Political attitudes toward Syria
In 2012, as evidence of war crimes committed by the Syrian government against its own people were exposed, leaders inside and outside the Arab Middle East began to imagine a future Syria without Syrian President Bashar Al-Assad. Then U.S. President Barack Obama said that Assad’s “days are numbered,” which became common thinking in subsequent years as the violence continued.
Dubai’s ruler, Mohammed Bin Rashid Al-Maktoum, expressed sentiments in 2014 that aligned with many political leaders at the time: there will never be business as usual with Syria so long as Bashar Al-Assad is in power.
However, as the violence slowed down and Syria’s allies propped up the government, states began to abandon the idea of a Syria without Al-Assad in power. Throughout 2021, Arab countries including the UAE, Bahrain, and Jordan have all reopened embassies in the Syrian capital of Damascus.
The U.S. has remained steadfast in warning its allies against engaging with Syria, using the threat of sanctions as a potential punishment for actors that engage with the country in a way that would go against U.S. interests. They have set an example by sanctioning several Gulf companies in recent years because of their contribution towards Syria’s reconstruction. In 2019, the UAE Minister of Culture withdrew millions of USD intended for reconstruction projects in Aleppo because the structures involved were linked to the Syrian government, opening up the possibility of U.S. sanctions.
In June 2020, the U.S. Special Representative to Syria, James Jeffrey, said “in terms of economic activities that either somebody in the UAE or somebody in another country does that meets the criteria of these sanctions or legislation, they are a potential sanctions target.” A person or company could become a target for U.S. sanctions even if they indirectly or unknowingly circumvent U.S. sanctions laws, which are comprehensive and provide few exceptions.
Heightened risk for U.S. investors
But what should U.S. companies look for when seeking to mitigate risk exposure with regards to Syria?
The top-level OFAC guidance specifies the following prohibitions when it comes to Syria:
- New investment in Syria by a U.S. person, wherever located
- The direct or indirect exportation, re-exportation, sale, or supply of any services to Syria from the United States or by a U.S. person, wherever located
- The importation into the United States of petroleum or petroleum products of Syrian origin
- Any transaction or dealing by a U.S. person, wherever located, in or related to petroleum or petroleum products of Syrian origin
- Any approval, financing, facilitation, or guarantee by a U.S. person, wherever located, of a transaction by a foreign person where the transaction by that foreign person would be prohibited if performed by a U.S. person or within the United States.
The final point is particularly important as it pertains to Syria. Myriad general holding, investment, and construction companies based in U.S.-allied countries, such as Kuwait, Jordan, Lebanon, and the UAE, are actively doing business in Syria, which would clearly be a violation of U.S. sanctions if conducted by a U.S. national, either directly or indirectly.