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U.S. Sanctions on Syria: What Comes Next?
U.S. Sanctions on Syria: What Comes Next?

Too Close For Comfort: Syrians in Lebanon

As the Syrian conflict increasingly implicates and spills over into Lebanon, a priority for its government and international partners must be to tackle the refugee crisis, lest it ignite domestic conflict that a weak state and volatile region can ill afford.

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Executive Summary

Syria’s conflict is dragging down its neighbours, none more perilously than Lebanon. Beirut’s official policy of “dissociation” – seeking, by refraining from taking sides, to keep the war at arm’s length – is right in theory but increasingly dubious in practice. Porous boundaries, weapons smuggling, deepening involvement by anti-Syrian-regime Sunni Islamists on one side and the pro-regime Hizbollah on the other, and cross-border skirmishes, all atop a massive refugee inflow, implicate Lebanon ever more deeply in the conflict next door. It probably is unrealistic to expect Lebanese actors to take a step back; Syria’s fate, they feel, is their own, and stakes are too high for them to keep to the sidelines. But it ought not be unrealistic to expect them – and their international partners – to adopt a more forward-looking approach to a refugee crisis that risks tearing apart their own country’s economic, social and political fabric, igniting a new domestic conflict that a weak Lebanese state and volatile region can ill afford.

This is a story numbers tell best. Over one million Syrians are in Lebanon – registered and unregistered refugees, as well as migrant workers and others. That figure – more than 25 per cent as great as the approximately four-million citizen population million– is rising and likely will soar if and when the battle for Damascus is fully joined. It would be staggering anywhere but is truly frightening when one considers the state’s institutional frailty, meagre resources and, perhaps above all, highly sensitive sectarian balance. Unsurprisingly, the government – divided and polarised, on this issue as on most others – was slow off the mark.

The day-to-day impact is palpable. The demographic change can be felt in virtually all aspects of life, from the omnipresent Syrian dialect, to worsening traffic congestion, mounting housing prices and rising delinquency. Yet, the refugees do not pose a humanitarian problem alone. Their presence also has been politically deeply polarising. The vast majority are Sunnis who back the uprising. Most Lebanese view the conflict through a sectarian prism, and thus their attitude toward refugees from the outset has largely been informed by confessional considerations, as well as by their potential security impact and implications for future domestic politics.

Refugees generally have moved to hospitable, predominantly Sunni areas. Even there, however, patience is beginning to wear thin. Hatred for the Syrian regime remains acute and tends to dominate other feelings. Still, there is growing anger at the fact that they are attracting Syrian fire by providing succour and cover to anti-regime rebels. Besides, a history of stereotypes is at play: as many Lebanese see them, Syrians fall into broad categories: low-income, poorly uneducated, menial workers, criminals or abusive security officers and soldiers. Complaints go both ways: from Lebanese who fault their guests for introducing greater insecurity, to Syrians who accuse Lebanese of disrespecting, exploiting or even assaulting them. Street fights and criminality have trended upwards.

Hostility and suspicion are far more discernible among Shiites and Christians. In predominantly Shiite areas now witnessing refugee arrivals, many local residents express concern that the numbers could grow, while Hizbollah fears that refugees’ anti-regime sentiment could be a prelude to activism against the movement itself. Many Christians feel even more vulnerable, alarmed at a demographic balance that continuously tilts against them. The current human wave harkens back to the community’s experience with Palestinian refugees whose initial, theoretically short-term resettlement turned into a massive, largely Sunni, long-lasting, militarised presence. And it feeds into a more general belief that Lebanon’s Sunni community – more specifically, Islamists in its midst – are being empowered, riding an irresistible regional tide.

The refugee issue is only one aspect of a far broader challenge Lebanon faces as a result of the Syrian conflict. The political demography of the area that includes the two countries is shifting as borders become ever more permeable. Lebanese Islamic organisations set up to assist Syrian refugees also are instruments of socialisation; they threaten to radicalise a generation of Syrians, inculcating militant anti-Shiite and anti-Alawite outlooks. Sunni Islamist militants in Lebanon smuggle weapons and join their Syrian brethren’s struggle in what has become jihadis’ destination of choice. There is risk of blowback: once their work in Syria is done, they might well turn their sights back home.

If anything, Hizbollah’s involvement is more intense. What began as relatively modest help to the regime over time has mushroomed into what now appears to be direct, comprehensive, full-fledged and less and less concealed military support. Israel’s recent (officially unconfirmed) air attacks against targets in Syria – supposedly Iranian arms shipments destined to the Shiite movement – and heightened Hizbollah rhetoric reflect growing possibilities of regional entanglement involving Lebanon. All in all, even as the government in Beirut hangs on to its policy of dissociation, non-state actors hardly feel so constrained. Lebanon’s hopes of being immune to the conflict have been brushed aside by domestic parties for whom its outcome is quasi-existential.

Historically, and to a far greater extent than any other neighbour, Lebanon’s fate has been deeply intertwined with Syria’s. As Syria heads even more steadily toward catastrophe, there is every reason for Lebanese of all persuasions to worry about their own country – and to do something about it. Regrettably, it is likely too late for them to wind back the clock and revert to a policy of non-interference in the Syrian war. But if the country’s various political forces cannot agree on what to do in Syria, at least they might agree on a sensible approach toward the refugee tragedy. A population influx of such magnitude would be a huge problem anywhere. In Lebanon – with fragile institutions and infrastructure; a delicate political and sectarian balance; tense social fabric; and declining economy, all of which the refugee crisis worsens – it is a nightmare.

Beirut/Brussels, 13 May 2013

An employee weighs Turkish coins at a bank in the town of Sarmada in Syria's northwestern Idlib province, June 14, 2020. Authorities are taking steps to substitute the plummeting Syrian pound with the Turkish lira. AAREF WATAD / AFP

U.S. Sanctions on Syria: What Comes Next?

Sanctions on Syria aim to protect Syrian civilians from the regime but may end up hurting them instead. Washington should further clarify humanitarian exemptions, specify benchmarks related to civilian protection and offer temporary easing of sanctions as long as these are met.

Since early June, the Syrian economy has taken a further dive into an already deep hole. “Famine could very well be knocking on that door”, warned the World Food Program on 12 June. The new U.S. sanctions under the Caesar Civilian Protection Act that kicked in on 17 June will probably push the economy deeper still into the pit, magnifying the misery of ordinary Syrians. At the same time, given the Syrian regime’s track record, it appears unlikely that these sanctions in and of themselves will achieve their stated objective of protecting civilians by “compelling the government of Bashar al-Assad to halt its murderous attacks on the Syrian people and to support a transition to a government in Syria that respects the rule of law”.

It remains uncertain if sanctions could be used as levers toward some other end, such as ensuring unrestricted humanitarian access or consolidating a sustainable ceasefire. At a minimum, the U.S. and its European partners (which have separate sanctions on Syria) should describe the concrete and realistic steps they are asking Damascus and its foreign backers to take, and explicitly lay out the range of partial and reversible sanctions waivers and relief they are prepared to provide in return. The U.S. should also expand the scope of the humanitarian exemptions that it will allow and communicate them proactively to reassure third parties who may otherwise stay away for fear of real or perceived legal penalties, while stepping up its humanitarian assistance to all of Syria to avoid food shortages.

A Self-inflicted Economic Disaster

According to Damascus and some of its foreign supporters, Western sanctions are mostly to blame for immiserating the population, 83 per cent of whom live below the poverty line. Yet Syria’s economic decay cannot be attributed exclusively, or even mainly, to these sanctions, just as the Syrian lira’s depreciation cannot be pinned on foreign interference or currency manipulation. Rather, it is nine years of war, preceded by decades of rampant corruption that prepared the ground for the 2011 popular uprising, that have ravaged Syria’s economy. In the course of the war, the regime and its Russian and Iranian allies have obliterated vital infrastructure and entire city quarters as part of a deliberate strategy for crushing their opponents.

The Syrian government’s response to the crisis has exacerbated the downward trajectory.

War has also severely depleted the Syrian government’s revenues. One of the biggest blows came in 2014, when it lost access to many of the country’s natural and agricultural resources, in particular oil and gas but also wheat, which is produced in the north east, now controlled by the Kurdish-led Syrian Democratic Forces (SDF). So far, talks between the SDF and the regime over the future of these areas and prospective revenue-sharing arrangements have led nowhere. Elsewhere, the regime has subcontracted areas nominally under its control to paramilitary forces and foreign militias that engage in looting, extortion and smuggling, all of which stand in the way of economic recovery. The implosion of the Lebanese economy and banking system next door has aggravated the crisis. Syrian deposits in Lebanese banks – estimated at up to $40 billion – have become inaccessible; much of that money has likely evaporated. Lebanon also long served as an essential conduit for the Syrian economy to the outside world, allowing it to circumvent sanctions, but the Lebanese financial system’s collapse has shut this channel.

The Syrian government’s response to the crisis has exacerbated the downward trajectory. Remittances from diaspora Syrians to their families back home are one of the country’s few remaining sources of hard currency, but a recent crackdown to curb black-market money transfers and impose a much lower official exchange rate throttled the influx, creating a dollar shortage and robbing thousands of families of the cash infusions on which they rely. In a 4 May meeting, President Bashar al-Assad announced that the state would intervene more heavily to manage the economy, stoking fears among local businesses of further corruption and driving down the currency’s value yet again. Damascus also interferes in the delivery of humanitarian assistance in regime-held areas, forcing international organisations donating food to go through tightly controlled, regime-affiliated agencies, such as the Syria Trust for Development, launched by Assad’s wife Asma (who is on U.S. and EU sanctions lists), and the Syrian Arab Red Crescent. Both entities are infamous for exploiting their humanitarian roles for political ends, such as steering assistance away from known opposition areas into loyalist hands. Still, even if Syria’s economic disaster is largely the regime’s fault, Western economic pressure has not helped.

An Ever Expanding Sanctions Regime

The U.S. sanctions that came into force on 17 June significantly broaden existing ones by aiming to deter third parties from doing business with the Syrian regime unless or until the latter meets certain stated conditions. The legislation, named the Caesar Civilian Protection Act after the alias of a Syrian military photographer who smuggled thousands of images documenting torture and extralegal killings out of Syria in 2013, imposes sanctions on non-U.S. persons and entities that knowingly provide “significant financial, material or technological support to”, or engage in a “significant transaction with”, the Syrian government or military forces in Syria acting on behalf of the regime, Russia or Iran. The law further specifies that the U.S. will apply sanctions to non-U.S. entities providing “significant” goods or services to the regime that help it use aircraft for military purposes or reap the benefits of domestic oil and gas production. The law seeks to further block the flow of funds to Syria that could enable reconstruction by applying sanctions against non-U.S. entities that provide the regime with “significant” construction or engineering services. The deliberate ambiguity of the term “significant” might deter third parties considering deals with Syria, but it also leaves wide discretion for U.S. policymakers to decide on how to prioritise the sanctions’ implementation. The act also gives the U.S. president the right to waive the application of sanctions for up to 180 days on “national security grounds”, which gives flexibility to U.S. negotiators to offer renewable sanctions relief in exchange for more incremental Russian and regime concessions.

The measures imposed to penalise the Syrian regime risk missing their purported target.

These new sanctions applied to non-U.S. entities are in addition to previous U.S. sanctions banning the provision of U.S. products, services and investment to Syria except for humanitarian purposes. Those sanctions specifically ban U.S. entities from importing, trading or engaging in transactions related to Syrian oil, and prohibit them from providing financial services to Syria, a measure with significant impact, given U.S.-based financial institutions’ centrality to the global economy. The U.S. first imposed sanctions on Syria in 1979, when the State Department designated the country a “state sponsor of terrorism”. In adopting the 2003 Syria Accountability Act, Congress added new sanctions, which have gradually expanded since the civil war began in 2011 to include an extensive list of targeted measures against individuals, such as asset freezes and travel bans, including on persons linked to state-owned companies or the Central Bank, and persons who offer material support to the regime.

The EU, for its part, started adopting punitive measures against the Syrian regime and its supporters from 2011 onward. By June 2020, the EU’s Service for Foreign Policy Instruments had put in place travel bans and asset freezes against 273 Syrian and non-Syrian persons and 70 entities, including all government ministers and public and private banks, which the EU considered “responsible for the violent repression against the civilian population in Syria, benefiting from or supporting the regime, and/or being associated with such persons or entities”. The EU also placed export restrictions on goods and technology that could be used for internal repression, an import ban on crude oil and petroleum products from Syria by European citizens, an export and investment ban on equipment and technology for the oil and gas industry, a ban on investment in companies engaged in building power plants for electricity production, and an export ban on equipment, technology and software for monitoring or intercepting internet and telephone communications.

As with other sanctions across the globe, the measures imposed to penalise the Syrian regime risk missing their purported target. Political elites are typically well placed to avoid the sanctions’ impact or even profit from the scarcity they create, while the real harm hits a broad majority of the population. Crisis Group interviews with local merchants and shop owners across Syria suggest that, although there are a range of views on sanctions, the general perception is that they will seriously hurt the population. In an attempt to avoid this outcome, U.S. and EU sanctions contain humanitarian aid exemptions, and both Washington and Brussels issued detailed guidance on how coronavirus-related humanitarian aid can be sent to Syria despite sanctions. Yet even before the Caesar Act came into force, the mere expectation of additional restrictions helped accelerate the lira’s devaluation, leading to skyrocketing prices, with an almost 100 per cent increase in the cost of food, and widespread panic. International NGOs may well be deterred from supporting much-needed small-scale rehabilitation projects amid uncertainty as to how U.S. authorities will define “humanitarian aid” or “reconstruction”.

The Caesar Act measures are unlikely to lead to regime change, despite many predictions that the economic meltdown will spell the end of Assad’s rule.

The impact will not be limited to government-controlled areas. While areas in northern Syria, for example, are not supposed to be the target of sanctions, they have still been hit hard by the economic crisis. Damascus has been the prime buyer of oil from the north east via middlemen, some of whom were sanctioned earlier because of their regime affiliations. The U.S. has reassured its Kurdish partners in fighting ISIS that it would not deem the SDF’s commercial transactions with Damascus to be “significant” enough to become new sanctions targets. Washington also told the SDF that it is looking into ways to increase humanitarian assistance to the north east. But even if the Kurdish-led administration manages to keep dodging secondary sanctions, it would struggle to escape the lira’s freefall. In Idlib, the “salvation government” backed by the jihadist group Hei’at Tahrir al-Sham, as well as the Turkey-backed interim government in northern Aleppo, sought to address their economic predicament by replacing the Syrian currency with the Turkish lira. Such measures may help temporarily mitigate some of the sanctions’ unintended consequences, but as long as these areas have no access to alternative export markets, local authorities cannot keep shielding the population under their control from the fallout.

Leveraging Sanctions to Help the Syrian People

The Caesar Act measures are unlikely to lead to regime change, despite many predictions that the economic meltdown will spell the end of Assad’s rule. Some point to an uptick of anti-government demonstrations in supposedly loyalist areas as a sign of increasing popular discontent. Yet today’s power dynamics do not allow for an uprising that would threaten the regime. Nor is that the law’s apparent intent: Western governments say they dropped regime change as an objective years ago, even if some individual policymakers may still prefer that outcome. Yet when speaking about sanctions relief, Western officials often broadly refer to UN Security Council Resolution 2254 of 2015, which stipulates the establishment of “an inclusive transitional governing body with full executive powers”, leaving the impression that they continue to pursue regime change through other means.

Whether sanctions can get Damascus to move at all is a legitimate question. But with sanctions in place and new ones being implemented, the U.S. and EU ought at a minimum to outline a range of concrete and immediate demands, describe what they are willing to concede if and when the regime starts meeting some of these, and limit the humanitarian costs that sanctions inevitably entail. The Caesar Act stipulates seven conditions that, if met, would trigger the suspension of sanctions. These include the regime halting attacks on civilians; allowing access to besieged areas for international medical and humanitarian assistance; releasing all political prisoners; facilitating the safe return of the displaced; and holding accountable all war criminals. Some of these demands are likely – if unfortunately – unattainable under current circumstances: “release of all forcibly held political prisoners” goes against the regime’s very nature, while “holding war criminals to account” amounts to asking elements of the Syrian leadership to indict themselves. But others may be within the realm of the attainable: asking Damascus to allow unrestricted humanitarian access, permit displaced persons to go home, stop using some of its most egregious instruments of war and end indiscriminate strikes on populated areas. Given the discretion the law provides to U.S. policymakers in issuing temporary waivers, and in deciding what and who to add to the sanctions lists, there should be room for offering relief to the Syrian government if it meets concrete benchmarks. Washington should aim to coordinate such an approach with its European allies, as a unified Western position could increase the leverage derived from the prospect of sanctions relief.

The same logic applies to the sanctions strategy’s other target, Russia. Bashar al-Assad’s main external enabler may have resigned itself to the likelihood that large investments in Syria’s reconstruction, whether from Europe or the Arab Gulf states, will not materialise any time soon. Yet the Caesar Act also jeopardises investment prospects for Russian companies in Syria, for example in ports, oil and gas, and phosphates, at a time when Moscow seeks to secure benefits from its intervention.

So far, Moscow has been either unwilling or unable to use the influence it enjoys by virtue of the crucial support it provides to Damascus to push the regime to compromise. Some Western officials want to pursue a strict interpretation of UN Security Council Resolution 2254 on the strength of the new sanctions, thinking that Moscow will change tack. This is to misread Russian foreign policy priorities; the Kremlin will likely keep backing the regime to the end. But Moscow may yet be interested in a more transactional logic that allows it and businessmen well-connected to its power centres to benefit from dealings in Syria in exchange for regime steps that could minimise further violence and reduce human suffering, without challenging Russia’s strategic outlook for Syria.

In return for such Russian steps, the U.S. and Europe could offer to refrain from imposing additional sanctions and provide waivers for some existing ones, including possibly for secondary sanctions likely to deter potential construction or business investors – whether Russian economic actors or Arab Gulf states. In turn, this would enable investors to come in and speed up the pace of reconstruction. The U.S. and Europe could also offer to expand humanitarian programming in regime-held areas, provided that Damascus respects internationally accepted standards, notably independent verification that aid reaches those in need. Such sanctions relief would be conditioned on Russia and the regime meeting certain benchmarks and it would be reversible if either reneged.

Critics are right to point out that sanctions without achievable policy objectives amount to little more than making a political point at the expense of the most vulnerable. Steps can and should be taken to minimise their harm and maximise the likelihood that they will do some good. That means in particular attaching their removal or waivers to concrete, realistic steps; clarifying the scope of permitted humanitarian exemptions; clearly defining “significant” construction services to avoid third party over-compliance; and flexibly implementing the law to address adverse humanitarian consequences as they emerge. Whether or not sanctions are the appropriate tool, policymakers should at least ensure that those in place are used to accomplish what they purportedly set out to achieve – namely, genuine protection for Syrian civilians.