Syria sanctions update: Unlocking the Syrian market?

Following the full termination of the US sanctions programme on Syria on 8 July 2025, and the earlier easing of EU restrictions in February, Syria’s new leadership is seeking to re-establish international partnerships and attract foreign investment.

The progression from General License 25 (‘GL25’), issued in May 2025, to the complete lifting of US sanctions - alongside the removal of Hayat Tahrir al-Sham (‘HTS’) from the US list of Foreign Terrorist Organisations - marks the most significant shift in US and European policy towards Syria since the fall of the Assad regime in December 2024. Yet, these developments can raise more questions than answers. Are they a genuine signal of long-term re-engagement, or simply tactical adjustments within a still-hostile regulatory environment?

In this article, Rabiee Ibrahim and Rami Assaf examine the evolving sanctions landscape in Syria. They assess the possible implications on Syria’s economic recovery with potential opportunities for investments in infrastructure, as well as energy and construction projects, by Development Finance Institutions (‘DFIs’) and international companies.

New openings: What’s changed?

On 30 June 2025, US president Donald Trump signed Executive Order (‘EO’) 14312, which would revoke the US Syria Sanctions Regulations (‘SSR’). EO 14312 followed the issuance of GL25 by the US Department of Treasury one month prior, which had provided a partial relief on the SSR. The SSR was effectively a blanket sanctions regime that constituted eight executive orders by successive US presidents against Syria’s government and economy from 2004 until the fall of the Assad regime in December 2024.

Following the fall of the Assad regime, EO 14312 marked a significant departure from the long-standing US policy of implementing comprehensive sanctions against Syria, revoking several prior executive orders which froze properties and blocked transactions involving the Syrian state, government officials, and state-affiliated entities. Individuals and entities that have been designated pursuant to the repealed executive orders have since been removed from the Office of Foreign Assets Control (‘OFAC’) list of Specially Designated Nationals and Blocked Persons List (‘SDN List’). However, individuals and entities that have been designated under other US sanctions regimes, such as Bashar al-Assad, will remain designated on the SDN List. Additionally, Executive Order 14312 prompted the US Department of State to review its stance on HTS and its leader, the current Syrian President Ahmad Al Sharaa. As a result, on 7 July 2025, the Department revoked HTS’s designation as a Foreign Terrorist Organisation.

Despite these changes, EO 14312 maintained sanctions on Bashar al-Assad and individuals tied to his former regime. It also amended a previous executive order from 2019 to include individuals that were former government officials under the Assad regime, and have committed serious human rights abuse, or have contributed to the production and distribution of the narcotic Captagon, as well as any entity owned or controlled by these individuals.

EO 14312 also directed the US Secretary of State and US Secretary of the Treasury to determine whether the appropriate conditions have been met to suspend the Caesar Act, in part or in whole. The Caesar Act was renewed in December 2024 and remains in effect until 2029. On 12 June 2025, six members of the US House of Representatives introduced a bill to repeal the extension of the Caesar Act until 2029.

The US’s sanctions relief on Syria came after the European Council had made a similar decision to issue a relief on its sanctions regime against Syria. On 24 February 2025, the Council suspended a number of restrictive measures targeting Syria’s energy, transport, and banking sectors. The decision was intended to support an inclusive political transition and facilitate humanitarian and economic rebuilding by, for instance, reinstating funding to five major Syrian entities and allowing critical infrastructure imports. The five Syrian entities included four Syrian banks and Syria’s national flag carrier. However, the Council maintained its asset freeze on the Central Bank of Syria. Subsequently, the Council lifted most economic sanctions on 27 May 2025, while retaining measures tied to human rights, terrorism, and chemical weapons and maintaining prohibitions on individuals linked to the Assad regime.

Enduring constraints: What sanctions still apply?

For DFIs and companies considering re-entry or expansion, the lifting of US economic sanctions in July 2025 has sparked cautious optimism. However, key elements of the broader sanctions' architecture remain intact, and continue to shape both strategic and compliance-related decision-making. Foremost among these is the Caesar Act, which remains in effect until 2029. The Caesar Act Waiver Certification is only valid for 180 days since it was issued. Therefore, the recent Trump administration executive order introduces a degree of regulatory flexibility, but the overall regulatory situation is still ambiguous, as future enforcement decisions will depend heavily on evolving US policy priorities. Additionally, while the SSR have been formally terminated, several targeted US designations remain in place. These include former President Bashar al-Assad, members of his inner circle, and entities linked to chemical weapons proliferation. Although the US Treasury has indicated that these are under review, their continued designation poses ongoing reputational and compliance risks, particularly for international firms or DFIs engaging in sectors previously associated with the regime.

On the other hand, in the EU, key sanctions linked to terrorism, human rights violations, and chemical weapons use also remain. Notably, in March 2025, the EU targeted several senior military figures in the Syrian transitional government with new sanctions in response to attacks against Alawite civilians in the Syrian coast. These additions suggest that while certain economic restrictions have been lifted, the EU’s punitive mechanisms remain active. It remains to be seen, however, whether the EU will continue to target figures within the transitional government should more sectarian violence take place in Syria — a possibility that would test the EU’s resolve to balance engagement with accountability during the fragile transition period.

Overall, DFIs and international companies looking to capitalise on Syria’s market reopening and ensuing reconstruction initiatives must therefore conduct enhanced due diligence. Even amid formal easing, navigating Syria’s evolving regulatory landscape requires careful assessment of counterparties, ownership structures, and exposure to residual risks tied to still-designated individuals and entities.

Early economic impact and market reactions

Since the fall of the Assad regime in late 2024, Syria’s economy has entered a new phase of cautious reactivation. DFIs have already began to engage, primarily through grants and technical assistance, targeting strategic sectors such as energy. Therefore, while the country remains under significant financial and political strain, the formation of a transitional government and the easing of sanctions have laid the groundwork for selective re-engagement, led by DFIs and regional rather than multinational corporations. As a result, the Syrian pound has experienced slight stabilisation, and early signs suggest a modest rebound in trade and foreign exchange flows.

Qatar has emerged as a leading early partner. In May 2025, it announced a USD 7 billion energy package, led by UCC Holding, a major private Qatari construction and energy firm, to develop four combined-cycle gas plants and a 1,000-megawatt solar project. Turkey has likewise increased its economic footprint, with exports to Syria rising by nearly 37% in the first quarter of 2025. Turkish businesses, particularly in the construction and consumer goods sectors, are capitalising on new demand that was operationally cut off under the Assad regime. On the other hand, China, as part of its Belt and Road Initiative, has signed 20-year investment agreements to develop industrial free zones in Hassia and Adra. These deals aim to facilitate infrastructure upgrades and support light manufacturing, signalling Beijing’s long-term interest in Syria, though actual implementation has yet to begin.

Despite these developments, US and European commercial engagement had remained virtually absent, until now. The formal termination of the SSR, paired with the removal of HTS from the US list of Foreign Terrorist Organisations and the most recent re-establishment of diplomatic relations between Syria and the UK, signals a meaningful shift in US and European positioning. Legal clarity around permissible transactions is expected to improve in the coming months, creating greater investment confidence for multinational firms that had previously steered clear. Nevertheless, the continued designation of Assad-era individuals and entities, and the volatile security and political landscape in Syria all contribute to sustained caution. Additionally, the operational environment remains high-risk: shifting governance structures, limited regulatory clarity, and regional instability complicate compliance and long-term planning. As a result, many firms appear to be adopting a wait-and-see approach, with meaningful international investment likely to remain on hold until there is a more visible institutional reform and a clearer detachment from the networks of the former regime. Crucially, companies must also navigate the reputational and compliance challenges of engaging with a transitional government that includes individuals who, until recently, were designated - requiring a reassessment of internal risk appetites and due diligence frameworks. For now, Syria’s early economic recovery seems to be driven less by international confidence and more by regional pragmatism - tentative and deeply shaped by geopolitical calculations.

Syria unlocked?

The recent shift in US and EU sanctions policy has undoubtedly opened new space for economic manoeuvring in post-Assad Syria. With the formal termination of US sanctions, the removal of HTS from US terror designations, and renewed diplomatic engagement, most notably the UK Foreign Secretary’s visit to Damascus, this moment is increasingly being viewed as a potential inflection point, not just a tactical recalibration. Yet, the balance between opportunity and risk remains fragile. While regional actors and DFIs are moving quickly, US and European firms remain cautious, awaiting clearer guidance and enforcement practices. Political conditions also still apply, and reintegration remains both conditional and potentially reversible.

All in all, the coming months will be critical. The extent to which European institutions align with Washington’s shift, and whether multinational firms respond with renewed interest, will determine whether this moment evolves into durable re-engagement or fades into another fleeting chapter in Syria’s long sanctions trajectory.