Gulf countries can turn the Syrian refugee crisis into an engine of regional growth

The deadly Houthi attacks on Riyadh’s King Khalid International Airport earlier this month are just the latest reminder of how the war with Iran continues to destabilise the Middle East. The conflict has driven Gulf countries to accelerate efforts to diversify trade routes and deepen regional integration. However, amid the focus on immediate security threats, a longer-standing regional challenge demands renewed attention – the fate of millions of Syrian refugees in the Middle East.

The Syrian refugee response now stands at an inflection point. The collapse of western humanitarian aid, the overthrow of Bashar Al Assad, the lifting of sanctions on Syria and the war with Iran have transformed the regional context. More than 3.8 million Syrians still live in neighbouring countries, and many face increasingly dire conditions. Yet, these overlapping crises also present an opportunity for the countries of the region to pioneer a more sustainable refugee strategy that reduces dependence on humanitarian aid while advancing their ambitions for regional economic integration.

For 15 years, the western-led response to Syrian refugees in the Middle East struggled to move beyond emergency relief. Efforts by donor governments to promote economic inclusion stumbled in the face of domestic political opposition. Aid agencies became locked into an expensive model of supporting refugees without enabling them to become self-reliant.

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Over time, donor fatigue and aid shortfalls left Syrian refugees poorer. Even after more than a decade of aid operations costing tens of billions of dollars, 69 per cent of Syrian refugees in host communities in Jordan lived in poverty, according to a UN study last year – a record high.

The enduring displacement of Syrians risks compounding the region’s instability. The fall of the Assad regime allowed some refugees to return to Syria, but enduring challenges prevent largescale return.

Syria’s new government cannot provide basic services, housing is scarce, and living costs have sparked protests. At the same time, western humanitarian aid cuts are forcing refugees to choose between basic needs such as rent, medicine and education, while also cutting off host countries from a key source of revenue. Without the legal right to contribute to host countries’ economies, refugees are trapped in worsening conditions, and tensions with host communities are likely to increase.

But other developments create new opportunities. The new Syrian government’s successful diplomacy secured the lifting of international sanctions, creating an opening for private sector activity and international investment in the country’s recovery. Then, the war with Iran shifted the geopolitics of the region, enhancing Syria’s value as a potential hub of regional connectivity and an alternative trade route to the Strait of Hormuz.

Show caption: Syrian President Ahmad Al Shara with Dubai real estate tycoo…

Gulf states have worked to mitigate their reliance on key maritime chokepoints by investing in land corridors through the Levant

Even though Gulf countries have increased their humanitarian budgets in recent years, global aid cuts still pose a major challenge. Therefore, the alternative strategy would be to prioritise refugee self-reliance. To achieve that, host governments must be encouraged to grant refugees key rights of economic inclusion, including labour rights, mobility rights as well as access to banks and other financial services. These reforms would not only allow Syrians to reduce their reliance on aid but would also allow them to advance the regional integration agenda.

Syrian refugees are particularly well placed to contribute to this vision. Having spent years working and building networks across the region, many possess the skills, commercial relationships and knowledge of different markets needed to connect the Levant’s economies. Giving them opportunities to establish businesses, access finance and move across borders would help build the commercial networks underpinning Gulf-funded infrastructure projects. Those who eventually return to Syria could bring capital, expertise and connections that accelerate its recovery.

This could prove to be advantageous for the Gulf states in various ways. Enabling Syrian refugees to participate in Gulf-backed investments across the Levant would help meet labour needs, stimulate local economies and strengthen the commercial networks connecting the region to Gulf markets.

Gulf states have worked to mitigate their reliance on key maritime chokepoints by investing in land corridors through the Levant. Saudi Arabia’s recent transport agreements with Syria, alongside Emirati and Qatari investments in Syrian infrastructure, demonstrate the Levant’s economic importance to the Gulf. Refugee participation could transform these projects into engines of regional economic integration.

Gulf states have a unique ability to convince Syria’s neighbours to enhance Syrians’ economic inclusion. They have significant political and economic leverage with host governments, and their relationships are not burdened by western colonial legacies. They can mobilise development finance, sovereign wealth funds and private companies to support longer-term interventions and strategies.

Their expanding investments across the Levant provide opportunities to link refugee employment and entrepreneurship to commercially viable projects that generate returns and sustain livelihoods well beyond the lifespan of humanitarian aid.

They also have recent experience transforming their own economies, which they can bring to bear in refugee-hosting states. They have embarked on ambitious plans to diversify away from oil revenues and to move away from state-centric economic models. These strategies have included supporting private sector growth, boosting entrepreneurship and creating jobs. Expanding opportunities for Syrians and host communities advances Gulf states’ own economic interests, while simultaneously boosting the economies of refugee-hosting states and promoting stability in the Levant.

To achieve these wins, Arab governments could integrate refugee self-reliance into their regional economic strategy and make economic inclusion a condition of investments in refugee-hosting countries. They could finance vocational training linked to infrastructure projects, support Syrian-owned small businesses through access to credit, and facilitate commercial ties between refugee entrepreneurs and Gulf markets. In order to overcome host governments’ resistance to reforms that might disadvantage their own citizens or encourage refugees’ permanent presence, Gulf governments could link opportunities for Syrians to job creation for host communities.

As Gulf states seek to build a more connected and resilient Middle East, a vital component would be to bring in millions of Syrian refugees who find themselves on the margins of the region’s economic transformation. Empowering them to contribute to that vision would turn one of the region’s most enduring crises into an opportunity to advance prosperity and stability.