Economic Sanctions Relief for Syria Provides Opportunities and Risks for U.S. Companies

The Trump Administration has provided Syria with economic sanctions relief from the United States’ long-standing comprehensive embargo, paving the way for U.S. companies to re-engage in business in Syria. The sanctions relief is intended to support the new Syrian government in “establishing a stable and united Syria” and follows President Trump’s meeting in the Middle East with the new President of Syria, Ahmed al-Sharaa. The sanctions relief is implemented through a so-called “general license.” Specifically, the Treasury Department’s Office of Foreign Assets Control (“OFAC”) has issued General License 25 (“GL 25”), which authorizes U.S. persons to broadly engage in transactions in Syria. In conjunction, the Secretary of State issued a waiver to Congress under the Caesar Syria Civilian Protection Act, which will allow non-U.S. persons to also engage in the types of transactions authorized by General License 25 without fear of U.S. retaliation. 

The Trump Administration has made it clear that this sanctions relief may not be permanent and will depend on closely-monitored conditions on the ground in Syria. The Trump Administration retains the prerogative to revoke the sanctions relief in the future, and it has not as yet lifted any of the broad export controls in place that would allow U.S. products to be shipped to Syria.

Sanctions Relief Measures

Under GL 25, OFAC has authorized U.S. persons to engage in many transactions otherwise prohibited by the embargo on Syria including provision of services to individuals and companies in Syria, new investment, importing or dealing in Syrian-origin petroleum and petroleum products, and transactions with the new government of Syria. Transactions with various individuals and entities that are Specially Designated Nationals and Blocked Persons (“SDNs”) and specifically identified in GL 25, including certain Syrian banks, energy companies, and Mr. al-Sharaa, are also authorized.

GL 25 does not authorize transactions with any other persons or entities listed on the SDN List or any transactions involving the governments of North Korea, Russia, or Iran, or trade in goods or services with those jurisdictions.

The Caesar Act waiver, which is renewable after 180 days, will allow U.S. partners and allies to engage in activities that U.S. persons are allowed to engage in without risk of exposure to so-called “secondary sanctions,” which are retaliatory measures targeting non-U.S. companies that engage in activity counter to U.S. foreign policy.

Importantly for U.S. and non-U.S. companies alike, while the Trump Administration has provided Syria with relief from economic sanctions, very stringent U.S. export controls on Syria remain in place and have not been waived. As a result, other than food and medicine, products made in the United States or otherwise under jurisdiction of U.S. export control laws cannot be exported or re-exported to Syria without a license from the Commerce Department.

Implications 

U.S. companies are now authorized to engage in most transactions in Syria, including with the new Syrian government, and non-U.S. companies can engage in those same transactions without risk of secondary sanctions.

Restrictions remain in place, however, including on the export of U.S. products to Syria. The situation on the ground in Syria is also fluid, and the U.S. could revoke the sanctions relief if the government of Syria takes actions contrary to U.S. interests.
Accordingly, companies interested in engaging in trade and investment in Syria and with the new Syrian government and related entities should be mindful of the activities that are authorized and still restricted and should closely monitor regulatory changes that could affect their business. 

On the enforcement front, companies should be cautious of efforts to use Syria as a locus for sanctions evasion involving other countries subject to sanctions, such as Iran. Moreover, OFAC has not been shy to pursue enforcement actions involving violations that occurred prior to sanctions easing measures, and so those risks remain until the ten-year statute of limitations that applies to most sanctions programs expires.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Greta L. Nightingale, an O’Melveny partner licensed to practice law in the District of Columbia; David N. Kelley, an O’Melveny partner licensed to practice law in New York and Connecticut; David J. Ribner, an O’Melveny partner licensed to practice law in the District of Columbia and New York; and Hannah V.L. George, an O'Melveny associate licensed to practice law in the District of Columbia, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted..

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