In the turbulent landscape of the Middle East, the summer of 2025 has brought a cascade of crises that threaten to reshape alliances, deepen economic woes, and heighten the sense of instability already gripping the region. From the faltering negotiations in Syria to Iran’s escalating rhetoric and diplomatic setbacks, a complex web of events is pushing the region toward an uncertain future.
In Syria, the fragile talks between the Damascus government and the Syrian Democratic Forces (SDF) are teetering on the brink of collapse. According to The Syrian Observer, the negotiations—based on a March 2025 agreement to integrate civilian and military institutions in SDF-controlled northeastern Syria into the national fold—have stalled amid mutual accusations and mounting external pressures. The situation reached a new low after a failed July meeting between President Ahmad al-Shara and a senior SDF official, held during a visit by a US envoy. Hopes for reconciliation now seem more remote than ever.
The stakes could hardly be higher. Syria’s economy, battered by more than a decade of conflict, faces the prospect of even deeper hardship should the talks unravel. The United Nations estimates the war’s cost at over $400 billion, with roughly 40% of the nation’s infrastructure destroyed. The World Bank’s forecast of a modest 1% GDP growth for 2025, following a 1.5% contraction in 2024, already appears optimistic. Experts warn that persistent financial strain, liquidity shortages, and the suspension of international aid could quickly tip the balance toward further decline.
On the ground, the numbers are stark. Over two-thirds of Syria’s 26 million people live below the poverty line. Unemployment stands at a staggering 50%, and 75% of the population relies on humanitarian assistance. The northeastern region—under SDF control and often dubbed Syria’s “food basket”—holds 95% of the country’s oil and gas reserves. Major fields like al-Omar and Tanak in Deir ez-Zor, and Rmeilan and al-Hol in Hasakah, are critical not only for energy but also for agricultural output. This matters even more as the country grapples with its worst drought in 36 years, which has slashed wheat production by 40% to about 1.2 million tonnes, leaving a shortfall of 2.7 million tonnes.
Before war upended the country, Syria produced 383,000 barrels of oil per day, accounting for 20% of government revenue. Today, that figure has plummeted to under 40,000 barrels daily, with estimates for the eastern region ranging between 80,000 and 100,000 barrels. In a tentative step toward cooperation, Damascus received initial oil shipments from SDF territories in February 2025. But as political analyst Sharif Shehadeh told Al-Hal Net, the situation remains precarious: “The US has only temporarily suspended some sanctions, while the Caesar Act remains in effect, albeit softened, and the EU has merely frozen parts of its measures.” He warned that a breakdown in negotiations would double the pressure, as SDF areas account for 80% of Syria’s oil production and key crops like wheat and cotton—potentially driving up energy costs, disrupting supply chains, and threatening food security.
Legal expert Mahmoud Marai echoed these concerns, noting the risk of renewed military confrontation if integration talks fail—a scenario that could pull in regional powers like Turkey and halt investment and reconstruction. “This could lead to direct conflict, halting investment and reconstruction,” Marai said, adding that increased instability would deepen daily hardships, including shortages of electricity, water, food, and medicine. He called for a comprehensive national dialogue in Damascus to stave off partition and preserve national unity.
Meanwhile, the broader region is witnessing a dramatic shift in power dynamics. Since Israel’s twelve-day air offensive in June 2025 devastated Iranian nuclear and military facilities, Tehran has found itself increasingly isolated and under pressure. As reported by The National Council of Resistance of Iran (NCRI) and other outlets, Iran’s diplomatic and economic predicament has only deepened. The once-dominant influence of Iranian-backed proxies like Lebanese Hezbollah appears to be waning, while Iraq asserts its sovereignty more forcefully than before.
Ali Larijani, Iran’s national security chief and a figure once sidelined by more radical elements, embarked on a tour of Iraq and Lebanon in August 2025 in an effort to shore up regional ties. The trip, however, ended in what many described as humiliation. Iraqi officials made clear that Larijani had only signed the minutes of a previous security meeting, not the sweeping new accord Tehran had trumpeted. In Lebanon, Larijani was met not by government officials but by Hezbollah members, while the Lebanese foreign minister declined to see him. The Lebanese cabinet, long constrained by Hezbollah, had just approved a US-backed plan to disarm the group and ramped up efforts to dismantle its weapons caches. Lebanese President Joseph Aoun delivered a blunt message: “No armed group in Lebanon can operate under foreign patronage.”
Adding insult to injury, Lebanese media reported that Syria refused overflight clearance for Larijani’s aircraft, forcing a detour over Turkey. For a regime that spent an estimated $50 billion propping up Bashar al-Assad during Syria’s civil war, this was a particularly bitter pill. With Assad gone, Syria now stands as one of the most hostile regional states to Iran after Israel.
At home, Iran’s leadership is responding to these setbacks and growing public discontent with a surge in war rhetoric. Senior military adviser Yahya Rahim Safavi declared that Iran is “in a stage of war” with the US and Israel, urging an “offensive strategy” across diplomacy, media, missiles, drones, and cyber operations. The hardline daily Kayhan claimed that over 60% of Iranians now support accelerating nuclear deterrence, despite widespread protests over water shortages, blackouts, rising gas prices, and unpaid wages. Parliamentary security commission member Amir Hayat-Moghaddam went so far as to threaten missile strikes on Washington D.C., New York, and European capitals from naval platforms stationed 2,000 kilometers off US shores.
But beneath the bravado lies deep insecurity. Iranian military setbacks in Lebanon, Syria, and Iraq have undermined morale among IRGC units, prompting officials to escalate threats in an effort to maintain internal cohesion. Tehran’s fears are further stoked by the proposed US-backed Zangezur Corridor, which would cut off Iran’s land border with Armenia, and the looming possibility of renewed UN sanctions that could further cripple the economy.
Social media has become a barometer for public sentiment. As one Iranian influencer with 105,000 followers remarked, “Enjoy these days of Khamenei’s humiliation — soon they’ll be just memories.” Inflation, already at 36.8% in February, continues to erode purchasing power, with the Syrian pound trading at around 11,000 to the US dollar and multiple currencies circulating across the region. Reconstruction costs for Syria alone are estimated at hundreds of billions, potentially reaching one trillion dollars—funds that are unlikely to materialize without political stability.
International observers, including the US Congress, have stressed that the SDF-Damascus talks must conclude by the end of 2025 to unlock aid and stabilize the region. Without a breakthrough, both Syria and Iran risk entrenching cycles of fragmentation and chaos, where warlords and informal networks profit from division and obstruct the path to unified markets and sustainable recovery.
As the “honeymoon” period for transitional authorities fades, the region stands at a crossroads—one where the choices made in the coming months could reverberate for years to come.
