Table of Content:

• Background on US Sanctions Policy 

• Key developments 

• Remaining Restrictions and Risks 

• Strategic outlook for investors 

• Recommendations and Risk Advisory Services 

Executive Summary

On 13 May, the Trump administration announced its intention to lift sanctions on Syria and has since proceeded to take several steps to remove restrictions imposed during the Assad regime. This includes the issuing of a general license that allows US entities to conduct activities in several key sectors, including oil and gas, aviation, and finance. The Trump administration has also issued waivers under the 2019 Caesar Act and is putting pressure on Congress remove the legislation completely.

Coupled with the EU’s near-simultaneous decision to lift economic sanctions, the removal of the restrictions forms a significant political and economic development that may significantly aid Syria’s economic recovery and facilitate economic investments. That said, significant investments may be held back over the short term due to the complexity of the sanctions and the persistence of some restrictions on the country.

Moreover, political uncertainty remains, and the sanctions have so far been repealed based on executive orders that can be quickly reversed should the current (or future) US governments determine that the new government is not meeting its obligations with respect to sanctions relief. Efforts to repeal legislation mandated by Congress are expected to continue but the timeline is unclear, and the process is expected to be protracted. Meanwhile, the US, UK and EU have conditioned sanctions relief on the government’s commitment to an inclusive political transition, human rights and other requirements, and have threatened to reimpose restrictions should the government fail in this regard.

Background on US Sanctions Policy

In a move that took many observers by surprise, US President Donald Trump announced on 13 May that his administration intended to lift “all” sanctions on Syria. Prior to the announcement, the US issued a limited six-month sanctions waiver in January that permitted some financial transactions with the new government. In March, the government also submitted a list of requirements to the interim government which (as reported at the time) would result in a conditional sanctions relief if implemented.

The announcement on 13 May represented a major policy shift for the US which, unlike European allies, has been more cautious to engage the new government in Damascus since the fall of the Assad regime. Speaking at an investment forum in Riyadh, Trump said he “will be ordering the cessation of sanctions against Syria in order to give them a chance at greatness” while indicating that “all” sanctions would be lifted on the country. “It’s their time to shine. We’re taking them all off,” Trump said, “Good luck Syria, show us something very special.”

A week after the announcement, the Council of the European Union also moved to lift all economic sanctions on Syria, including a previously existing oil embargo, export restrictions and other limitations that targeted the former regime of Bashar al-Assad.  While hailed as a positive development and greeted with celebrations upon its announcement, the process of lifting sanctions is complex and the timeline for implementation unclear. Given the multitude of legislation involved in a sanction’s regime developed over several decades, there is also an element of uncertainty with respect to how current sanctions-relieving measures will be implemented in practice.

Key developments

Whereas the EU-mandated sanctions can be lifted relatively easily, the sanctions imposed by the US involves a complex set of regulations mandated by both presidential decree and congressional legislation. As a result, some restrictions can be lifted by presidential order, however several pieces of legislation can only be reversed by Congress. Regardless, the Trump administration has moved quickly and in the weeks after the announcement, the US government proceeded to enact two significant measures that aim to provide immediate sanctions relief on the country. Most importantly, the US Treasury issued a General Licence (GL25) that effectively lifts all restrictions previously imposed under the Syria Sanctions Regulations (31 C.F.R. Part 542) and that prohibited US entities from undertaking investments, export activities and other forms of economic engagement with the Syrian government…

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