The Political Economy of Ethnic and Sectarian Conflicts in Post-Assad Syria

Syria is among the Middle East’s most ethnically and confessionally diverse societies. This pluralism includes Sunni Arabs, Alawites, Kurds, Druze, Christians, Turkmen, Circassians, Syriacs, Assyrians, Yazidis, and others. These groups are unevenly distributed across the national territory and are tied to distinct regional and economic spheres.

Diversity, in and of itself, is not an inevitable cause of instability. It becomes a source of chronic conflict, however, when it is embedded in a political economy structured around patronage, a shadow economy, and a pervasive war economy.

The fall of Bashar al-Assad in December 2024 and the rise of Ahmad al-Sharaa as interim president did not resolve this dilemma. Nor did it succeed in reducing the intensity of these structural tensions or dismantling entrenched systems of loyalty.

This paper attempts to build a conceptual and synthetic argument grounded in tools of social and economic analysis—particularly analyses of the political economy of underdevelopment—to approach conflicts in Syria and across its various regions. In this sense, it aims to offer a political and economic reading of both the drivers of fragmentation and the drivers of cohesion within the layered structure of Syrian society, horizontally and vertically, in the post-Assad period.

The paper outlines:First, a map of the country’s ethnic and sectarian composition, its geographic distribution, and its links to neighboring states (Iran, Turkey, Israel).Second, the features of an “immature” productive national bourgeoisie that has not yet crystallized into an integrative, comprehensive class capable of advancing a unifying national program—one that dissolves the economic foundations of subnational loyalty systems and strengthens national cohesion.Third, the role of the shadow economy in reproducing sectarian boundaries and enabling external powers to instrumentalize Syrian communities as tools of influence.Fourth, the ways in which a productive, cross-sectarian national bourgeoisie can build a dominant economy that gradually displaces the shadow economy and the war economy, thereby transforming incentive structures, dismantling ethnic/sectarian loyalty systems mobilized for asabiyyat (group solidarities), and supporting a cohesive national state project with an encompassing, unified loyalty.

Although examining the deep structure of the Syrian state’s political economy in the final years of Bashar al-Assad’s rule appears necessary, this paper does not expand on that subject. Rather, it confines its brief—and necessarily incomplete—analysis to transformations in the political economy of the fragmented Syrian space after the outbreak of the Syrian uprising in 2011.

Syria’s trajectory since 2011 has been marked by two intertwined dynamics:

• A deepening fragmentation of national loyalty systems.

• The formation of a fragmented political economy in which, across most areas, the shadow economy and the war economy have prevailed at the expense of a productive national economy.

For a long time, the country’s ethnic and sectarian mosaic coexisted with a state structure dominated by narrow security and bureaucratic networks. The overthrow of Bashar al-Assad in December 2024 by jihadist military formations, and the appointment of Ahmad al-Sharaa as interim president, closed an important chapter in a civil war that lasted thirteen years.

Even so, the political economy on which the Ba‘athist system rested did not disappear. Bureaucratic patronage, regional disparities, and informal networks of power anchored in the shadow economy persisted. These structures partially reintegrated with new Islamic and local elites, producing a hybrid order in which actors in the war economy and the shadow economy coexist alongside former rebels and former beneficiaries of the regime.

This paper addresses three central questions:

• How does Syria’s ethnic and sectarian pluralism intersect with its political economy and regional environment?

• How does the shadow economy rely on mechanisms of loyalty and sectarian/ethnic asabiyyat to maintain sectarian divisions and prolong external penetration?

• What conditions are necessary for the emergence of a free, productive national bourgeoisie that can become a unifying force for the nation and for a comprehensive Syrian state, transcending ethnic and sectarian divides?

The analysis proceeds from a political-economy perspective grounded in game-theory mechanisms: different actors respond to shifts in economic structure, and institutional arrangements can alter payoff structures in ways that push the country either toward unity or toward further fragmentation.

The paper’s central claim is that the absence of a mature, productive, cross-sectarian national bourgeoisie has made Syria’s plural society highly vulnerable to internal segmentation and to instruments of external intervention, within a political economy built on underdevelopment and on the convergence of shadow-economy clusters among various actors in ways that entrench and perpetuate conflict among Syrians.

2. Ethnic and Sectarian Pluralism in Syria

Available estimates—given the long-standing refusal of official authorities to publish detailed figures by ethnicity or religion—offer only an approximate picture of the demographic structure. Synthesizing the work of Fabrice Balanche, the Minority Rights Group, and others yields the following approximate composition of Syrian society before the war:

• Sunni Arabs: about 60–65 percent, concentrated in most cities and rural plains.

• Kurds: typically estimated at 10–16 percent, concentrated in the north and northeast (al-Jazira, Kobani, Afrin) and in pockets in Aleppo and Damascus.

• Alawites: about 10–13 percent, concentrated in the coastal mountains (Latakia, Tartus) and in parts of Homs and Hama.

• Druze: about 3–4 percent, concentrated in Suwayda Governorate.

• Christians (Greek Orthodox, Syriacs, Assyrians, Armenians, etc.): formerly 8–10 percent; their share is likely to have fallen to a few percent due to displacement and emigration during the war.

Turkmen, Circassians, Ismailis, Twelver Shi‘a, Yazidis, and the large Palestinian refugee community constitute smaller blocs but possess notable social and political weight.

Minorities are often geographically positioned in border and peripheral areas: Kurds and Turkmen are concentrated along the Turkish border; Druze presence intersects with the borders of Jordan and Israel; and mixed communities live in the Golan, granting neighboring states natural entry points into Syrian politics.

Several external powers—including Iraq, France, Britain, Egypt, the Soviet Union, the United States, and Israel—invested in this complex ethno-sectarian structure after independence and sought to mobilize it through a series of coups that ended with the rule of the Arab Socialist Ba‘ath Party, followed by the rise of a military-security core through which Hafez al-Assad consolidated power in 1970.

Despite the Assad state’s declared secular character, the authorities did not succeed in overcoming sectarian and regional divisions; in many stages, they reinforced them, whether through state-building or through the distribution of regional investment shares. The Kurds, for example, faced exceptional measures such as the 1962 “special census,” which stripped many of citizenship, alongside ongoing cultural and linguistic restrictions.

These policies kept conflicts and distinctions smoldering like embers beneath ash, under a hierarchical “security crust” whose true core consisted of loyalty systems based on cross-sectarian and cross-component interests, underpinned by the shadow economy and government corruption. Bribery and the shadow economy became tools of repression and of buying loyalties under a regime that sought to monopolize all avenues of life and development. In this way, the structure planted the seeds of later mobilization that erupted through the regime’s fissures in 2011.

3. Political Economy: Patronage, Corruption, and the War Economy

3.1 Patronage and the Bureaucratic Bourgeoisie

By the late 2000s, Syria’s political economy was governed neither by the logic of a fully functioning state nor by the logic of a liberal market. Programs of “structural adjustment,” partial privatization, and trade liberalization under Bashar al-Assad created new opportunities, which the bureaucratic bourgeoisie quickly seized by harnessing the state and its assets for its own benefit. The commanding heights of the economy fell under patronage networks tied to the ruling bureaucratic elite—formally cross-sectarian, but economically ineffective and using the economy as an instrument of coercion—leaving wide segments of society marginalized and angry.

Some researchers, such as Qadri and Saad, describe this pattern as “authoritarian hybrid capitalism,” in which:

• Access to licenses, land, and credit depends on political loyalty and personal, mafia-like networks.

• Tax evasion, legal manipulation, and patronage become widespread, pushing small businesses gradually into the shadow economy.

In this context, regional inequality deepens—especially between more prosperous urban centers and marginalized rural and Kurdish areas. Class formation remains incomplete, while a parasitic bureaucratic bourgeoisie further entrenches itself at the expense of weaker economic and social structures.

The productive urban bourgeoisie declines, and many potential entrepreneurs choose either to join the regime’s corruption networks or to resort to the shadow economy. In many cases, political loyalty becomes the near-exclusive route into these channels, deepening a sense of marginalization that often takes on a regional character.

3.2 From a Crisis Economy to a War Economy

After the 2011 uprising and subsequent militarization, economic relations across Syrian territory transformed into a hybrid system that gradually slid into a war economy. Some of its features can be described as follows:

• Peripheral areas become linked to neighboring states through the shadow economy and entangled with their commercial and security networks.

• Production disintegrates: production and distribution circuits become geographically limited (within a few kilometers) and almost entirely subject to the interests of militia and war-economy actors, distributed along the influence lines of “warlords.”

• Local authorities establish semi-independent systems of taxes and fees.

• Checkpoints and internal/external borders are managed as rent sources and become tools of extortion.

• Cross-border shadow-economy trade expands dramatically with Turkey, Iraq, Lebanon, and Jordan.

• Reliance increases on hawala networks and dollarization as the official banking system erodes.

• Studies of local economies in Idlib, Aleppo’s countryside, and the Jazira region show an economy that has become severely fragmented, with armed groups, local councils, and warlords controlling major revenue sources with little oversight or transparency.

• This process entrenches ethno-sectarian and regional loyalty systems (Kurdish, Turkmen, jihadist Islamist, pro-regime, etc.) rather than a unified national market.

4. External Powers and the Use of Syrian Social Structures

These economic and military transformations turned the Syrian state into an arena for the breaking of regional and international “sticks,” making different regions of the country competing fields of influence and turning warlords into instruments of repression and execution for that influence.

Operations such as “Euphrates Shield,” “Olive Branch,” and “Peace Spring” led to the creation of areas under the control of warlords aligned with Turkey. Ankara rewarded them with cross-border, monopolistic commercial privileges, and these operations contributed to the displacement of large numbers of Kurds from the border strip.

Iran combined military support for the Assad system with the cultivation of militias and loyal religious networks, and it invested in real estate, energy, and telecommunications in regime-controlled areas—further fueling sectarian sentiments.

Israel sought to shape communities in adjacent territories. Although its economic involvement has been less overt, Israeli security considerations have been decisive in risk calculations related to any potential threat from jihadist Islamist militias.

5. The Corrupt Bureaucratic Bourgeoisie and the Militia Economy as a Basis for Ethno-Sectarian Division

Recent research indicates that the shadow economy and the war economy compete with—and in some areas surpass—the formal economy across wide sectors of Syria. Related activities include fuel, food, and weapons smuggling; illegal taxation at checkpoints; and unregulated trade in construction materials and antiquities.

This economy is organized on regional and communal bases. Local councils and armed forces at crossings and along major pipelines across the country control it, while formal state institutions play only a marginal role.

The shadow economy powerfully links identity to livelihood: sectarian leaders and militias amplify sectarian discourse and control access to jobs and income in their areas. Local revenues finance patronage and reinforce loyalty to factional authorities rather than to the nation. As long as this structure persists, identity groups retain strong incentives to preserve fragmentation, because it guarantees the continuity of their economic power.

This reality brings Syria to a strategic hinge, confronting two main options:

• The authorities reproduce the corrupt bureaucratic bourgeoisie, thereby reproducing the shadow economy and pricing sectarian intolerance, conflict, and ethno-sectarian/regional asabiyyat.

• The authorities gradually transition toward a productive national bourgeoisie that withdraws the politico-economic foundation of ethno-sectarian war and reunifies the country, transforming material wealth and doctrinal/cultural diversity into a source of broader economic and cultural attraction and prosperity—within constitutional guarantees for a unified, inclusive, decentralized state.

Reconstruction cannot succeed without relying on small and medium-sized enterprises selected through transparent, open criteria for all, rather than reproducing mafia-like war-economy conglomerates.

6. The Productive National Bourgeoisie

Here, the concept of the productive national bourgeoisie is understood as an independent class composed of entrepreneurs and cross-sectarian, cross-ethnic firms that operate under predictable rules, can articulate a collective interest in stability, contract enforcement, and market expansion, and can act as an integrative force.

In many experiences of emerging from civil wars elsewhere, this class formed the backbone of a transition from “identity politics” to “performance politics,” pushing elites toward a state of institutions and national belonging.

In Syria, this productive national bourgeoisie continues to re-form around a productive national economy, in the face of efforts to reconstitute the corrupt bureaucratic bourgeoisie. Merchants of Damascus and Aleppo were influential actors before the war, but the war economy, corruption, and militias crushed their businesses and undermined them as a social class.

Multiple factors—previous authoritarian despotism, regional and ethnic exclusion, the destruction and flight of capital during the war—have driven a fragmentation of the country’s productive capacities: factories, infrastructure, and skills disintegrated. International sanctions and pervasive uncertainty created high risks that pushed the economy increasingly toward the shadow economy.

While the shadow economy is a central driver of ethnic and sectarian conflicts, the country needs to build a decentralized local economy—especially in cities—that enables firms to hire across communal lines and gradually weakens sectarian and ethnic segmentation in labor markets. Syrian businesspeople—within the framework of a productive national bourgeoisie—can establish unified associations and property-rights protections that guarantee equal treatment of citizens regardless of religion or ethnicity.

Such leadership also enables a reconfiguration of cross-border trade, transforming it from a tool that feeds the border militia economy into a lever for regional economic integration. This raises the opportunity cost of conflict for different groups and makes confrontational, identity-based strategies less attractive than inclusive national strategies grounded in a market economy.

This project faces enormous obstacles: entrenched war-economy elites work to price and protect sectarian hatred. Yet without some form of this structural shift, Syria risks economic, demographic, and political disintegration.

Ethnic and sectarian pluralism is not, in itself, a curse on Syria. But the absence of a mature, productive, cross-sectarian national bourgeoisie—under Ba‘ath rule and during the war years alike—allowed secondary identity conflicts to remain the primary organizing principle of power and profit. The fall of Assad altered the political landscape, but it has not yet altered the fundamental economic structures: the shadow economy continues to support many edifices of sectarian authority and provides multiple entry points for Iran, Turkey, Israel, and others to exert influence through Syrian groups.

The article concludes that the project of nation-building in Syria cannot succeed without deep economic refoundation. Building a genuinely productive national bourgeoisie—grounded in inclusiveness, the rule of law, and cross-community markets—is not a marginal technocratic task but a central political project.

Only such a transformation can gradually dissolve rigid ethnic and sectarian boundaries into a more inclusive Syrian civic identity, reduce the appeal of patronage and external dependency, and provide the material basis for durable pluralistic stability. This article was published in Ara’ Magazine.