Military Funding Compromises Could Cast A Long Shadow Over Syria’s Future – Analysis

By Dr Diego Lopes da Silva, Zubaida A. Karim and Gretchen Baldwin

Last week’s peace deal between the Syrian Armed Forces and the Syrian Democratic Forces (SDF), if it holds, may have brought the Transitional Government’s ambition of stabilizing post-revolutionary Syria one step closer. Of the many tasks facing the Transitional Government, one of the most daunting is undoubtedly integrating or disarming the patchwork of militias and semi-autonomous armed groups born out of years of civil war. Besides the enormous political challenges, it requires vast resources and the institutional apparatus to marshal those resources effectively.

In both policy and research circles, discussions of how to achieve the Transitional Government’s vision of building ‘One Syria, One Army, One Government’ have so far neglected the importance of funding architecture—that is, the policy framework determining where the resources will come from, how they will be allocated and managed, and who will oversee their use by the Syrian Armed Forces and any groups that are at least partially integrated into the chain of command. Funding architecture might seem like a secondary, rather technical issue at a time when violence is still rife in Syria. But it should not be ignored. The funding architecture could exert a strong influence on the future distribution of power in Syria. 

The Constitutional Declaration adopted in March 2025 is intended to prepare the ground for negotiating a new permanent Syrian constitution in five years’ time. Decisions made in the next few months—including those on military funding—will shape the conditions under which that happens.

‘One Syria, One Army, One Government’

The Constitutional Declaration sets out, in broad terms, the Transitional Government’s vision for the ‘One Army’. The Syrian Armed Forces will be a ‘professional national institution’ acting in accordance with ‘the rule of law and the protection of human rights’. No non-state actor may ‘establish military or paramilitary formations, divisions, or organizations, and weapons are restricted in the hands of the state’.

The Transitional Government’s plans for integrating or disarming the remaining armed groups in Syria are advancing. In May 2025 Defence Minister Murhaf Abu Qasra announced: ‘We have met with some 130 military factions to discuss the new structure of the army and achieved great success in integrating them into the Defense Ministry.’ He also stated: ‘We will not allow any armed group to stay outside the authority of the Ministry.’

However, this was proving difficult when it came to the two biggest remaining armed groups: the SDF and the Syrian National Army (SNA). While there seem to have been several rounds of negotiation and some progress claimed, their integration has faced several setbacks.

The SDF is a Kurdish-led coalition established in 2015 as the United States’ primary partner on the ground fighting the Islamic State group. The SDF recognized the Transitional Government and agreed in November 2025 to integrate its forces into the Syrian Armed Forces. However, substantial differences remained unresolved. For example, the SDF has called for a decentralized, secular and more representative governance system for Syria, which is in stark opposition to the Transitional Government’s demands for centralization. There were further armed confrontations between the SDF and the Transitional Government in December and January. 

The SDF is part of the Democratic Autonomous Administration of North and East Syria (DAANES) and until very recently controlled about a third of Syria’s territory, where around 70 per cent of all Syrian gas and oil reserves are found. The DAANES relied heavily on these resources: with a total revenue of US$777 million in 2024 (of which 66 per cent came from oil), the DAANES spent about $350 million on its military—a significant part of which probably went to the SDF. Last month, the Syrian Armed Forces captured Syria’s largest oil field from the SDF, among other significant territorial gains, securing an important new source of revenue for the Transitional Government and severely weakening the SDF’s position. The deal announced last week reportedly includes not only a plan for the phased integration of SDF forces into the national military—with three brigades constituted of former SDF fighters—but also the integration of the DAANES administration into the central state.

The SNA is a coalition of between 25 and 40 different armed groups operating in north-west Syria, backed by another influential external player: Türkiye. This backing complicates the integration process because Türkiye sees the SDF as a terrorist organization due to its links with the Kurdistan Workers’ Party (PKK). The adversarial relationship between the SDF and the SNA has frequently spilled over into violence. 

The fact that the SNA is an umbrella organization is another major challenge for negotiations with the Transitional Government, as it cannot enforce any agreement over its members. While the SNA has taken formal steps to integrate into the national defence ministry, command and control remains fragmented and de facto integration still seems far off.

The perils of off-budget funding

Bringing Syria’s remaining armed groups into line, whether through negotiation or force, will also entail a series of technical decisions on how to pay for—and pay—the national armed forces as well as any forces that are not fully integrated into state structures. These decisions will constitute a funding architecture. While they are in themselves technical, they will inevitably be shaped by political considerations and will have political consequences that must be considered.

No detailed Syrian state budget or expenditure accounts were made public during the Syrian civil war. The most recent data point for Syria in SIPRI’s Military Expenditure Database is from 2011 and very little reliable information exists about the military funding architecture during that period. According to a recent World Bank report, Syria’s funding architectures as of late 2024 were largely off-budget, meaning that revenues were collected and expenditures—including military expenditure—were financed and executed through channels that were outside the state budget. This is the most recent information on Syria’s public accounts and economic situation and, given that the Transitional Government has been in power for only a year, it is likely that the situation remains largely the same.

Off-budget mechanisms for funding the military are relatively common in post-conflict societies. They enable governments to finance security needs swiftly despite a weak fiscal capacity, which is a common legacy from civil wars. In Syria, the war has severely impaired revenue extraction—the World Bank report estimates that tax revenues in 2024 were a tenth of those in 2010. As the formal economy has collapsed, the informal sector has expanded rapidly, further undermining state revenues. 

According to the World Bank report, Syria under its former president, Bashar al-Assad, relied on two main off-budget sources to fund its expenditure. The first was monetary financing—that is, the Central Bank printing more money, which is recorded as state borrowing and not as on-budget expenditure. The other was external credit lines from Iran and Russia. 

These are fragile foundations for a funding architecture and are particularly vulnerable to shocks. For example, monetary financing can lead to inflation and falling foreign exchange rates, potentially further weakening the economy. External credit lines are largely contingent on political alignment. A case in point is that Iran ceased to provide oil supplies via credit line to Syria as soon as the regime of its ally, President al-Assad, collapsed. 

As the Transitional Government seeks to establish itself and promote Syria’s own foreign policy interests, Syria’s reliance on external credit may become a bigger issue. Even if it manages to obtain other sources of external credit or grants, like the recent time-bound grant from Qatar, the issue of reliance on foreign sources will remain unless the funding architecture is changed.

If the Transitional Government chooses to rely on the same unreliable funding sources, this could, among other risks, imperil efforts to retain military personnel. The Transitional Government is effectively competing with a range of non-state armed groups and their patrons to attract fighters. For example, Türkiye provides the SNA with salaries and weapons, while Israel has reportedly been paying salaries to some Syrian Druze militia members. Every funding shortfall that delays or reduces soldiers’ pay packets will become an opportunity for other actors to lure them away, as has happened in the Democratic Republic of the Congo with disastrous results for the state and for human security. Ideological and political factors certainly have a bearing on fighters’ willingness to lay down their arms or join the national army, but so does remuneration.

Off-budget mechanisms can create a range of other problems. For example, given their opacity, they are conducive to corruption and allow rent-seeking behaviour, as has been seen in Chile, where a group of military officers forged military procurement deals in order to embezzle millions of dollars from an off-budget fund. 

The lack of transparency also hinders the efficient and effective use of public resources—another ambition enshrined in the Constitutional Declaration—by increasing the risk of wasteful spending. Because there is no information on expenditures, the armed forces can request resources from multiple sources for the same end. 

Temporary taxes may be an alternative, on-budget way to meet Syria’s military funding needs in the short term, giving the Transitional Government some breathing space to establish more permanent structures for revenue extraction. In this regard, the Transitional Government could usefully study another experience from Latin America. Between 2002 and 2014, the Colombian government relied on a special tax, dubbed the Democratic Security Tax, to fund its armed forces. This was levied from individuals above a certain income threshold. The experiment is regarded as a success.

While this may be difficult to replicate identically in Syria due to differences in state capacity and income distribution, the Colombian experience suggests the benefits of aligning funding to the military with wider fiscal goals, so that one compounds the positive effects of the other. In the case of Syria, a simpler mechanism, easier to monitor, could be more appropriate. 

Military funding and the integration question

One important variable in the design of a funding architecture for the Syrian military is the degree of autonomy that is eventually granted to the different armed groups. During the Syrian civil war, many armed groups were associated with particular communities or regions. Granting them quasi-autonomy within military structures would probably entail some form of localized management—perhaps even extraction—of resources. This kind of bargain often comes with high political risks, not least the fact that it could give armed groups more, not less, leverage over time. 

One illustration of this risk comes from Sudan. The 2005 Comprehensive Peace Agreement between the Sudan People’s Liberation Movement (SPLM) and the government of Sudan granted the SPLM’s military branch—the Sudan People’s Liberation Army (SPLA)—a great deal of autonomy. According to the agreement, oil revenues were to be divided equally between the SPLM and the government. The SPLM’s share funded the SPLA’s transformation from a guerrilla army into a conventional military. Moreover, the SPLA was able to bring other former rival armed groups under its patronage, becoming an unchallenged military force in the south of the country. This, along with a hike in oil prices, laid the groundwork for South Sudan’s successful independence referendum and subsequent secession in 2011.

While the contexts are certainly different, the case of Libya is also salutary. After the fall of Muammar Gaddafi’s regime in 2011 Libya’s transitional government built a complex funding architecture with several streams to fund multiple semi-autonomous armed groups. Salaries were not paid to individuals but to group leaders, allowing them to consolidate their leadership using state funds by leveraging salary distribution. Ultimately, this has contributed to greater fragmentation rather than integration.

Five years to succeed

There are many reasons why the Transitional Government might be tempted to make expedient funding choices and ignore their potential longer-term consequences. Foresight is a luxury transitional governments can rarely afford. But neglecting institutional matters now would merely postpone problems and probably exacerbate them.

Establishing a sustainable, on-budget funding architecture for the military is a strong reason to rebuild Syria’s fiscal capacity, which could in turn help to rebuild and contribute to the country’s economy. Not only would transparency in military funding encourage the effective use of public resources but it could also bolster the Transitional Government’s legitimacy with regard to civil society.

Given the dire security situation in the country, the Transitional Government may find itself prioritizing military expenditures over urgently needed reconstruction. While the Transitional Government seems to be focused on attracting investment to fund the reconstruction drive, foreign donors could also step in with Official Development Assistance as budget support, making it easier to pursue the goals of centralizing the use of force and rebuilding the country simultaneously. However, the prospects for broader external engagement are still uncertain. They are likely to depend heavily on the Transitional Government making substantive efforts to address international concerns over its leadership’s affiliation with the Organization for the Liberation of the Levant (Hay’at Tahrir al-Sham, HTS). One of the most prominent opposition militias during the Syrian civil war, the HTS had past links with al-Qaeda and Islamic State and was implicated in attacks against minorities.

The Transitional Government has a great deal of work to do over the next five years. Its success in implementing the Constitutional Declaration, above all its success in integrating or disarming armed groups, will largely determine the conditions under which the permanent constitution is drafted—if one is drafted at all. Attention to the funding architecture could be decisive in this regard. Its implications will weigh heavily on Syria’s future.

About the authors:

• Dr Diego Lopes da Silva is a Senior Researcher in the SIPRI Military Expenditure and Arms Production Programme.
• Zubaida A. Karim is a Research Assistant in the SIPRI Military Expenditure and Arms Production Programme.
• Gretchen Baldwin is a Senior Researcher in the SIPRI Peace Operations and Conflict Management Programme.

Source: This article was published by SIPRI