Reconstruction Aid, Not Sanctions Relief, is What Syria Really Needs
Last week, the Biden administration issued General License 24, which removes prohibitions on a range of transactions with Syrian governing institutions, even while sanctions targeting Syrian entities and individuals remain in place. Syria’s newly appointed foreign minister, Asaad Al-Shaibani, welcomed the Biden administration’s move, but insisted that the US must lift all sanctions, which “constitute a barrier and an obstacle to the rapid recovery and development of the Syrian people.” The UN envoy for Syria, Geir Pedersen, has similarly called for “significant further efforts to adjust sanctions.” Meanwhile, German officials are reportedly discussing a plan that would see the EU ease sanctions on Syria so long as Syrian authorities implement political reforms.
These discussions on sanctions relief are important and reflect the urgency of such relief for Syria’s economic recovery. Syria is entangled in a web of US, EU, and UN sanctions. These measures include sanctions targeting the Syrian state and key economic sectors, which were imposed to weaken the Assad regime. Separate sanctions target Hayat Tahrir al-Sham (HTS), a designated terrorist organization that comprises the core of the new Syrian leadership. But while determining a timeline and conditions for sanctions relief is important, Western officials and Syrian authorities are already sliding into a debate over what sanctions relief is warranted and at what stage. Meanwhile, Syrian civil society actors, cognizant of the precarious humanitarian situation in Syria, are being forced to use their political energy to advocate for sanctions relief, when the relief is not what truly matters for the stabilization of Syria.
The debate over sanctions relief risks becoming a distraction from the far more important aim of securing reconstruction aid. Syria is a country devastated by a brutal civil war. While sanctions exacerbated economic hardships in the country, contributing to currency devaluation, hyperinflation, and soaring budget deficits, the measures were significantly tightened only in 2019, at which point the Syrian economy had already effectively collapsed. In short, sanctions relief will not suffice to restore the Syrian economy.
The inadequacy of sanctions relief as both a political and economic goal becomes especially clear when considering what sanctions relief really entails. Sanctions are nothing more than language contained in laws and regulations. As such, lifting sanctions means nothing more than the creation of new legal language. While the imposition of sanctions does impose legal prohibitions that prevent governments or private sector actors from engaging in certain economic activities, lifting sanctions does not introduce any obligations for those actors to resume economic activities.
Clearly, sanctions relief cannot be the primary goal of advocacy. Removing legal prohibitions for economic engagement with Syria is very important, but it is a simply a means to an end. The goal of advocacy must be to push Western governments to take action that will really make a difference. What Syria needs is for Western governments to forthrightly commit to providing billions of dollars of reconstruction aid that can help resurrect the Syrian economy.
To this end, it is troubling is that Western governments have so far said little about their commitment to reconstruction in Syria. The recent visit of the German and French foreign ministers to Damascus was followed by headlines declaring that the EU would “will not fund new Islamist structures” rather than headlines committing European financing for reconstruction.
While European governments did provide Syria much-needed humanitarian aid during the long civil war, support for reconstruction will require a far greater political commitment. Not only is the scale of financial assistance required much larger, but the aid must be provided in parallel with what will surely be a complex political transition. The challenge of creating more inclusive political institutions in Syria may explain Western equivocation on the issue of reconstruction aid. But the reluctance to even signal the possibility that substantial aid could be forthcoming reflects a typical cynicism in Western capitals. To ensure that Syria secures both sanctions relief and the billions of dollars in aid, Syrian authorities and Syrian civil society must be unified in their calls for reconstruction support. There are several reasons why effective advocacy requires clear messaging that the paramount goal is reconstruction assistance, and not sanctions relief.
First, sanctions relief itself will not restore the Syrian economy, even if it is provided quickly. As Karam Shaar and Benjamin Fève have detailed, the economic situation in Syria is dire. The economy has contracted 80 percent since the onset of the civil war. Nine out of ten Syrians live below the poverty line. The damage to cities and infrastructure is extensive. A 2018 study used satellite imagery to identify over 100,000 damaged structures in Syria’s major cities, including thousands of homes destroyed by the Assad regime’s criminal use of barrel bombs on civilian targets. In this context, rebuilding Syria’s economy means replacing the capital stock while also restoring economic institutions and networks. A 2019 estimate on the costs of reconstruction put the figure as high as $400 billion. Given the scale of the devastation, post-conflict recovery in Syria is not something that can be accomplished through the resumption of private sector business activity. A resumption of trade and investment in Syria will certainly help stabilize the economy and improve the welfare of ordinary Syrians. But rebuilding critical infrastructure and restoring public services, actions necessary for Syria’s long term economic development, will require massive investments made by the Syrian state, with funds provided by foreign donors. This is precisely how Western governments have sought to support economic recovery in Ukraine, where the United States and EU have so far provided a combined $67 billion of financial support to the government. A similar commitment must be made for Syria.
Second, if sanctions relief is cast as the main goal of advocacy, Syrian stakeholders risk enabling Western governments to wash their hands of the responsibility to provide reconstruction assistance. We already see signs that Western governments will be content to provide sanctions relief so long as they can foist the responsibilities of reconstruction on other actors—the issuance of the General License 24 was quickly followed by the dispatch of Turkish and Qatari floating power plants to Syria. It was also no surprise that Al-Shaibani made his first overseas visit to Saudi Arabia, another potential reconstruction donor. Western governments should not leave Syrian authorities to seek reconstruction assistance from regional powers alone. Such an arrangement would give regional powers extraordinary influence over the course of the political transition in Syria. Western governments, meanwhile, will have little influence beyond the leverage provided by their remaining sanctions, and will therefore be inclined to keep those sanctions in place. While the US began to ease sanctions on Sudan in 2017, a paltry increase in aid contributed to Sudan’s slide into a deep economic crisis just one year later. The imposition of austerity measures by President Omar al-Bashir in 2018 spurred a new round of unrest, eventually triggering a new civil war. To avoid the same fate, Syria needs reconstruction support from a wide range of donor countries. This will ensure that the issue of reconstruction is not unduly politicized. Western policy must shift from the mindset of economic coercion to one of economic inducements.
Third, the best way to ensure that sanctions relief works is to ensure Western governments are committed to providing reconstruction aid. Providing effective sanctions relief is a complex process. Even if Western authorities issue new licenses or rollback sanctions designations altogether, the implementation of sanctions relief depends on proactive outreach by authorities to provide guidance and encourage economic operators to take advantage of the more permissive environment for trade and investment. Western governments have tended to take a lackadaisical approach to the provision of such guidance unless the lingering sanctions are preventing the implementation of their own policies. A cautionary tale can be seen in the aftermath of the 2016 peace deal between the Colombian government and FARC, a rebel group designated by the US as a foreign terrorist organization (the same designation that applies to HTS). The US supported the peace deal but provided limited aid for its implementation. The US aid program was mainly focused on supporting the Columbian government in implementation of the deal, rather than supporting reintegration of the FARC rebels into civilian life. This is partly why FARC was only removed from the FTO list in 2021, five years after its fighters had demobilized. Had US authorities been required to engage with FARC at an early stage because of their own policy commitments, there would have been greater urgency to remove the legal impediments to such engagement by any and all actors. Ultimately, the delay in providing sanctions relief jeopardized implementation of the peace deal.
Finally, there are certain kinds of aid and technical assistance that only Western governments can provide to Syria. For example, rebuilding Syria's economy will require reform of the banking sector, including through the implementation of anti-money laundering and counter-terrorist financing controls that give international banks and financial institutions confidence they can avail themselves of sanctions relief and transact with Syrian banks. If Western governments lift sanctions, but do not help Syrian banks improve their financial integrity, then the economic recovery will falter, largely due to overcompliance among private sector operators. Here, the cautionary tale is Iran, where the lifting of nuclear sanctions in 2016 led to a modest recovery in trade and investment. However, failure to support Iran's push to comply with critical financial crime regulations left Iranian banks unable to reintegrate with the global financial system. Foreign companies seeking to re-establish operations in Iran faced tremendous barriers as they struggled to conduct even routine banking operations. Unsurprisingly, foreign firms also struggled to secure financing for trade or investment deals. The failure to mobilize more investment into Iran left the nuclear deal vulnerable to domestic and foreign political opponents, and the deal effectively collapsed in 2018 following a unilateral US withdrawal.
If Syrian authorities and civil society demand that Western governments provide reconstruction assistance, they will benefit from sanctions relief. But if they allow the parameters of the debate to focus on sanctions relief alone, whatever relief and reconstruction support materializes will certainly prove insufficient. In this sense, Syrians must not only push Western governments to recognize their direct responsibility to redress the economic consequences of sanctions, but also the expediency of contributing to Syrian reconstruction generously and broadly. The price tag of Syrian reconstruction will be high, but Western governments can afford it. What no one can afford is to squander this historic opportunity to build a more prosperous, equitable, and resilient economy in Syria.
Photo: Ahmed Akacha
