Less than two weeks after President Donald Trump announced that his administration would lift U.S. sanctions on Syria, the U.S. Departments of the Treasury and State took significant first steps to provide the anticipated sanctions relief.
On May 23, the Treasury Department’s Office of Foreign Assets Control (OFAC) issued General License 25 (GL 25), authorizing a broad range of transactions that had previously been prohibited under the Syrian Sanctions Regulations. In parallel, the State Department exercised its authority under the Caesar Syria Civilian Protection Act (Caesar Act) to waive certain mandatory secondary sanctions against non-U.S. persons engaging in related transactions.
While certain sanctions and extensive export controls remain in place, the authorizations in GL 25 and the Caesar Act waiver provide significant sanctions relief for Syria, presenting new opportunities for U.S. and international businesses.
GL 25 Authorizes a Range of Transactions
GL 25 provides broad and immediate sanctions relief for Syria. Under GL 25, OFAC has authorized all transactions that would otherwise be prohibited by the Syrian Sanctions Regulations, other than transactions involving blocked persons. As the Treasury Department highlighted, this includes authorizations enabling “new investment in Syria; the provision of financial and other services to Syria; and transactions related to Syrian-origin petroleum or petroleum products.” GL 25 further authorizes transactions with a limited set of blocked persons, including Syrian President Ahmed al-Sharaa’s new government and persons listed in an annex to GL 25 (the Annex), as well as entities they own 50% or more.
On May 28, OFAC issued a set of related Frequently Asked Questions that further clarify the effect of GL 25 and provide additional examples of now-authorized transactions. These include, but are not limited to:
- telecommunications-related services
- power grid infrastructure rehabilitation and other energy-related services
- health care-related services
- education-related services
- agricultural-related services
- civil-aviation and other transportation services
- construction-related services
- water and waste management-related services
- financial and investment services
In addition, while not part of GL 25, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) now also permits covered financial institutions to open and maintain correspondent accounts for the Commercial Bank of Syria, subject to certain conditions.
Waiver Under the Caesar Act Suspends Mandatory Secondary Sanctions
The Caesar Act waiver, which is effective for a renewable 180-day period, provides additional sanctions relief for Syria by suspending related mandatory secondary sanctions against non-U.S. persons. Foreign persons that would previously have risked being sanctioned for engaging in certain activities involving Syria may now pursue such transactions without facing U.S. sanctions. The waiver for mandatory sanctions against non-U.S. persons mirrors the authorizations for U.S. persons in GL 25 and complements the sanctions relief provided by OFAC “to ensure sanctions do not impede the ability of [U.S.] partners to make stability-driving investments, and advance Syria’s recovery and reconstruction efforts.” The State Department highlighted that the waiver would facilitate the provision of electricity, energy, water, sanitation and humanitarian support to Syria.
Restrictions that Remain
While these actions are an important first step in easing sanctions on Syria and create significant new opportunities, many restrictions and risks remain and must be carefully navigated:
- Blocked Persons. GL 25 and the Caesar Act waiver are clear that they do not authorize transactions with sanctioned persons that are not identified in GL 25 and its Annex, including entities they own 50% or more. As a result, hundreds of individuals and entities in Syria remain subject to sanctions. Further, as we previously explained, Hay’at Tahrir al-Sham (HTS), which continues to be involved in Syria’s governance, remains designated as a Foreign Terrorist Organization (FTO). As a result, even with GL 25 in place, there remains at least potential risk of criminal and civil liability for the knowing provision of substantial assistance or material support to HTS under 18 U.S.C. §§ 2333(a) and 2339B.
- Russia, Iran and North Korea Exclusion. GL 25 and the Caesar Act waiver both also exclude authorization for any transaction for or on behalf of the Governments of Russia, Iran or North Korea, as well as any transactions “related to the transfer or provision of goods, technology, software, funds, financing or services to or from” these countries.
- Potential Snapback. Both GL 25 and the Caesar Act waiver may be rescinded by the administration at its discretion, and the underlying sanctions regime remains in place. OFAC and the State Department emphasized U.S. expectations that the Syrian government would follow through on U.S. priorities, including denying terrorist organizations safe haven and ensuring security for religious and ethnic minorities. Businesses pursuing opportunities under the new sanctions relief should continue to monitor developments on the ground and any changes in the administration’s approach.
- State Sponsor of Terrorism and Export Controls. The administration’s actions to date have not rescinded Syria’s designation as a State Sponsor of Terrorism or made any changes to comprehensive export controls on Syria. As a result, virtually all exports to Syria of goods, software and technology subject to U.S. jurisdiction continue to require a license from the U.S. Government, with only limited exceptions (e.g., food and certain medicine).
(More details on the existing regime of sanctions and export controls on Syria can be found in a previous post.)
Looking Ahead
These actions are a significant first step in the Trump administration’s efforts to ease U.S. sanctions on Syria. They authorize a range of transactions in a number of key sectors, including banking and energy, and further measures could be on the horizon, particularly in export controls. Miles and Stockbridge is ready to advise on the new opportunities presented by these developments and will continue to monitor the U.S. process for lifting sanctions on Syria.
Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.
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