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Syrian Minister of Economy Dr. Nidal Al-Shaar (left) meets with Saudi Minister of Investment Khalid Al-Falih (right) during an official visit in Damascus, Syria, on July 23, 2025.
What We’re Watching: Saudi invests in Syria rebuild, Ukraine and Russia seek cash, Thai-Cambodia border battle escalates
Saudi seeks a piece of the Syrian pie
Saudi Arabia has pledged to invest $6 billion to rebuild the war-torn Syrian economy, an amount that represents roughly 30% of Syria’s 2023 GDP. Still, the investment is just a tiny fraction of the estimated $400 billion in reconstruction funds that Syria needs. We’re watching to see if the Saudi move spurs other regional powers to take the plunge too – either as partners or rivals to Saudi influence. Meanwhile, Syrian interim President Ahmed al-Sharaa must try to keep a lid on sectarian violence and deal with ongoing attacks from a wary Israel. (Read more here.)
Ukraine and Russia get their money up for more war
The Russian and Ukrainian governments, apparently readying for even more conflict as peace talks stay stalled, are scrambling to shore up their war-fighting finances. On Thursday, Ukraine’s President Volodymyr Zelensky asked European leaders to help pay not only for new weapons but also for higher wages for his country’s soldiers. Meanwhile, as Russia’s war economy starts to sputter, President Vladimir Putin’s central bank cut its benchmark interest rate by two percentage points to a still-sky-high 18% — its second rate cut this summer.
Thailand-Cambodia clashes could reach “stage of war”
Border clashes between Thailand and Cambodia continue. Thailand has now evacuated more than 130,000 people from the area as acting Prime Minister Phumtham Wechayachai warns the situation “is escalating and could develop to the stage of war.” Violence has erupted in 12 areas along the disputed frontier, killing at least 15 Thais and one Cambodian. Nationalist tensions and a friendship breakup between powerful former leaders Hun Sen of Cambodia and Thaksin Shinawatra of Thailand are further inflaming the crisis.
Members of Syrian security forces ride on a back of a truck after Syrian troops entered the predominantly Druze city of Sweida, Syria July 15, 2025.
What’s behind Syria’s surging sectarian violence?
The latest round of deadly sectarian violence in Syria started off small. Last Sunday, a Bedouin tribe reportedly robbed and attacked a Druze man at a checkpoint in southern Syria, near the Israeli-occupied Golan Heights. The incident quickly escalated into a battle that has left more than 350 people dead and drawn in not only Syrian government forces, but also Israel, which intervened forcefully under the pretext of protecting the Druze.
The clashes add to a series of sectarian flare-ups since the fall of the Assad dictatorship seven months ago. In March, forces aligned with the government massacred nearly 1,500 Alawites in response to a failed rebellion by Assad loyalists within the community, and in April, dozens were killed when the Druze clashed with security forces near Damascus.
Violence of this kind has destabilized an already fragile post-war Syria, raising fresh doubts about the transitional government’s ability to maintain control and safeguard the rights of minority communities. Interim president Ahmad al-Sharaa, a former jihadist who has restyled himself as a statesman since leading the militia coalition that overthrew Assad, has promised to unify and rebuild Syria after a brutal 14-year civil war and decades of dictatorship.
So, what are Syria’s main ethno-sectarian fault lines? Arabs make up the majority of the population, which is about 75% Sunni Muslim.
But there are tensions with several powerful minority groups. They include the Druze, an Israel-friendly community in the South which practices an offshoot of Islam considered heretical by Sunni fundamentalists, and the Alawites, the sect that the Assad family belonged to and conspicuously elevated throughout the dictatorship.
Tensions also persist between Arabs and the Kurds, who operate a semi-autonomous government in northeastern Syria. Although the Kurds have agreed to merge with the new Syrian army, they remain deeply skeptical of al-Sharaa – particularly because of his recent overtures to Turkey, a long-standing opponent of armed Kurdish groups.
Lastly, there are fears of persecution among Syria’s ancient but shrinking Christian population – which came to a head last month when a suicide bombing left dozens dead at a church in Damascus.
The fact that al-Sharaa, a veteran of Al-Qaeda, overthrew the Assad regime atop a coalition of Sunni extremist militias has put all minority groups on edge, fearful of the intentions of a new government that is led largely by Islamists and former jihadists not known for their tolerance of ethnoreligious diversity.
What’s standing in the way of peace? For one thing, Syria’s newly formed army remains fragmented, with many fighters drawn from Islamist extremist groups. Lacking cohesion and a clear chain of command, al-Sharaa can’t rely on the military to effectively control the country.
In fact, the military itself has been part of the problem. Syrian troops were seen to be helping the Bedouins in the recent flareup, according to the UK-based Syrian Observatory for Human rights.
“There isn't a well disciplined national army that could take control of all the Syrian territories.” says Ibrahim al-Assil, senior fellow at the Atlantic Council. “Whenever there is an erupting cycle of violence…they just go and they start fighting, they start looting, and killing as well.”
But there’s also a question about the intentions of a government that often seems to be exacerbating precisely the tensions it claims to be concerned about.
“Whenever there are clashes and confrontations, the authorities in Damascus and Ahmad al-Sharaa try to utilize that as a ploy to gain political achievements,” adds al-Assil. “[While] people could argue if the government was behind that eruption of violence or not, it has certainly used this to gain more power.”
And external actors aren’t helping. Israel, which insists on the demilitarization of Southern Syria, has repeatedly attacked government troops and facilities there under the pretext of defending the Druze. On Wednesday, the IDF escalated tensions further, striking the Syrian defense ministry in Damascus. Al-Sharaa has since redoubled his pledge to protect the Druze amid a fragile ceasefire in the area, but also said Syria is “not afraid of war.”
At the same time, Iran – having lost a key ally in Assad – may also be seeking opportunities to reestablish a foothold in the country.
“Iran is trying to find a way to regain some influence inside Syria and any force or any group that challenges the authority in Damascus creates an opportunity for Iran to find a way back,” says al-Assil.
Can the “new Syria” survive these tensions? “It shows a huge challenge for Ahmad al-Sharaa and the legitimacy of the government inside Damascus,” al-Assil says. “Most countries, including the West, do want to see Damascus consolidating inside Syria. They do want to see territorial integrity in Syria.”
But the failure of the Syrian government to stabilize the country could also open the door for more regional interference, complicating things further.
“Violence and fragmentation won’t stay inside Syria,” al-Assil warns. “Most likely, it will spill over to the region.”
Saudi Crown Prince, Mohammed bin Salman, and US President, Donald Trump, meet with the Syrian president Ahmad Al-Sharaa
Trump pledged to lift Syria sanctions, can Damascus seize the moment?
When US President Donald Trump promised to lift sanctions on Syria this week, the streets of Damascus erupted in celebration.
“It was a huge, huge day for Syrians,” says Ibrahim al-Assil, a Senior Fellow at the Middle East Institute in Washington, D.C., who is from the Syrian capital.
“Many people, my relatives and friends in Damascus, they are saying the same thing: ‘this is the second biggest day in my life after the fall of the regime!’”
For a country battered by more than a decade of war and mass emigration, Trump’s announcement has flung open a window of opportunity that few thought possible as recently as December. That was when current president Ahmed al-Sharaa, a one-time Al-Qaeda member, led a coalition of militias that overthrew the Assad dictatorship.
The reconstruction needs are huge. A recent UN report says Syria’s 14-year civil war cost the country at least $800 billion in lost GDP – the country’s annual output plunged from $67.5 billion in 2011 to just $23.62 billion in 2022. Estimates of the cost to rebuild the country’s infrastructure run into the hundreds of billions of dollars.
Trump’s move now opens the way for powerful foreign players like Saudi Arabia, Qatar, and Turkey to help foot that bill, without fear of running afoul of US law.
Hold up, those sanctions didn’t vanish just yet. There are numerous restrictions on the books. The president can lift some, but others require Congress. US Sen. Lindsey Graham (R-SC) has already questioned the wisdom of scrapping sanctions before it’s clear al-Sharaa and his allies have fully shed their jihadist pedigree.
Still, Trump’s personal commitment to sanctions relief, and the strong interest of US allies Saudi Arabia and Turkey in seeing it happen, means the measures are likely to come off sooner rather than later.
“There were some very strong dissenting voices within the administration,” says Firas Maksad, head of Eurasia Group’s Middle East practice. “But this was one of those times where the president just went over and above those differences.”
But even if the sanctions are scrapped, al-Sharaa still faces huge challenges if he wants to make good on the promise of Trump’s move.
For starters, he must tamp down long-standing sectarian tensions. Pro-government gunmen have recently clashed with both the Alawites – the Assad family’s own sect – and the Druze minority, which is backed by Israel. Christian and secular Syrians remain wary of a government still run almost entirely by Islamists close to al-Sharaa. At the same time, efforts to forge a new security force out of the country’s dozens of local militias have slowed.
What’s more, al-Sharaa has yet to follow through on a promise to appoint a new legislative council. The composition of that body will tell us a lot about whether he is willing, or able, to carefully balance the country’s various factions, but it will also serve a more basic function, says al-Assil.
“When we talk about investments and reviving the Syrian economy, that requires new laws to govern those investments, and a space to resolve conflicts so that they aren’t resolved through violence.” To date, that space seems to exist only among a small number of power-brokers close to al-Sharaa.
Lastly, Damascus will have to manage competition among the various outside powers jostling for influence in the new Syria.
The most immediate concern is Syria’s old foe Israel, which since December has moved aggressively to wreck Damascus’s military capabilities and establish its own sphere of influence in Southern Syria. The two sides are now speaking via backchannels, though, giving al-Sharaa the change to reach an understanding with the Israelis that gives him more breathing room.
But even among Syria’s friends there will be friction. The two likely giants on the scene, Saudi Arabia and Turkey, have in the past clashed over Istanbul’s support for Islamist political groups. Riyadh and Doha have had similar run-ins. Competing visions for Syria among its biggest patrons could prove destabilizing.
Despite this thicket of challenges, al-Assil is cautiously optimistic.
“Syrians want this to work,” he says, “they want to navigate a way to reconcile their differences, and they recognize how important this opportunity is. And that gives me hope.”
People celebrate after fighters of the ruling Syrian body ousted Syria's Bashar al-Assad, in Aleppo, Syria, December 13, 2024.
From Assad to Uncertainty
Syria’s new leadership claims it wants to prioritize stability and reconstruction over further conflict – but will that be possible? With Israel fortifying the Golan Heights, Turkey expanding its influence, and Russia retreating, we’re watching this week if Syria and its neighbours will manage to get along — and how allies and adversaries will react.
No new confrontation – for now. In an interview given on Saturday to Syria TV, Ahmad al-Sharaa — formerly known by his nom de guerre “Abu Mohammed al-Golani” — the leader of the HTS, stated that despite Israel having “clearly crossed the lines of engagement in Syria”, the country’s war-weary condition “does not allow for new confrontations.” Instead, Al-Sharaa stated that HTS’ priorities are reconstruction and stability and called for diplomatic solutions to ensure Syria’s security.
Israel is still wary. Despite al-Sharaa’s moderate tone, Israeli Defence Minister Israel Katz maintained that security threats to Israel have not diminished. Israeli forces remain present in the buffer zone inside Syria and continue to conduct strikes on military targets. On Sunday, Prime Minister Benjamin Netanyahu announced plans to double the Israeli population of the Golan Heights as a defensive measure against the “new front” that had opened up in the wake of Assad’s ouster, but says his country has "no interest in a conflict with Syria."
Iran steps out, Turkey steps in. Assad’s fall dealt a severe blow to Tehran’s influence in Syria, a vacuum Ankara is only too happy to fill. Turkey has now offered to provide military training to Syria's new administration if requested, and will maintain troops in several cities in northern Syria, where it has been conducting military operations since 2016. Turkish Defence Minister Yasar Güler said his country’s priority remains the elimination of Kurdish militias, which enjoy US backing but are considered terrorists by Turkey.
What about Russia? The other big loser in Syria is Moscow, which had heavily backed Assad’s regime for years, in exchange for strategic positions within the country including the Khmeimim Air Base and Tartus Naval Base. Recent satellite imagery has shown Russian forces packing up military equipment and preparing for transport. The Kremlin has confirmed that Moscow is in discussions with HTS about retaining its two bases, but has withdrawn troops from frontline positions.
Will the United States fill the gap? US Secretary of State Antony Blinken said Saturday that Washington has been actively engaging with Syria's new leadership but gave no details on when or at what level. Blinken met over the weekend with regional leaders in Jordan to discuss Syria’s future as well as seek the return of Austin Tice, an American journalist detained a decade ago in Syria.
Blinken also emphasized the importance of destroying chemical weapons and rejecting terrorism, warning that “This is a moment of vulnerability in which ISIS will seek to regroup.”
Could US policy change under Trump? When Assad’s government fell, President-elect Donald Trump posted “THIS IS NOT OUR FIGHT. LET IT PLAY OUT. DO NOT GET INVOLVED!"
Mike Waltz, Trump's nominee for national security adviser, told Fox News last week that Trump was elected with an overwhelming mandate to keep the United States out of regional wars, and that America's "core interests" remain ISIS, Israel and "our Gulf Arab allies". There are no indications that Trump or his team have reached out to HTS, but the President-elect has reportedly spoken with Netanyahu about Israel’s plans to expand settlements in the Golan Heights.