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U.S. Sanctions on Syria: What Comes Next?
U.S. Sanctions on Syria: What Comes Next?
Averting an Egyptian Military Intervention in Libya
Averting an Egyptian Military Intervention in Libya
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.

Members of the self-proclaimed eastern Libyan National Army (LNA) special forces gather in the city of Benghazi, on their way to reportedly back up fellow LNA fighters on the frontline west of the city of Sirte. Abdullah DOMA / AFP

Averting an Egyptian Military Intervention in Libya

On 20 July, Egyptian legislators authorised sending combat troops to Libya, where Cairo’s ally Field Marshal Khalifa Haftar is on the defensive. Following Turkey’s intervention on the Tripoli government’s behalf, Egypt’s involvement could escalate the war dramatically. All parties should seek a compromise.

Egypt’s threat to send its army into neighbouring Libya is a predictable and understandable but dangerous response to Turkey’s deepening military involvement that risks embroiling both countries in a costly war. Cairo has warned that it will intervene directly should Turkish-backed forces loyal to the Tripoli-based government try to retake key locations in central Libya and nearby oil installations now under the control of an Egyptian-backed rival coalition led by Field Marshal Khalifa Haftar. As Egypt sees it, a Turkish-backed advance into central Libya would cross a red line, endangering its border and national security. Both Ankara and Cairo should take a step back and seek a settlement on the status of central Libya’s strategic sites, including its prized oil assets. Foreign capitals with close ties to both countries should help them de-escalate tensions and reach such an accommodation. The alternative is to further regionalise what has become an unwinnable war. 

The latest tipping point in the six-year Libyan conflict came on the heels of the pro-Tripoli coalition’s successful counteroffensive in western Libya, made possible by support from the Turkish army and the Syrian fighters on its payroll. Ankara’s deployment came in response to a request for help from the government of Prime Minister Fayez al-Serraj in Tripoli in early 2020. The overt nature of its intervention, sanctioned by a Turkish parliamentary vote, enabled Turkey to dispatch military assets more rapidly and with greater freedom than its regional adversaries.

Fresh from its military win, the Tripoli government is now insisting that Haftar’s troops pull back from the former Qadhafist stronghold of Sirte and the Jufra air base in central Libya, both used by Haftar’s foreign backers as operational hubs. In addition, Tripoli wants Haftar’s forces to withdraw from the nearby “oil crescent” as a precondition for a ceasefire. These requests mark a shift from the Serraj government’s previous demand that Haftar move his troops back to their pre-April 2019 positions, before the Tripoli offensive, when both the oil crescent and Jufra were still under his coalition’s control. The explanation for this change is not hard to discern: Ankara and Tripoli now believe they can not only beat back but defeat Haftar, despite the support he enjoys from Egypt, the United Arab Emirates (UAE), Saudi Arabia, Jordan, Russia and France. Although Tripoli has nominally laid out its conditions for a ceasefire, it continues to reject political negotiations with the Haftar camp, blaming it for waging a year-long offensive that killed at least 3,000 people, both civilians and combatants. By imposing new ceasefire terms that it knows will be hard for the Haftar camp to accept, Tripoli is hoping to legitimise its refusal to negotiate.

A major driver behind a new flare-up in fighting would be the desire to control oil facilities and revenues.

A major driver behind a new flare-up in fighting would be the desire to control oil facilities and revenues. Haftar’s withdrawal from the oil crescent would amount to handing over the country’s main oil facilities to Tripoli. Haftar’s forces imposed a blockade on oil exports in January to protest Tripoli’s alleged misuse of oil revenues, including purportedly to fund Turkish military efforts in Libya. The blockade has almost completely halted oil exports, bringing down daily production from around one million barrels to just 100,000 barrels, and causing revenues (already affected by low international oil prices) to plummet.

For regional actors, Egypt in particular, the stakes transcend Libya and its oil sector. Their main concern is defending their vision of the regional order. Egypt and its Arab allies – Saudi Arabia (which has provided political and financial support), Jordan (under-the-radar military support) and the UAE (financial and military assistance) – oppose the presence of Turkish forces and pro-Ankara Syrian fighters in Libya and see the Syrians, in particular, as militant Islamists. Egypt considers an expanded Turkish military presence in central Libya to be a potential threat to its own national security. It fears that a Turkish-backed offensive could alter the power balance in eastern Libya, allowing pro-Tripoli forces to use this area as a staging ground for attacks inside Egypt. Egypt’s Arab allies share these views, while France is especially concerned with the conflict’s ripple effects in southern Libya, which borders Chad, an important ally.

These preoccupations have pushed Cairo to take the unprecedented step of preparing for an openly declared military intervention, rather than continuing to back Haftar’s forces covertly. Egypt did not consider taking this step even in 2015, when the Islamic State took over Sirte and established a presence in Benghazi. Cairo is now trying to match and counter Ankara, which it sees as a regional sponsor of the Muslim Brotherhood, the Egyptian government’s mortal enemy.

Egypt is relying on eastern Libya’s parallel governing institutions to provide a veneer of legitimacy for its intervention. On 13 July, the Tobruk-based House of Representatives officially asked Cairo to intervene. A few days later, President Abdelfattah al-Sisi met with a delegation of tribal leaders from eastern Libya in Cairo, who likewise called on Egypt to step in. Tripoli slammed both appeals as illegal, pointing out that tribal leaders have no official authority and that the east-based parliament, whose active members number no more than 40 of the 200 nominal parliamentarians, held no vote on its request. Regardless, on 20 July, the Egyptian parliament responded by authorising the deployment of Egyptian troops for combat missions outside the country to defend its national security against “criminal armed militias and foreign terrorist elements”. In escalating rhetoric, the Tripoli government condemned this decision as “a hostile act and direct interference, amounting to a declaration of war”.

Military experts believe that Cairo is likely to limit its intervention to securing the border area inside Libya. It could back up such an operation with airstrikes upon pro-Tripoli forces, should they seek to advance. With Sirte located 1,000km from the Egyptian border, deploying troops to central Libya would pose significant logistical challenges for the Egyptian army, lengthening supply lines and promising only inconsistent air cover to ground troops. A more expansive intervention should not be excluded, however, one that could expose Egyptian troops to a direct confrontation with the Turkish military and affiliated Syrian fighters in central Libya. Private military contractors of the Russian-owned Wagner company are also consolidating a presence in central Libya, reportedly operating fighter jets in Jufra and bringing in reinforcements to Sirte and the oil terminal areas in a bid to bolster the Haftar forces’ positions there.

The repercussions of a resumption of hostilities for the local civilian population would be catastrophic.

The repercussions of a resumption of hostilities for the local civilian population would be catastrophic. The growing involvement of conventional armies raises the spectre of intensified violence, particularly in the residential areas of Sirte. Likewise, Egypt’s rumoured plan to transfer weapons to eastern Libyan tribal groups risks unleashing even more local violence and retaliatory measures against civilians. Renewed fighting in the oil crescent could also result in hard-to-reverse damage to hydrocarbon facilities; while secondary to humanitarian concerns, such damage would be worrying, as it could stanch the flow of financing critical for Libya’s long-term economic viability and standing. Finally, with Turkish and Egyptian troops potentially coming into close contact and pro-Russia private military fighters also in the fray, the risk of a wider regional confrontation looms.

All sides ought to take immediate de-escalatory steps to minimise these risks and save civilian lives. Tripoli should freeze its military advance in central Libya and pursue a negotiated agreement on Sirte and Jufra, both now under the control of pro-Haftar forces aided by Wagner fighters. In Sirte, such an accord could entail Haftar and the forces backing him withdrawing from the area, to be replaced by a limited pro-Tripoli military presence that would leave out Turkish-backed forces and hardware; in Jufra, an agreement could allow for a symbolic presence of Haftar-aligned fighters with guarantees that foreign forces currently operating there move out. This would be one step toward a partial demilitarisation of central Libya rather than the full demilitarisation that Berlin and Washington have advocated but which would be difficult to achieve.

At the same time, the sides should come to a resolution to the oil sector standoff. Egypt should seek to convince Haftar and its other regional allies to drop their demand to see profits redistributed between western, eastern and southern Libya (in the absence of a legal framework that would regulate this arrangement), and instead accept a compromise agreement put forward by the U.S., UN and Libya’s National Oil Corporation (NOC). This proposal envisages reopening oil production and exports in exchange for placing future oil revenues in a NOC-held account for 120 days rather than in the Tripoli-based central bank, as a means of reassuring Haftar as to how such funds would be used. Supporters of this plan believe that the timeframe would allow for negotiating a new line-up of the central bank’s top management as a possible precursor to reunification of the bank, which split into two parallel and competing institutions after 2014. This deal would also mean that, for now, Haftar-led forces remain in charge of the sites.

Such arrangements would fall short of what each side wants, but they could pave the way for a negotiated way forward. Moreover, acceptance of these arrangements would help build much-needed confidence between the two coalitions and their respective backers. From Cairo’s perspective, conceding on Sirte and Jufra and persuading the Haftar camp to accept an oil deal would also spare Egypt and its Libyan allies from the many unknowns that a military adventure would entail. For Ankara and Tripoli, a symbolic return to Sirte and acceptance of a semi-demilitarised Jufra would guarantee that these sites would not be used for military offensives aimed at taking Tripoli or Misrata, while an oil deal would provide much-needed revenues to sustain public-sector salary payments.

As for Turkey, it should be wary of overreach. Its authorities have made clear that they will not consider Haftar, or anybody else in his camp, as negotiating partners. Instead, they say they want to restore the Tripoli government’s control over all of Libyan territory. Their strategy is wearily familiar: reestablishing their proxy’s military superiority with the aim of going back to the negotiating table from a position of strength. The problem with this approach is that the other side and its foreign backers are unlikely to accept a lopsided negotiation, as the past years of conflict and diplomacy in Libya have shown. Eventually, a new cycle of violence almost certainly will emerge, as the opposing side tries to level the playing field by counter-escalating. Turkey should avoid falling into this trap and instead push its allies in Tripoli to accept a compromise solution on central Libya’s security arrangements and oil revenues that could lead, at a later stage, to a comprehensive military and political agreement to reunify the country.

With each new intensification of the conflict, the opportunity for compromise seems ever more remote, while the risk of a larger regional war looks ever greater. If there still is a chance to reverse course, regional actors should jointly take it – now – or find themselves mired in an endless regional confrontation.