The sanctions imposed on the regime of the ousted president Bashar al-Assad and his military, security, and economic officials have multiplied since 2011, as a result of the repression the regime exercised against peaceful protesters in various Syrian provinces.

The sanctions targeted the head of the former regime, Bashar al-Assad, and members of his family, extending down to government and economic figures that support him. However, the most prominent of these sanctions, which negatively impacted the lives of Syrians, were those imposed on service and economic sectors, most notably the US Caesar Act.

The United States eased sanctions on Syria on January 6 of this year, and for a period of only six months, which will positively reflect on the Syrian economy, according to experts and researchers in the Syrian economy, thus alleviating the burdens on citizens.

A testing period

Economic researcher Zaki Mahshi told Enab Baladi that the general license issued by the US Treasury “is a positive signal regarding the Syrian situation,” as most, if not all, American sanctions were imposed with the aim of changing the behavior of the Assad regime.

With the fall of the Assad regime, there was no longer a justification for the presence of the sanctions. Nevertheless, researcher Mahshi views the six-month general license as a “testing period” by the US administration.

Mahshi speculated that the European Union and Britain would follow the same step as the United States, seeing it as a testing period to observe what the current administration in Damascus will do regarding steps towards a peaceful democratic transitional political process. After six months, the license may be renewed for another six months, or discussions may begin regarding gradually lifting the sanctions or reinstating them depending on the steps taken by the administration.

On January 3, the foreign ministers of France and Germany met with the new Syrian administration leader, Ahmed al-Sharaa, in Damascus.

The German foreign minister stated at the time that “Europe will not fund the establishment of new Islamic structures in Syria,” adding that the lifting of sanctions on Syria will depend on progress in the political process.

On January 8, Reuters reported, citing sources in the German foreign ministry, that Germany was actively discussing ways to ease sanctions on the Syrian people in specific sectors, which requires a unanimous decision from the European Union.

German officials had previously circulated ideas about easing sanctions on Syria in documents sent to Brussels before Christmas.

The American Financial Times reported, quoting informed sources, that German officials distributed two proposed documents among European Union capitals outlining suggestions regarding the key sectors where sanctions imposed by the EU on Syria could be eased.

The documents outline ways to gradually lift restrictions from Damascus, in exchange for progress on social issues, including the protection of minority and women’s rights and adherence to commitments to prevent the proliferation of weapons.

The newspaper also quoted a source described as familiar with the EU discussions on this matter, stating that the EU, like Washington, could issue a temporary easing decision for sanctions to ensure that it can be reversed if necessary.

Proposals include easing restrictions imposed on the banking sector in Syria to facilitate the flow of money to the country, and on the energy sector to help address power outages.

The suggestions will also work to alleviate sanctions imposed on air transport and lift restrictions preventing Syrian refugees who wish to return to their homeland from taking their vehicles with them or opening bank accounts.

It is still unclear whether there is unanimous support among the 27 EU member states for easing sanctions, as some capitals continue to call for a thorough assessment of the new administration in Damascus and its governance, as reported by the Financial Times citing a participating official in the European discussions.

The main provincial government building in Damascus – December 2024 (Enab Baladi/Anas al-Khouli)

Positive impact

Researcher Zaki Mahshi believes that the easing of sanctions is a positive signal for the Syrian economy, especially regarding humanitarian aid and support for Syria, as dealing and providing assistance to government institutions will become easier, allowing for direct dealings with them.

This point is “very important” in the current situation in Syria to assist the current administration and the Syrian society, which is in dire need of humanitarian aid, as levels of poverty are increasing and there is a significant rise in prices.

Additionally, there is now greater capacity for individual money transfers, although sanctions still apply to transferring funds through the central bank for commercial activities.

The United Nations Office for the Coordination of Humanitarian Affairs (OCHA) warned at the beginning of the month that Syria is still facing a “triple threat,” characterized by insecurity and economic and humanitarian crises.

According to UN estimates, 90% of the population in Syria lives below the poverty line, alongside crises in various sectors, especially healthcare.

Mahshi pointed out significant challenges, including the ongoing impact of “overcompliance.” Most global companies and institutions, including banks and financial institutions, cannot invest in Syria or enter the Syrian market if sanctions remain in place, as they would not take that risk.

This negative impact of “overcompliance” will continue to affect financial and commercial institutions and global economic entities as long as sanctions are in place.

Another challenge is related to the current economic situation. Even if all sanctions are lifted, rather than just eased or a general license granted, the Syrian economy or Syria still remains “unattractive to investments,” except for expatriates wanting to invest in their country.

However, the Syrian market is relatively small, and the purchasing power of Syrians is low due to systematic destruction by the former regime, and economic policies remain unclear. There is uncertainty regarding the economic direction, despite government declarations about a shift towards a free market economy, according to researcher Zaki Mahshi.

The current administration is a temporary or transitional one, raising questions about whether this orientation will apply to future governments in Syria. If it moves towards a free market economy, how will the administration implement a social protection system? Additionally, there are other related questions regarding the regulatory framework for economic activity in Syria.

Mahshi explained that the regulatory framework for economic activity in Syria still requires work from the current administration and future governments to create a suitable investment climate and attract foreign investment, ensuring that the environment is ready when sanctions are lifted.

Easing of sanctions

The Executive Order No. “24” issued by the US Treasury included provisions to ensure that sanctions do not impede essential services and the continuity of governance functions throughout Syria, including the provision of electricity, energy, water, and sanitation.

This license remains valid for six months, during which the US government will continue to monitor the evolving situation on the ground, according to the decree.

US Deputy Treasury Secretary Wally Adeyemo stated, “The end of Bashar al-Assad’s brutal and repressive rule, backed by Russia and Iran, provides a unique opportunity for Syria and its people to rebuild.”

He added that during this transitional period, the Treasury Department will continue to support humanitarian assistance and the new Syrian administration.

This authorization does not lift restrictions on properties or interests of any individuals prohibited under any of Washington’s sanctions programs, including al-Assad and his associates, or the Syrian government, the Central Bank of Syria (CBS), or Hayat Tahrir al-Sham (HTS).

The authorization does not permit any financial transfers to any prohibited individuals, except for the purpose of making certain authorized payments to governing institutions or service providers in Syria.