Syria Hopes for Terrorism Delisting to Spur Economic Recovery

Syria is pinning its hopes for economic recovery on being removed from the US list of state sponsors of terrorism, a designation that has been in place since 1979. This label remains the primary political and legal obstacle to tangible economic progress, despite a broad easing of international sanctions approximately a year ago.

Sources in Damascus suggest US hesitation to delist Syria is linked to Israeli opposition, while others cite a combination of regional, international, and domestic factors. Syrian President Ahmed al-Sharaa recently urged US President Donald Trump via phone call to lift remaining sanctions, emphasizing their necessity for reviving the economy, improving living conditions, and attracting investment.

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The sanctions still in place include the Caesar Act, which has only been suspended repeatedly and temporarily for 180 days at a time, not permanently repealed, leaving investors facing uncertainty.

Despite some easing, Syria remains entangled in a complex sanctions regime. Measures continue to target President al-Sharaa, the interior minister, the central bank, Syrian Airlines, and key ports and companies. Economic expert Ziad Arbash noted that the Caesar Act, repeatedly suspended for 180 days, creates investor uncertainty. Broad secondary sanctions from the US, EU, and UK also persist, alongside restrictions on technology exports, particularly dual-use items.

Arbash explained that delisting Syria would facilitate direct US investment, currently banned, help reintegrate Syrian banks into the global financial system, ease transfers, and enhance international confidence. However, Washington maintains that sanctions will continue to target individuals accused of human rights abuses, Captagon traffickers, and other actors deemed destabilizing. This stance aligns with a US policy encouraging allies to become more self-reliant.

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Removing Syria from the state sponsors of terrorism list would unlock direct US investment, which had been fully banned, help reconnect Syrian banks to the global financial system, ease bank transfers and bolster international confidence.