Summary

Companies engaged in Syria’s post-Assad reconstruction efforts have significant opportunities in key sectors such as infrastructure, energy, and telecommunications. For businesses investing in Syria’s recovery, understanding and navigating the complicated maze of sanctions compliance is essential to avoiding financial and reputational risks.

Understanding Syria’s Emerging Market

As Syria’s political landscape shifts, potential investors have grown enthusiastic about investing in Syria’s reconstruction, which presents both substantial opportunities and complex challenges. Energy, telecommunications, and construction sectors are the most attractive investment options as they need to be rebuilt in war-torn Syria to stimulate overall economic growth. US, EU, and other Western sanctions cover a large part of Syria’s economy and will significantly influence investment efforts into Syria’s reconstruction. These sanctions will likely persist long after the fall of Assad’s regime.  To avoid penalties and reputational damage, investors in Syria’s reconstruction must implement strong sanctions compliance programs and lean on regional expertise to inform their decisions.

Key Challenges

A significant challenge that investors face in Syria is the risk of engaging with sanctioned entities, which can lead to monetary and criminal penalties along with reputational damage. Regardless of intent or knowledge of an engagement being subject to sanctions, Western regulators have stated in numerous instances that they will penalize sanctions violations.

Non-sanctioned entities in high-risk regions, even outside of Syria, present another risk for investors due to the possibility of entities in these regions diverting goods to sanctioned parties in Syria. Entities in the Middle East, Russia, and China are particularly likely to facilitate transactions for sanctioned Syria-based companies or government entities. Investors can mitigate this risk by prioritizing comprehensive due diligence practices, including ‘Know Your Customer’ (KYC) and ‘Know Your Intermediaries’ (KYI), on entities located in high-risk regions to ensure transactions don’t present a high risk of evasion or product diversion.

Syria’s infrastructure, telecommunications, and energy sectors present higher risks than other industries given their heavy regulation under international sanctions. These industries are essential to Syria’s recovery, making them attractive for investment. Investments in these sectors require close attention to ensure that no transactions go to sanctioned individuals or entities, or their associates.

For example, Rami Makhlouf, Bashar al-Assad’s cousin and one of Syria’s most powerful businessmen, has controlled critical sectors such as telecommunications, real estate, and banking. Similarly, Samer Foz, a prominent oligarch, expanded his wealth during the Syrian Civil War through activities in the energy, real estate, and food sectors. The United States and European Union have issued comprehensive sanctions against both Makhlouf and Foz, and any entities or property that they control or hold a majority stake in, for supporting and benefiting from Assad’s regime.

While it’s unclear what their exact roles will be in a post-Assad Syria, Makhlouf and Foz have heavy economic influence that could persist beyond Assad’s rule. Their wealth, vast networks, and control over critical industries make them likely to play significant roles in Syria’s post-Assad economic and political landscape, unless Syria systemically restructures its economy and takes strong measures to dismantle their monopolies.

The Status of Syria Sanctions

While some lobbyists are campaigning in Washington, DC to ease sanctions on Syria following Assad’s removal, their efforts face significant hurdles in getting Syria sanctions completely lifted, as US and international stakeholders are demanding assurances regarding governance, human rights, and political stability in a post-Assad Syria prior to removing sanctions.

The unsteady governance situation in Syria makes it likely that emerging political groups in the region could engage in conflict over control of Syria’s government, which could lead Western regulators to react with new sanctions on these groups. Hayat Tahrir al-Sham (HTS), which has emerged as the key governing actor in Syria, is an example of what these emerging political groups could look like. HTS presents numerous risks; it is designated as a terrorist group and sanctioned by the United States, EU, and United Nations. The status of HTS complicates investments in regions under its control. To reduce the risk of violations and prepare for new sanctions requirements, investors will need to engage with regional experts that can monitor and assess changes in Syria’s political situation and international status.

Efforts for Removal

Syria’s new foreign minister, Asaad Hassan al-Shibani, is engaging with regional and international partners to foster cooperation and rebuild relations, which could open channels of international support for removing sanctions on Syria. During a visit from Kuwaiti Foreign Minister Abdullah Ali al-Yahya, al-Shibani urged Kuwait and other nations to reopen their embassies in Damascus and resume diplomatic relations. In turn, al-Yahya encouraged the international community to reconsider sanctions on Syria, signaling growing regional support for Syria’s reintegration into the global arena.

Further, Syria’s new de facto leader, Ahmed al-Sharaa, has expressed intentions to stabilize Syria and is actively campaigning for Western governments to lift sanctions. al-Sharaa has stated that lifting Western sanctions will facilitate reconstruction and economic rehabilitation. Though al-Sharaa’s rhetoric alone is unlikely to motivate Western governments to change their sanctions regimes, for which they require tangible changes, al-Sharaa’s efforts have brought the topic of easing Syria sanctions to the top levels of Western governments. If Syria implements the changes that Western governments require, efforts like al-Sharaa’s could speed up the process of sanctions reforms as they open communication channels and move the topic higher on Western political agendas.

Sanctions Easing

Both the EU and the United States have insisted on concrete reforms before drastically changing their sanctions regimes, underscoring the tension between Syria’s internal reforms and external demands for accountability and stability.

Some Western regulators have started to ease sanctions or are discussing easing sanctions, albeit for limited transaction types. OFAC, the US sanctions regulator, issued a general license on January 6, 2025, permitting limited transactions for energy and personal remittances into Syria. For energy, the scope is quite narrow, only allowing transactions for energy imports into Syria, not out of Syria for exports. This general license does not allow investors interested in Syria’s rich energy reserves to make investment transactions. Additionally, the general license will expire in six months, and although OFAC will likely renew it if Syria’s political situation improves, the current license’s short validity period adds a layer of risk to long-term investments.

Though the European Union is also considering easing sanctions, it will likely ease sanctions in a manner similar to OFAC. Many Western sanctions on Syria, such as the US Caesar Act, target individuals, companies, and organizations implicated in war crimes, corruption, and human rights abuses in Syria.

Many of these individuals and entities currently hold significant stakes in the country’s economy, including in the energy, finance, and real estate sectors critical to reconstruction. Makhlouf and Foz, discussed above, are two examples of these entrenched sanctioned actors. Despite political will to remove Assad, these individuals and entities are deeply embedded in Syria’s economy and will be difficult to remove from Syria’s post-Assad agenda.

Mitigating the Risks

If the West lifts sanctions on Syria, it will likely be through a slow and conditional process. While Western regulators are easing some restrictions to address immediate humanitarian needs, a more comprehensive lifting of sanctions will be contingent on sustained reforms and credible commitments to international human rights standards.

Investors must prioritize detecting sanctions evasion, accurate sanctions screening, third-party due diligence, and regional monitoring. By doing so, investors can avoid exposure to high-risk actors and significantly lower the risk that their investments in Syria’s reconstruction violate sanctions.
At FiveBy Solutions, we offer comprehensive support for companies navigating this complex investment landscape in Syria post-Assad. Our team specializes in sanctions compliance, risk assessment, and due diligence. We help businesses identify and mitigate potential risks by conducting thorough background checks on partners and intermediaries to ensure that all financial transactions and investments are fully compliant with international regulations.