Overview
Syria has entered a new post-Assad era with President Trump’s dramatic mid-May announcement that he would order the cessation of US sanctions. The move has opened the door for the US, the UK, and the EU to begin the process of comprehensively lifting their respective Syria sanctions. Despite significant steps towards lifting "all sanctions,” while important sanctions are being lifted, the process reflects a careful and gradual approach by Washington, London, and Brussels, aiming to keep some of the sanctions in place and testing the interim Syrian government’s policies and actions over time before broadening the scope of sanctions relief. Nonetheless, the transitions present a significant opportunity for Syria to bolster its economy and potentially its democratic transition, despite ongoing domestic and regional stressors, posing upside and downside risks for regional stability, the global economy, and multinational businesses.
The Trump Administration Moves to Implement Partial Sanctions Lifting
Following Trump’s decision, the US Treasury Office of Foreign Assets Control (OFAC) issued General License No. 25 (GL 25) effectively lifting most sanctions on Syria and authorizing a range of transactions, previously prohibited by the Syrian Sanctions Regulations (SySR). These include permitting transactions with the new Syrian government, delisting 28 individuals and entities previously on the sanctions list and allowing the provision of services to/deals with them, as well as new investment in Syria, imports of petroleum and petroleum products from Syria, and the processing of transactions by US banks for any activities authorized by GL 25. Additionally, the US State Department issued a 180-day waiver of sanctions under the Caesar Syria Civilian Protection Act in order to facilitate the provision to Syria of critical utilities and other services, essential to Syria’s recovery and reconstruction efforts. Finally, the US Treasury’s Financial Crimes Enforcement Network published exceptive relief under the USA Patriot Act, allowing the opening of accounts and maintaining of contacts with the Commercial Bank of Syria.
Despite these sweeping steps, GL 25 does not revoke SySR, as it continues to prohibit transactions with individuals and entities identified on OFAC’s Specially Designated Nationals list and Blocked Persons list and does not unblock any blocked property or interests in property. Moreover, transactions for or on behalf of the Russian, Iranian, or North Korean governments or the provision of services between these jurisdictions and Syria remain prohibited. Also, GL 25 does not alter current export-related State Department and Commerce Department restrictions on exports to Syria.
The UK Cabinet Selectively Lifts Sanctions and Eases Restrictions
The UK had already taken steps to lift sanctions prior to the US’ move. In accordance with its Plan for Change, designed to promote peace and regional stability, Prime Minister Starmer’s government amended its Syria sanctions regime effective April 25, 2025. Key changes include the lifting of sanctions on 12 Syrian entities, among them the Syrian Ministry of Defense, the Ministry of Interior, and several media companies. Restrictions on financial services and the energy sector have been eased as part of a broader effort to facilitate investment in Syrian infrastructure. However, many other sanctions have been kept in place, including on individuals associated with the former Assad regime as well as restrictions on the export of military products and technology, precious metals, gold and diamonds.
The EU Lifts All Economic Sanctions
Unlike the UK and the US’ more piecemeal approach, the Council of the European Union issued a formal statement announcing the lifting of all economic sanctions on Syria in late May, advancing its phased approach which was launched in February 2025 and moving from providing relief (a limited suspension of sanctions) to a broader lifting of economic sanctions. Supplementing this phased approach, on June 4th the European Commission announced a plan to provide €175 million in aid for Syria's social and economic recovery. The EU continues to maintain targeted sanctions on individuals and entities associated with the former Assad regime, as well as an arms embargo and restrictions on surveillance technology. The EU also announced new restrictive measures, soon to be introduced, that will target groups and individuals responsible for ongoing instability and human rights violations in Syria.
What’s Next for Syria, Post-Sanctions
The fairly comprehensive lifting of Western economic sanctions is a boon for Syria’s post-Assad government. Since the toppling of the Assad dynasty in December of last year, the interim government—headed by Ahmed al-Sharaa, a member of US-designated Hayat Tahrir al-Sham (HTS)—has repeatedly appealed for sanctions relief to give oxygen to Syria’s fledging post-Assad democracy. The weight of crushing sanctions has perpetuated the humanitarian crisis in Syria—with 16.5 million people in need, it is one of the world’s largest—and harmed Sharaa’s credibility as he attempts to lift Syria out of international isolation.
Nonetheless, Damascus still faces significant obstacles on the road to stabilization and democratic transition. Perhaps most concerningly for internal stability, the last several months have seen several outbreaks of sectarian violence against minority ethnic groups in Syria. The clashes have spurred rising distrust in Sharaa’s government over both the sincerity of his commitment to minority rights in the new Syria and his ability to provide security within Syria’s borders. Tensions with Israel also pose risks: unlike Washington, Jerusalem would like to see the Islamist-led government—which it sees as a “wolf in sheep’s clothing”—factious and weak, unable to mount damaging operations against Israel. In a bid to kneecap the HTS-led government’s early moves, Israel decimated Syria’s existing military infrastructure in the first hours and days following Assad’s ouster and has maintained an expanded military presence in southern Syria, where it has reportedly intervened in sectarian attacks against the Druze. While Syria and Israel are now reportedly engaged in Emirati-brokered face-to-face security talks, risks of miscalculation remain high—with Israel capable of delivering devastating blows.
Another question mark will be the extent of future support from Gulf allies. While major Arab monarchies have been outspoken in their support for the transitional state thus far, the shape of future Gulf investment and development in Syria is up in the air. Support for Syria is something of a complicated question for the Gulf Arab monarchies: all had passable to warm relations with Assad, and Saudi Arabia and the UAE have in the past opposed regime change and Islamist political parties, which HTS appears to be turning into. However, Saudi Arabia and the UAE, who have long been targeted by Iranian-backed proxies, are in particular eager to prevent a backslide to failed state status, which Iran could more effectively exploit. In May, Qatar and Saudi Arabia paid off Syria’s $15.5 million debt to the World Bank—a largely symbolic amount that will allow Damascus to access more international financing—and both countries announced that they would collaborate to fund Syrian public sector salaries. Saudi Arabia and the UAE have announced their intention to discuss expanded business cooperation with Damascus, while Qatar has already taken the leap to investment, inking a $7 billion power deal between Syria and a consortium of power companies to develop major power generation projects.
The Business Environment
The lifting of sanctions by the US, UK, and EU coupled with steps to more directly enter the Syrian economy by Qatar, Saudi Arabia, and the UAE, demonstrate the global reopening of the Syrian economy. For Western partners, the country remains a high-risk compliance environment, with many sanctions still in place and exposure to money laundering, terrorism financing, and export control violations creating serious risks. Further, Syria’s stability is by no means guaranteed—broader conflict with Israel, spiraling internal clashes, or democratic backsliding and a snap-back of sanctions remain a distinct possibility. Initial investments in infrastructure and the easing of Syria’s fiscal situation may also take time to come to fruition and reconstruct a viable market economy. Nonetheless, there are significant upside risks for entities willing and able to engage with Syria’s reopening economy—an opportunity on which Gulf entities are already beginning to capitalize.
