Overview
The Sanctions Update, compiled by attorneys from Steptoe’s award-winning International Regulatory Compliance team and the Stepwise: Risk Outlook editorial team, publishes every Monday. Guided by the expertise of Steptoe’s industry-leading IRC team, the Sanctions Update compiles and contextualizes weekly developments in international regulatory enforcement and compliance, as well as offers insights on geopolitical context, business impacts, and forthcoming risks.
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The Lede: International Sanctions Response to Syria’s New Regime Takes Shape
The surprise ousting of Syrian dictator Bashar al-Assad in December, and the still-emerging transitional regime headed by former members of the Hayat Tahrir al-Sham (HTS) militant group, created various dilemmas for the international community. Two months later, with Syria’s post-Assad future still deeply murky, the EU, UK and UN are beginning to map out a sanctions-relief plan designed to relieve economic pressure on Damascus’ hoped-for democratic transition and prevent Russian and Iranian influence from growing. The US, on the other hand, has remained mostly mum on the issue. In the coming months, global sanctions policy on Syria has the potential to deeply impact the trajectory of the transitional state.
Since the fall of the Assad regime, proponents of lifting international sanctions on Syria have argued that easing economic sanctions could provide much-needed oxygen to the country’s nascent democracy. Indeed, the Syrian economy has been devastated by thirteen years of civil war and a web of international sanctions: the UN reports that more than 90% of Syrians live in severe poverty. Further, providing a Western economic lifeline to Syria could keep rivals like Russia and Iran from rebuilding influence in Damascus. However, there are risks to engaging Syria economically: it is difficult to judge the true intentions of the transitional government, whose parent organization HTS has long espoused a conservative Salafist Islamist ideology, or the likelihood of success for the democratic transition. Although HTS has pledged to foster an inclusive political transition and pursue a market capitalist system, leadership has declined to give specifics on the inclusion of women, for example, in its future government.
The EU Council has decided to suspend Syria sanctions related to energy, transport and reconstruction at a meeting in Brussels today, taking a significant step to ease restrictions on Syria’s post-Assad economy. Specifically, the Council has suspended restrictions in the energy sectors (including oil, gas, and electricity) and transport sectors. Additionally, five entities have been removed from the asset freeze list, and financial resources are now allowed for the Syrian Central Bank. Certain banking transactions between Syrian banks and financial institutions in Member States are also permitted. The existing humanitarian exemption has been extended indefinitely, and an exemption for the personal use export of luxury goods to Syria has been introduced. The Council leaves open the possibility of further easing in future stages, currently leaving sanctions on individuals and entities tied to the former Assad regime. It also retains the option to re-impose sanctions if the new Syrian leaders fail to respect human rights or democratic values, as European diplomatic chief Kaja Kallas assured last month.
The UK also announced on February 13, 2025, its intention to amend the regulations imposing sanctions on Syria to support the Syrian people in rebuilding their country and to promote security and stability. Specifically, the UK intends to relax restrictions that currently apply to the energy, transport and finance sectors, as well as to further support humanitarian delivery. Asset freezes and travel bans on the former regime of Bashar Al-Assad will remain in force.
In recent weeks, the UN has also raised the possibility of lifting its own sanctions if Syria continues to make progress in its transition to a stable, democratic government – likely to include the potential removal of HTS from the UN’s list of terrorist organizations. The designation of HTS (the UK and US have also designated HTS a terrorist organization) has been a hot-button issue, as proponents argue that maintaining the designation for the country’s de facto leaders will create unnecessary barriers to attempts to engage with Damascus. Opponents, including China – which, with its Security Council veto power, could scuttle the plan – argue that it is premature to lift the designation, saying that Syria’s new leadership must “take concrete measures to actively respond to the concerns of the international community.”
The Trump Administration has so far maintained a hands-off approach to Syria, with President Trump saying shortly after his inauguration that “we're not involved in Syria. Syria is in its own mess.” On sanctions policy, the White House has been mostly silent, although it has left in place waivers announced in the final days of President Biden’s term relating to the provision of basic services in response to requests for humanitarian relief for Syria. Many of the US’ sanctions on Syria are mandated by law, such as the Caesar Syria Civilian Protection Act, and would require Congressional action to unwind. Washington’s path forward on sanctions is unclear, but is unlikely to lead global policy. The Trump administration, if it decides to focus on Syria, is more likely to seek a role for US companies in economic reconstruction in exchange for easing sanctions.
US Developments
Bessent Says Trump Administration May Alter Russia Sanctions to End the War in Ukraine
Secretary of the Treasury Scott Bessent recently stated in an interview that the US is prepared to either rollback or increase sanctions on Russia, depending on how talks to end the war in Ukraine proceed. Bessent added that Trump is “committed to ending this conflict very quickly.” Relatedly, Bessent said that Ukrainian President Volodymyr Zelenskyy had not yet committed to sign a proposed minerals deal, which in Bessent’s words would be part of an “elegant plan” to bring Ukraine closer to the US. Zelenskyy has rejected the Trump administration’s proposal that Ukraine repay US wartime aid with minerals.
Bipartisan Group of Lawmakers Call for Transfer of Frozen Russian Assets to Ukraine
During the Munich Security Conference, Sens. Jim Risch (R-ID) and Jeanne Shaheen (D-NH) —the Chairman and Ranking Member of the Senate Foreign Relations Committee, respectively—as well as Sens. Lindsey Graham (R-SC) and Sheldon Whitehouse (D-RI), called on the Trump administration and Group of Seven (G7) allies to “unlock” the value of approximately $300 billion in frozen Russian assets for the benefit of Ukraine. In particular, the Senators suggest either seizing the assets for Ukraine or using the assets as collateral for a larger loan to Ukraine.
The letter from senior Members of Congress came just days before Trump administration officials began negotiations with Russia concerning an end to the war in Ukraine. It also came just before President Trump delivered scathing criticism of Ukrainian President Volodymyr Zelenskyy, calling him a “Dictator without Elections” and lamenting the aid the US and allies have given Ukraine since Russia’s invasion. Although the letter suggests there is still strong bipartisan Congressional support for aid to Ukraine, it is unclear whether Congressional Republicans will continue to back Ukraine given Trump’s views on Zelenskyy and US aid to Ukraine.
US Designates Cartels as Terrorist Organizations
The US has formally named eight cartels as Foreign Terrorist Organizations (FTOs) and Specially Designated Global Terrorists (SDGTs). These determinations were made by Secretary of State Marco Rubio in accordance with President Trump’s recent Executive Order (EO), “Designating Cartels and Other Organizations as Foreign Terrorist Organizations and Specially Designated Global Terrorists,” which was signed on January 20, 2025. As we have previously noted, the primary effect of an FTO designation is to prohibit US persons or those subject to US jurisdiction from knowingly providing “material support or resources” to an FTO, whereas the primary effect of an SDGT designation is the imposition of blocking sanctions. Given the reach of the cartels named in the determinations, companies with business interests or investments in certain regions with cartel activity may be impacted by the determinations.
Attorney General Pam Bondi also recently issued a memorandum directing the DOJ to, among other things, pursue a “total-elimination policy” regarding cartels and transnational criminal organizations. This suggests that enforcement of these designations is likely to be a priority for the Trump administration.
OFAC Sanctions Rwandan Minister and Militant Leader
The Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned James Kabarebe, Rwanda’s Minister of State for Regional Integration, as well as Lawrence Kanyuka Kingston, a March 23 Movement (M23) and Congo River Alliance senior member, for their alleged roles in enabling M23 and the Rwandan Defense Force’s (RDF) destabilizing activities in eastern Democratic Republic of Congo (DRC).
M23 began their most recent offensive in eastern DRC shortly after President Trump’s inauguration in January 2025. Since then, the group has made rapid progress. M23’s capture of Goma, the capital and largest city in North Kivu Province, as well as other neighboring territories drew condemnation from the Chairman of the Senate Foreign Relations Committee, Sen. Jim Risch (R-ID), and a joint statement from the Group of Seven (G7) foreign ministers calling for an end to the conflict. More recently, M23 has forced DRC troops to withdraw from the city of Bukavu, the capital of the South Kivu Province.
In her remarks to the United Nations Security Council (UNSC), US Chargé d ’Affaires ad interim Dorothy Shea stated that the US is prepared to work with other relevant UN members on sanctions of actors in the region.
Lutnick Confirmed as Secretary of Commerce
The Senate voted 51-45 to confirm Howard Lutnick as the next Secretary of Commerce. Lutnick will now oversee multiple key bureaus and agencies, including the Bureau of Industry and Security (BIS) and International Trade Administration (ITA).
During his confirmation hearing, Lutnick stated he had a very “jaundiced” view of China, adding that “they only care about themselves and seek to harm us.” To combat this, and partly in response recent Chinese AI advances, Lutnick stated his support for increased controls on US exports of certain technologies to China. He also stated that he planned to “empower BIS with tariffs to enforce strict policies” and that export controls must be “backed by tariffs” in order to be fully effective.
UK Developments
UK Warns of Risks of a Bad Peace Deal with Russia
The UK has announced the imposition of fresh sanctions against members of Putin’s inner circle and companies at the intersection of the Russian energy and defence sectors alongside a joint op-ed by Foreign Secretary Lammy and Defence Secretary Healey outlining the importance and contours of a strong and durable peace in Ukraine. They state that a bad peace would embolden China, Iran, and North Korea, as well as harm European security and economies. For example, Russia’s 2022 invasion of Ukraine took one and a half percent off global GDP and added three percent to European inflation. The need for President Zelensky to participate in peace talks about Ukraine and for the UK to play its part in giving President Zelensky the strongest possible hand in those talks was underscored. In support of that commitment, the Secretaries of State emphasized the need to “turn up the pressure on Russia,” with sanctions on energy being a particular priority.
Prospect of Rwanda Sanctions Rises as Tensions in DRC Mount
During a speech at the G20 Foreign Ministerial Meeting in South Africa, Foreign Secretary Lammy highlighted the Rwandan Defence Force operations in the eastern Democratic Republic of Congo (DRC) as a blatant breach of the UN Charter that risks escalating into a regional conflict, noting that further breaches of the DRC’s sovereignty “will have consequences.” Foreign Secretary Lammy’s statement built on previous comments by Ambassador Kariuki, the UK Deputy Permanent Representative to the UN, which suggested the UK is actively considering a range of steps in coordination with its international partners. The US imposed sanctions on a number of individuals and entities in response to the situation in the DRC on February 20, 2025.
EU Developments
EU Agrees on 16th Sanctions Package Against Russia
On Wednesday, February 19, the European Union reached an agreement on its 16thsanctions package against Russia, set to be adopted by EU foreign ministers on Monday, coinciding with the third anniversary of Russia’s invasion of Ukraine. Discussions on the new sanctions package focused on measures such as banning aluminum imports, a proposal previously stalled due to economic concerns from some member states. In November 2023, the EU had already banned certain aluminum products, including aluminum wire, foil, and extruded items. However, semi-finished aluminum had not yet faced any trade restrictions.
The sanctions package also alluded to targeting video game consoles and software for oil and gas exploration, as well as potentially extending sanctions to 50 new entities. The final package reportedly includes a phased-in ban on importing Russian aluminum products, increased measures targeting Russia's crude oil sales, and restrictions on the sales of video game consoles. The objective of the package is also to undermine Russia's manufacturing strength by implementing export prohibitions on items such as chromium and chemical precursors (compounds used to produce other chemicals). Additionally, it targets 73 "shadow fleet" tankers that Russia uses to export crude oil, circumventing existing sanctions bringing the total number of such ships to 152. The package also imposes sanctions on 13 Russian banks and various individuals and entities deemed to be supporting Russia's war efforts. As had been anticipated, this package does not include a ban on Russian liquefied natural gas (LNG).
The 16thpackage comes as the EU seeks to maintain pressure on Moscow and bolster support for Kyiv, particularly as there are concerns that US President Donald Trump might relax US sanctions as part of a peace agreement with Russia. US Secretary of State Marco Rubio suggested that EU sanctions could play a role in these negotiations, underscoring the importance of EU participation in any peace discussions. EU officials has expressed concerns about the potential weakening of their sanctions' impact if the US decides to lift its restrictions.
Sanctioned Russian Ship Maia-1 Approaches Europe via Suez Canal
The Maia-1, a Russian ship sanctioned for transporting arms from North Korea, is set to enter the Mediterranean through the Suez Canal, marking its first entry into European waters. Owned by MG-Flot and sanctioned by the US, EU, and UK, the vessel is heading to a Russian port on the Baltic coast for an LNG facility project. The Maia-1's journey, starting from Vladivostok and involving cargo pickup near Shanghai, challenges the western sanctions system. The ship's entry into European waters raises significant questions about the enforcement of sanctions as it tests the resolve of the West to maintain economic pressure on Russia amid ongoing support for Ukraine.
