US Sanctions on Syria: What Comes After the ‘Summer of Caesar’

In return for pressure from Russia on Damascus to make real concessions to end the suffering of Syrians including halting the use of some of its most egregious instruments of war and end strikes on populated areas, the US and Europe could offer to refrain from imposing additional sanctions and to provide waivers for, or suspension of, some existing ones that are likely to deter potent reconstruction investors, whether Russian or from Arab Gulf states, writes Dareen Khalifa, Senior Analyst at the International Crisis Group working on security, conflict, politics, and governance in Syria.

Syria is grappling with a worsening economic crisis. Its currency has been in a free fall, sending prices of food and medicine soaring and prompting public protests across the country. New US sanctions on Syria, imposed in June, seek to push the government of President Bashar al-Assad to “halt the wholesale slaughter” of the Syrian people and “encourage a negotiated political settlement”. But sanctions could miss their primary target, while making the plight of ordinary Syrians in the war-town country even more desperate. In their bilateral discussions, the US and Russia should contemplate ways in which they could mitigate some of the negative humanitarian consequences of the ongoing crisis.

Sanctions should not be primarily blamed for the implosion of the Syrian economy, contrary to what the Assad government has repeatedly claimed. Its rhetoric overlooks the fact that Syria’s economy has been ravaged by nine years of war and decades of rampant corruption (which was one of the contributing factors to the outbreak of popular protests in 2011). The majority of the country’s natural resources have been out of government control for over half a decade and its vital infrastructure has been obliterated in the course of the war. The government’s response to the crisis also has exacerbated the problem. For example, the war-torn economy relies heavily on dollar transfers by Syrians in the diaspora to their families back home, and government policies, including its decision to crack down on money transfer companies, created an acute dollar shortage, depriving thousands of families who rely on foreign remittances.

The implosion of the Lebanese economy has further aggravated the crisis in Syria: Lebanon has always been a conduit for Syrian entrepreneurs seeking to circumvent Western sanctions imposed on Syria; a significant part of the deposits that are now stuck in the collapsing Lebanese banking system, perhaps up to 20 per cent, are thought to be Syrian-owned.

On top of this come US and European economic sanctions. US sanctions on Syria are rooted in a web of legislation that has been in place since 1979 and increased with the beginning of Syria’s civil war in 2011. They include blanket bans on exports of US products, services and investments to Syria, and they enforce a ban on imports and other transactions related to Syrian oil and petroleum products.

On 17 June, the US passed the Caesar Civilian Protection Act – named after the alias of a Syrian military photographer who defected and smuggled thousands of images documenting government torture and extra-legal killings out of Syria in 2013. The legislation imposes secondary sanctions on non-US persons and entities that knowingly provide “significant financial, material or technological support to”, or engage in a “significant transaction with”, the Syrian government or military forces in Syria acting on behalf of the government, Russia or Iran. The deliberate ambiguity of the term “significant” might deter third parties considering deals with Syria, but it also leaves discretion for US policymakers to decide on how to prioritise the sanctions’ implementation. As a senior US official put it, “the law determines what is sanctionable and it is up to us to decide on what and who to actually sanction”.

The new sanctions could seriously jeopardise investment prospects for Russian companies and strategic assets including its multi-million-dollar commercial port of Tartus, planned gas processing plants, and other industrial production facilities. The law’s extraterritorial nature is also expected to deter countries such as the UAE that have been considering normalising political and economic relations with Damascus.

Under the Caesar Act, the US Treasury Department grants exemptions for strictly humanitarian purposes – critically important for the import of medical supplies to cope with the Covid-19 outbreak – but these will not be sufficient to mitigate the impact of sanctions. The mere threat of the Caesar Act soon coming into force expedited the devaluation of the Syrian lira, triggering hyperinflation and thus causing food and medicine shortage as well as widespread fear of possible famine.

The Syrian government’s doubling down on its uncompromising behaviour towards a political settlement to the conflict has emboldened voices in Washington who perceive maximum economic pressure on Syria as their only viable policy tool to elicit political compromises from Damascus. US officials see their decision to leave a residual force in northeast Syria to deprive Damascus of the area’s natural resources (mainly oil) while expanding sanctions as the Trump administration’s only remaining leverage to extract political concessions from Damascus, especially because Trump does not appear keen to invest US financial or military resources in Syria. Some Syria watchers contest this argument, pointing at the fact that while sanctions on Damascus have gradually tightened since 2011, they have not produced any political change nor halted any of the abuses against civilians.

There is room for compromise between Moscow on Washington. Russia appears unwilling to yield to US economic pressure on Syria, but it might have an interest in a more transactional logic through quid pro quo transactions that could both protect some of its interests in Syria and make a difference in preventing further violence and reducing human suffering. In return for pressure from Russia on Damascus to make real concessions to end the suffering of Syrians including halting the use of some of its most egregious instruments of war and end strikes on populated areas, the US and Europe could offer to refrain from imposing additional sanctions and to provide waivers for, or suspension of, some existing ones that are likely to deter potent reconstruction investors, whether Russian or from Arab Gulf states. The US could also offer to expand humanitarian programming in government-held areas, provided that Damascus allows for the application of internationally accepted standards, in particular independent verification that aid goes to those in need, no matter where their loyalties lie. This may seem like a minor tweaking of the current standoff between Russia and the West on Syria. But given everything that has happened, as well as the state of US-Russian relations, such steps would constitute major progress indeed.

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