In a landmark diplomatic breakthrough, U.S. President Donald Trump met with Syrian President Ahmed al-Sharaa in Saudi Arabia – the first meeting between U.S. and Syrian heads of state in 25 years. During this historic encounter, Trump announced the complete lifting of U.S. economic sanctions on Syria, signaling a pivotal shift in the country's trajectory toward reintegration into global markets. Widely hailed as a step toward regional stabilization, this move is expected to catalyze foreign direct investment (FDI), revive trade routes and reignite long-delayed reconstruction initiatives.
Following the U.S. announcement that it would lift sanctions on Syria, the EU swiftly echoed a similar stance. Over the weekend, a delegation led by al-Sharaa visited Türkiye and held high-level talks with President Recep Tayyip Erdoğan, Vice President Cevdet Yılmaz (and Finance Minister Mehmet Şimşek, Defense Industries President Haluk Görgün and Central Bank Governor Fatih Karahan). The focus was on concrete and technical cooperation, an encouraging step.
However, the same week al-Sharaa was targeted with a genocide complaint at the International Criminal Court (ICC), casting a shadow over overly optimistic scenarios for Syria. These fast-moving developments risk turning Syria’s fragile recovery into a threadbare narrative. It is therefore crucial to closely examine the specifics of U.S. sanctions policy.
U.S. sanctions against Syria began in 1979 under President Jimmy Carter, when Syria was designated a “State Sponsor of Terrorism,” resulting in the suspension of military exports, foreign aid and development assistance. This designation laid the foundation for successive waves of sanctions under Presidents Reagan (1986) and Clinton (1998). Under President George W. Bush, sanctions were significantly expanded via the 2004 Syria Accountability and Lebanese Sovereignty Restoration Act (SALSA), targeting financial institutions, energy exports, and transportation infrastructure.
In response to the Assad regime’s violent repression during the 2011 civil conflict, President Barack Obama imposed a comprehensive sanctions package, including embargoes on crude oil exports, restrictions on state-owned enterprises and measures targeting the Central Bank of Syria. The sanctions regime reached its peak with the 2019 Caesar Syria Civilian Protection Act, signed by President Trump and subsequently upheld by President Biden (2021-2023), which extended penalties to entities indirectly supporting the regime, thus forming one of the region’s most extensive economic containment frameworks.
The sanctions regime not only isolated Syria’s economy but also triggered systemic collapse. Post-2011 energy sanctions decimated Syria’s primary source of foreign currency, oil exports, resulting in fiscal deficits, suspension of infrastructure projects and the deterioration of public service provision. The exclusion from SWIFT disconnected the banking system from global finance, crippling cross-border payments and stifling trade finance. Domestic capital flight and import dependency undermined industrial competitiveness, while inflation surged into triple digits due to supply chain disruptions in essential goods, including food, medicine and energy. These dynamics culminated in one of the gravest humanitarian and economic crises in Syria’s modern history.
Beyond macroeconomic deterioration, the prolonged sanctions precipitated a collapse in institutional capacity. Public service delivery ground to a halt, while illicit economies, ranging from narcotics to smuggling, flourished in governance vacuums, often under the control of armed factions. Syria became increasingly dependent on geopolitical patrons like Iran and Russia for fiscal and military support. Widespread poverty and labor market dislocation have also contributed to a sustained outflow of refugees, exacerbating the regional humanitarian burden.
It is understood that U.S. sanctions were viewed as a significant challenge to Syria's economic recovery. This decision was approved by all countries in the region, particularly Syria. Syrian Economy Minister Nidal al-Shar was visibly moved during a live broadcast as he thanked Türkiye, Saudi Arabia and Qatar for their contributions to the process.
In the wake of sanctions relief, SANA reported a memorandum of understanding between the Syrian government and Dubai-based DP World to develop the Port of Tartus, with an estimated investment of $800 million.
It is possible to say that this investment could be very beneficial for the Syrian economy at this stage. However, it seems that DP World's investment in Tartus is not just a port modernization project. This investment has the potential to contribute to Syria's economic recovery and support the UAE's strategic objectives in the Middle East. If this investment is successful and political risks remain manageable, it could pave the way for other Gulf investors. In the context of Syria's postwar economic landscape, it is important to recognize the potential of ports and logistics corridors to hold both commercial and strategic value.
Pre-2011, Syria produced 370,000-400,000 barrels of oil per day, over half of which was exported to Europe. Although modest by regional standards, its proven reserves of 2.5 billion barrels endowed it with strategic relevance. By 2015, production had plummeted to 90,000 barrels per day, largely under non-state control. While output levels are too low to influence global oil prices, Syria’s reentry into the hydrocarbons market may affect regional energy alliances, pipeline diplomacy and investment risk assessments more than price benchmarks.
The easing of sanctions is reshaping Syria’s economic landscape. Private enterprises, returning diaspora capital, Gulf-based multinationals and logistics sectors in neighboring states (e.g., Türkiye, Jordan, Lebanon) are among the early beneficiaries. Conversely, entrenched wartime actors, such as smuggling syndicates and black-market networks, face structural decline. Some opposition factions criticize the move, fearing it legitimizes the post-Assad transition. Small and medium-sized enterprises (SMEs), long sheltered from international competition, may struggle against better-capitalized foreign entrants. In this emergent order, economic adaptability and competitive capacity, not political alignment, will define market outcomes.
The U.S. decision to lift sanctions will undoubtedly be an economic turning point. Lifting sanctions alone will not be enough for economic recovery. The new government's policies, legal security, balance in foreign relations and internal peace will be decisive factors. If stability is achieved in these areas, Syria will once again become a regional economic player in the coming years. If transparent and investment-friendly policies are not implemented, there will be a short-term revival followed by a return to instability.
Several key variables will shape Syria’s post-sanctions economic trajectory. A critical question is whether foreign direct investment will be driven primarily by market fundamentals or by geopolitical considerations. Additionally, the prospects for productivity gains across key sectors remain uncertain, hinging on the effectiveness of institutional reform and policy coordination. The regulatory posture of the Syrian government will be pivotal – whether it pursues a liberalized, market-oriented framework or opts for strategic interventionism aimed at protecting domestic industries and labor. Lastly, the scale and pace of return migration among the Syrian diaspora will play a significant role in determining human capital availability and long-term economic revitalization.
