The United States formally removed Syria from its “state sponsors of terrorism” list on Monday, after President Donald Trump notified Congress on July 8 and a 45-day congressional review passed on Saturday. The designation had been in place since 1979.
The decision removes one of the last major barriers to Syria’s reconnection with the global financial system, although analysts say it will not immediately resolve the country’s deep economic problems after nearly 14 years of war.
What the delisting changes
The designation imposed additional financial and trade restrictions even after Washington lifted many other limits on transactions with Syrian banks. Its removal reduces legal risks for banks handling Syria-related financing and transactions, and allows US foreign assistance to Syria, according to sanctions analyst Vittorio Maresca di Serracapriola of Karam Shaar Advisory.
The decision could also open further channels for development and reconstruction support through US assistance and government contracting. Maresca di Serracapriola said the biggest likely effect would be on financial flows and investment, after international banks had often cited the designation as a reason not to work with Syrian banks.
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The change follows the Central Bank of Syria’s reactivation of its account at the Federal Reserve Bank of New York in March and the World Bank’s approval of a $100m grant for financial sector modernisation, according to Maresca di Serracapriola.
Why the economic impact may take time
Syria’s economy remains weak, with almost 90 percent of the population living below the poverty line. Obai Kurd Ali of the Tahrir Institute for Middle East Policy said the designation had contributed to restrictions on financing and exports, as well as banks’ reluctance to engage because of fears of secondary sanctions.
Banking activity is not guaranteed to rebound automatically. International banks and investors will continue to assess Syria’s anti-money-laundering and counter-financing-of-terrorism framework, broader risks, governance and political stability, Maresca di Serracapriola said.
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Banking and economic expert Ibrahim Kochaji described the delisting as a pivotal moment but not an immediate remedy. He said progress would require a long programme of reforms supported by stability and sound governance. Kurd Ali identified transparency, anti-corruption measures and judicial reform as necessary to rebuild investor confidence and support an inclusive recovery.
What it could mean for people in Syria
Kochaji said any benefits to daily life would likely emerge gradually if the transitional government manages the change effectively. Lower production and transportation costs and new job opportunities are among the potential effects he identified.
Syrians continue to face soaring energy costs and a struggling local economy despite improvements many people associate with the fall of the al-Assad regime. Kochaji said the removal of the designation could become tangible for households, but only if the transition is handled wisely.
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What happens next
The transitional government must use the opening to pursue reforms, stronger governance and measures that can restore investor confidence, according to the analysts cited.
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