The parliamentary elections held in late July 2020 in Syria coincided with the expansion of the US Department of Treasury’s restrictive measures against the government of Bashar al-Assad. The settlement of the conflict itself is experiencing difficulties, and the economic situation in the country is only getting worse. Besides the destruction during the war, among the factors affecting the crisis of the Syrian economy, the COVID-19, the socio-economic problems of neighboring Lebanon, whose financial infrastructure Damascus uses as an outlet to the world market, discord in the elite, as well as new sanctions are named.
With the signing of the “Caesar Syria Civilian Protection Act” or the “Caesar Act” by the US-President, the American policy towards Syria is becoming increasingly irreversible. The USA seem to be satisfied with the “freezing” of the situation while maintaining their positions. According to the document itself, the sanctions are intended to “force the government of Bashar al-Assad to end its deadly attacks against the Syrian people and support the transition in Syria to a government that respects the rule of law, human rights and peaceful coexistence with its neighbors”. Despite this message, it seems that this policy against the Syrian government will not lead to the declared American goals. On the contrary, such actions only exacerbate the situation in the country and negatively affect the humanitarian situation. The Syrian people need international humanitarian organizations that earlier faced sanctions barriers as well. Sanctions allow humanitarian aid, however, there is a problem of over-compliance. Some humanitarian organizations refuse to work in Syria to play it safe or limit the scope of work. The “Caesar Act” has already been named “economic terrorism” in Damascus, which will lead to the suffering of ordinary Syrian citizens. Despite this, the US sanctions do not affect the political course of Damascus itself, among whose key task is the holding of the presidential elections in 2021.
New sanctions have been prepared by the US Congress, which actually means their irreversibility. Unlike the EU sanctions against Syria, which are extended annually, the American sanctions have been passed for five years. The law came into force six months after it was passed by the US Congress, where the “Caesar Act” was included in the “National Defense Authorization Act for the fiscal year 2020”. In its statement, the US State Department noted the need to exert “maximum pressure on the Syrian regime in order to fully implement the political process”.
American sanctions and “maximum pressure” policy against Syria does not only complicates but deprives the country of development prospects. The United States recognized Syria as a state sponsor of terrorism decades ago, imposing various kinds of sanctions since the 1970s. However, this package of sanctions has never touched on third countries. The fundamental difference between the “new” US sanctions against Syria in 2020 is their extraterritorial nature. Now Americans can introduce secondary sanctions, that is, the interaction of third countries with Damascus is excluded. Relations with other states was mainly necessary to rebuild the destroyed economy of Syria.
Damascus will not succeed or will find it difficult to attract external funds to solve the problems of recovery. The main sponsors of the reconstruction could be the EU or the Gulf states since they have serious financial resources. However, the introduction of the American “Caesar Act” imposes significant restrictions on these plans. By introducing new sanctions, the Americans are devaluing the actual EU sanctions against Syria. Now, even if Brussels wants to lift its sanctions, it will not be able to trade with Damascus due to secondary US sanctions. By their step, the USA deprived the EU of arguments in its negotiations with Syria and its allies.
Secondary sanctions are also hitting the Gulf states, some of which in recent years have gone the extra mile towards Damascus. Thus, the UAE, having restored its official contacts with Syria, resumed the work of its embassy in Damascus, develop cooperation at the level of intelligence services, and outlined business projects. Now, these projects are at risk of sanctions. For the UAE, Damascus is important for several reasons, the most important of which is the regional confrontation with Turkey. An arc of instability across the Mediterranean, in which Turkey and the UAE stand on opposite sides of the barricade, is helping Damascus gain the attention of the Gulf monarchies and regain at least limited regional recognition. The latest escalation of tensions in Libya could create much bigger problems for Ankara if there was a constant escalation in Idlib at the same time. It seems that this is exactly what Abu Dhabi could ask Damascus. However, such an operation would harm Russian-Turkish interaction in Idlib. Apparently, the awareness of the need to preserve the ceasefire during this period and the absence of obvious provocations from the anti-government forces led Damascus to temporarily restrain its aspirations. The American sanctions confused the Emirates, which have already expressed their displeasure with such actions of the United States.
Under the sanctions, Damascus can rely on its own and limited support from allies, which, nevertheless, are not able to provide funds comparable to those of the EU or the Gulf countries. Damascus could rely on domestic resources, but key oil fields are controlled by the US holding the east of the country and its Kurdish allies. Russian diplomats have repeatedly raised the issue of the illegal US presence in Syria. On July 29, it became known from Russia’s Permanent Representative to the UN, Vasily Nebenzya, that Russia would request a meeting of the UN Security Council on the oil facilities occupied by the Americans in Syria. In case Damascus gained control over its own resources in the Euphrates, this would provide fuel for the Syrian economy, while at the moment oil comes from outside. Importing and transporting oil is costly for Syria as the process is also closely watched by OFAC.
The main source of funds for the Syrian partial reconstruction could be the Syrian diaspora or international Syrian business. These are mainly Syrian businessmen living in Europe, the Gulf countries, other Middle Eastern states. However, some of these individuals are negative towards the “Assad’s Syria”, while others do not see the benefits from the infusion of their resources in Syria. At the same time, the businessmen and companies that try to bring capital to the country face sanctions. Thus, Bashar al-Assad himself said: “some foreign companies have found ways to circumvent these sanctions, and we began to plan work. The process will be slow. If it weren’t for the sanctions, we wouldn’t have had problems with financing.”
For all of the actors in Syria, it remains to rely on their own resources, tactical interaction with external and regional players. Damascus should carry out major work to combat corruption, maintain the efficiency of the government, especially its economic bloc, and also limit the influence of various kinds of “businessmen of war”. Russia and the United States should realistically discuss the Syrian problem, but in the current conditions, this seems impossible. The doors for discussion could open after the US elections in November 2020. But by signing Caesar Act, the Americans restricted the next president and put the US Syria policy in concrete direction. This means for the government in Damascus that it should prepare for implementing its own agenda. It is not the USA, but Syrian presidential elections in 2021 that matter for Damascus and those engaged in the Syrian settlement. Syria’s survival depends on the government’s ability to adapt to new sanctions, establish order in its own economy while preserving contacts with the regional and external players.
In Syria, Moscow is facing growing financial and economic challenges. Russian companies that already under sanctions continue their work. But there are many restrictions on the Russian business. The major companies continue to comply with the US sanctions and do not risk engaging with the Syrian market. So, Moscow is currently focusing on maintaining the necessary level of participation in Syria, but not a thorough immersion. This is due to the capabilities of Moscow, understanding of the limited resources in the context of COVID-19 and sanctions.
Sanctions against Syria could also provide Moscow with new tools for expanding its presence in Syria. The Syrian settlement could also become an area for selective engagement between Russia and the EU. Moreover, Moscow, in cooperation with individual European and Middle Eastern partners, in addition to pressure on the humanitarian consequences of sanctions and the inadmissibility of the occupation of Syrian resources, should also promote the idea of the partial and phased lifting of sanctions by the US in exchange for political concessions from Damascus. However, this process requires from the USA a concrete and realistic formulation of their claims to Syria, and from Damascus – a willingness to make such concessions. Even so, neither should one rely on the willingness of the United States to conduct a pragmatic and realistic dialogue nor should one forget that the war in Syria is not over. Still, there are terrorist elements with the post-Soviet background in Syria, and fighting against terrorism is an important factor.