Syria: It Is Time to Complete the Work on Sanctions Relief

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More than a year after the fall of Bashar al-Assad, Syria is still largely cut off from the global financial system, thwarting hopes of an economic recovery that would benefit Syrians and help the country to contribute to, rather than stifle, regional stability.

This is despite sweeping sanctions relief in 2025, when major terror designations were lifted, most sectoral restrictions removed, and some U.S. export controls loosened. This rollback was all the more remarkable because it was the result of unilateral improvisation rather than coordination between Washington, London, and Brussels.

However, the transformation of Syria’s sanctions architecture has proved a necessary but not sufficient condition for the country to rejoin the global economy. Syria needs to be able to reconnect with Western banks that have global footprints and clinch deals with investors, including major corporations that have exposure to the U.S. dollar, to have any hope of progressing with a reconstruction estimated to cost as much as $215 billion. For this to happen, political stability and security in Syria are essential. But so is international progress in two areas of regulation and governance.

First, notwithstanding last year’s moves to relax sanctions, various restrictions are still in place that largely tie the hands of Western banks and companies. These include the state sponsor of terrorism designation as well as the remaining stringent U.S. export controls. Sanctions also remain in the form of hundreds of designations of natural and legal persons maintained by the United States, European Union, and the United Kingdom, along with an evolving set of criteria for listing new Syrian targets. Control and ownership rules also amplify the complexities and risks of doing business in Syria, making enhanced on-the-ground due diligence a must in almost all cases to ensure that sanctioned people or entities are not connected behind the scenes. Some relevant U.S. congressional authorizations remain in force that allow the White House to issue designations should it so wish. And overcompliance remains a reality that needs more action from governments to reassure the private sector.

Second, after 40 years of autocracy and the isolation of extensive sanctions, much remains to be done regarding Syria’s business and regulatory environment. The need for reform is particularly relevant when it comes to international standards on money laundering, terrorism financing, corruption, and other financial crimes. These issues are front and center for banks’ compliance and risk programs whenever opportunities arise to (re)establish direct, secure, and reliable correspondent bank accounts with Syria. Without global cross-border banking relationships, companies and other foreign direct investors have few opportunities to inject capital into the Syrian economy, even if they feel comfortable navigating remaining sanctions and export controls.

The good news is that Damascus has no shortage of enthusiasm for tackling these challenges. As early as May 2025, Syria’s central bank governor, Abdulkader Husrieh, wrote that rebuilding Syria’s financial system and “integrating Syria’s economy into the global financial system” were essential for the country to benefit from sanctions relief. He noted that “governance standards must be improved” and that “we will need external capital, both public and private. That demands credibility: transparency in public finance, clear legal protections for investors, and strong anti-money-laundering safeguards.” Since then, Husrieh has also commissioned the U.S. consultancy Oliver Wyman to conduct a gap assessment identifying what the central bank needs to do to meet international standards.

Support has also come from public- and private-sector stakeholders. After visiting the country in February, the International Monetary Fund agreed with Damascus to implement “an extensive technical assistance program,” including “financial sector reforms in support of the Central Bank of Syria Strategy 2025–2030,” with a focus on “the rehabilitation of the banking and payments systems and strengthening banking supervision.” Similarly, the United Nations Development Program inked a strategic partnership with the Central Bank of Syria to “lay the groundwork for a resilient and transparent financial sector.”

In addition, more work is needed to loosen the remaining restrictions that continue to hinder inward investment into Syria. The U.S.’s state sponsor of terrorism label is due for review via either of two avenues: a pending assessment directed by Executive Order 14312 of June 2025, or the upcoming annual certification under section 40A of the Arms Export Control Act of countries cooperating on counterterrorism. There is also ample room to relax U.S. export controls. The easing that came into force in September 2025 on the U.S. export controls front was a significant step, given that export controls are on the rise as a tool of economic warfare globally. However, the export, re-export, and in-country transfers to Syria of U.S.-origin dual-use items that are on the Bureau of Industry and Security’s Commerce Control List are all activities that remain tied to significant restrictions. (Re)exporting U.S.-origin items to Syria is subject to the lowest threshold of the de minimis rule (10 percent) and still requires individual licensing, conditions apply to available license exceptions, and several caveats remain in place regarding end use and end users.

Transparency and guidance from sanctioning authorities around targeted designations on Syrian natural and legal persons in support of political transition and accountability also remain critical to mitigate the chilling effect of any newly released listings. The same applies to legal decisions related to challenges of designations in EU courts.

The recent news that the Central Bank of Syria has “completed the procedures for settling [its] banking relationship with the Federal Reserve Bank of New York and reopening [its] account with them” is a major step forward that shows progress is possible. But the task of reintegrating Syria into the global economy must continue. This involves not only the Syrian government but also several international actors in the private and public sectors with the institutional wherewithal and expertise to back Syria’s work toward financial inclusion. Coordination and coherence among these actors will be crucial in the months ahead to ensure that efforts are timely and efficient, for the sake of the Syrian economy and of all Syrians.