national priority, not only to attract foreign investments but also to encourage Syrian investors at home and abroad to contribute to the reconstruction of their country.

One of the most important lessons learned from global experiences is the importance of legal and environmental reforms to attract investment. Syria needs to build a transparent investment environment where bureaucracy is removed, and business processes are facilitated for local and international investors. Additionally, laws must be flexible and stable to ensure the protection of investors' rights in the long term. Investors will not take risks in an environment where assets are confiscated or laws change suddenly.

But what is foreign direct investment, and why is it important?

Foreign direct investment (FDI) is a process where companies or individuals from outside the country invest capital directly in projects within the host country, such as building factories, establishing companies, or developing infrastructure projects. FDI is distinguished from other investments by including administrative control over operations, meaning that foreign investors directly participate in developing the local economy, bringing not only capital but also modern technology, managerial expertise, and international business relationships.

For Syria, FDI is not just an economic tool; it is a lifeline for a devastated economy suffering from a scarcity of resources and capital. After the departure of the Assad regime and liberation from a rule that lasted more than sixty years, during which Syria became associated with corruption, monopoly, and mismanagement, there is an urgent need to rebuild international trust. Historically, the "Corrective Movement" launched by the regime in the 1970s marked the beginning of the deterioration of economic institutions, turning them into tools to serve the ruling elite, leading to the erosion of trust in the Syrian business climate. Then came the war, which lasted 14 years, completely destroying infrastructure, including roads, ports, electricity, and water networks, making reconstruction a massive challenge.

FDI could be the optimal solution for rebuilding Syria on modern foundations. It is not only a means to bridge the financing gap but also an opportunity to introduce advanced technology and new managerial models that would put Syria on the path to sustainable development.

Why Do Investors Care About Country Risk?

Because money is smart. Investors do not waste their money on uncalculated dreams. They seek safety and stability. Capital does not like adventure; it seeks profits. When they see high risks, they close their books and look elsewhere.

But it's bigger than that. Companies do not just look at short-term returns; they plan for decades ahead. If the environment is unstable, there is no point in building a factory or making a long-term investment. Investors want clear rules, transparent laws, and long-term stability. Without these, they choose to withdraw.

How Can Risks Be Reduced?

Theoretically, it seems clear, but its implementation is highly complex. Political stability must be the top priority. The government needs to strengthen the rule of law and prevent random changes in policies. The legal infrastructure needs comprehensive improvement, including the establishment of a national center for economic and commercial arbitration, specialized in resolving disputes quickly and effectively, reducing reliance on the judiciary.

On the economic side, inflation must be controlled, the debt burden alleviated, and tax incentives provided to make Syria an attractive place for investment. Infrastructure needs comprehensive rebuilding, from roads to electricity and communication networks. International relations must enhance trust through bilateral investment treaties and trade agreements.

Final Message

Capital seeks safety, and Syria must provide this safety. Therefore, the most significant risk facing the country is political risk. We need an army that carries the banner of the nation, not fragmented banners, an army that unites rather than divides, an army that works to be a protector of stability and a symbol of sovereignty. Alongside the army, internal security institutions must be restructured to become tools for serving citizens, not tools of repression that deepen division. This is the foundation that will rebuild trust between the people and the state, show the world that Syria is returning stronger and more united, and enable the reduction of the country risk index to attract foreign investments.