Syrian Refugees: A Pathway to Regional Economic Growth for the Gulf

Recent Houthi attacks on Riyadh’s King Khalid International Airport serve as a stark reminder of the ongoing regional destabilization fueled by the conflict with Iran. This situation is prompting Gulf countries to expedite efforts in diversifying trade routes and fostering deeper regional integration. Amidst the pressing security concerns, a long-standing challenge—the plight of millions of Syrian refugees—requires renewed attention. The current phase of the Syrian refugee response marks a critical juncture, influenced by the decline of Western humanitarian aid, the potential overthrow of Bashar Al Assad, the lifting of sanctions on Syria, and the broader conflict with Iran. Over 3.8 million Syrians continue to reside in neighboring countries, many facing increasingly severe conditions. However, these converging crises also present an opportunity for regional nations to develop a more sustainable refugee strategy. This strategy would aim to reduce reliance on humanitarian aid while simultaneously advancing their goals for regional economic integration.

For fifteen years, the Western-led approach to Syrian refugees in the Middle East has largely been confined to emergency relief. Attempts by donor governments to foster economic inclusion were hampered by domestic political opposition, and aid agencies became entrenched in an expensive model that supported refugees without empowering them towards self-reliance. Consequently, donor fatigue and aid shortfalls have led to deteriorating conditions for Syrian refugees. A UN study last year revealed that 69 percent of Syrian refugees in host communities in Jordan lived in poverty, a record high, despite over a decade of aid operations costing tens of billions of dollars.

The prolonged displacement of Syrians exacerbates regional instability. While the fall of the Assad regime has enabled some refugees to return to Syria, significant challenges prevent large-scale repatriation. The new Syrian government struggles to provide basic services, housing is scarce, and the high cost of living has led to protests. Simultaneously, cuts in Western humanitarian aid force refugees to make difficult choices between essential needs like rent, medicine, and education, while also depriving host countries of a crucial revenue source. Without the legal right to contribute to the economies of host countries, refugees remain trapped in worsening circumstances, increasing the likelihood of tensions with host communities.

However, other developments offer new avenues. The new Syrian government's successful diplomacy has led to the lifting of international sanctions, creating an opening for private sector engagement and international investment in the country's reconstruction. Furthermore, the conflict with Iran has reshaped regional geopolitics, elevating Syria's potential role as a hub for regional connectivity and an alternative trade route to the Strait of Hormuz. Syrian President Ahmad Al Shara met with Dubai real estate tycoon and Emaar founder Mohamed Alabbar in Damascus earlier this month. Gulf states have been investing in land corridors through the Levant to reduce their dependence on key maritime chokepoints.

Despite increases in humanitarian budgets by Gulf countries in recent years, global aid reductions remain a significant challenge. An alternative strategy focusing on refugee self-reliance is therefore crucial. To achieve this, host governments must be encouraged to grant refugees essential economic rights, including labor rights, mobility, and access to banking and financial services. These reforms would not only enable Syrians to depend less on aid but also contribute to the regional integration agenda. Syrian refugees are uniquely positioned to support this vision. Having worked and built networks across the region for years, many possess the skills, commercial relationships, and market knowledge necessary to connect the economies of the Levant. Providing them with opportunities to establish businesses, access finance, and move across borders would help build the commercial networks essential for Gulf-funded infrastructure projects. Those who eventually return to Syria could bring capital, expertise, and connections that accelerate its recovery.

This approach could benefit Gulf states in several ways. Allowing Syrian refugees to participate in Gulf-backed investments across the Levant would address labor needs, stimulate local economies, and strengthen the commercial networks linking the region to Gulf markets. Gulf states have actively invested in land corridors through the Levant to mitigate reliance on critical maritime passages. Saudi Arabia's recent transport agreements with Syria, coupled with Emirati and Qatari investments in Syrian infrastructure, underscore the Levant's economic significance to the Gulf. Integrating refugees into these projects could transform them into catalysts for regional economic integration.

Gulf states possess a unique capacity to encourage Syria's neighbors to enhance the economic inclusion of Syrians. They wield considerable political and economic influence over host governments, and their relationships are not encumbered by Western colonial histories. They can mobilize development finance, sovereign wealth funds, and private companies to support long-term interventions and strategies. Their growing investments across the Levant offer opportunities to align refugee employment and entrepreneurship with commercially viable projects that generate returns and sustain livelihoods beyond the duration of humanitarian aid. Furthermore, they can leverage their recent experiences in transforming their own economies, applying these lessons to refugee-hosting states that are pursuing ambitious plans to diversify away from oil revenues and move beyond state-centric economic models. These strategies involve fostering private sector growth, promoting entrepreneurship, and creating jobs.

Expanding opportunities for both Syrians and host communities aligns with the economic interests of Gulf states, while simultaneously bolstering the economies of refugee-hosting nations and promoting stability in the Levant. To achieve these objectives, Arab governments could incorporate refugee self-reliance into their regional economic strategies and make economic inclusion a prerequisite for investments in refugee-hosting countries. They could finance vocational training programs linked to infrastructure projects, support Syrian-owned small businesses through access to credit, and facilitate commercial ties between refugee entrepreneurs and Gulf markets. To overcome potential resistance from host governments concerned about disadvantaging their own citizens or encouraging the permanent settlement of refugees, Gulf governments could link opportunities for Syrians to job creation for host communities.

As Gulf states strive to build a more connected and resilient Middle East, integrating the millions of Syrian refugees currently on the periphery of the region's economic transformation is a vital component. Empowering them to contribute to this vision can transform one of the region's most persistent crises into an opportunity for enhanced prosperity and stability.