European talks on Syria sanctions relief overshadowed by doubts on Trump’s moves

EU efforts widely hailed as important but full co-ordination must wait for Washington’s new rulers

EU High Representative for Foreign Affairs and Security Policy, Kaja Kallas, speaks in Riyadh ahead of a meeting of top diplomats on Syria. AFP

European officials are co-ordinating their positions on how to partially lift sanctions on Syria before a meeting of foreign ministers on January 27 to set out changes in response to the overthrow of the Assad regime.

Support for the war-torn country during its political transition would mean Brussels offering sanctions relief, particularly on Syria's banking sector. This would facilitate financial flows back into the country and help it to start rebuilding.

But Europeans are also aware that to have maximum impact, they need to align closely with the US. Washington is waiting for its new president, Donald Trump, to be inaugurated on January 20 and he has not given clear signals about his stance on sanctions.

"The lifting of EU sanctions would make a symbolic difference and would also have a positive impact on the lives of people on the ground by staunching the humanitarian crisis and allowing an increase in trade," said Delaney Simon, senior analyst for the US programme at the International Crisis Group. "But even if the EU completely lifted sanctions on Syria, as long as US sanctions remain as they do, there will continue to be an enormous chilling effect on the business community,"Ms Simon told The National.

The outgoing Biden administration has already deferred to the incoming Trump administration a number of Syria-related topics, including whether or not its new rulers, Hayat Tahrir Al Sham (HTS), should continue to be listed as a terror organisation. On January 6, the US Treasury issued a six-month licence allowing companies to do business in Syria but kept its sanctions in place.

Both publicly and behind closed doors, EU officials are working on concrete proposals made by countries such as Germany to possibly reopen banking and investment relations with Syria. There is broad consensus that sanctions on those affiliated to the former Assad regime should remain in place and that a mechanism should be put in place to reinstate sanctions if needed.

A paper signed by Germany, the Netherlands, France, Spain, Finland and Denmark calls for allowing exports of oil and gas to Syria, as well as re-evaluating sanctions on high-value goods, such as cars. "Allowing financial investment in Syria and dealings with the financial sector is a necessary step to provide effective sanctions relief in line with the steps above," says the document, viewed by The National.

Sanctions pressure

Meanwhile, European capitals appear willing to work with Syria, with France, Germany and Italy sending their foreign ministers to Damascus in the past 10 days. There should be a moratorium of six months to a year of EU sanctions on Syria, Italy's foreign minister, Antonio Tajani, said on Saturday as he met Syria's de facto leader, HTS boss Ahmad Al Shara.

The EU's foreign affairs chief, Kaja Kallas, said the EU's 27 foreign ministers will meet in Brussels on January 27 to discuss how to "ease" sanctions. She was speaking in Riyadh as Western and Arab officials met to discuss Syria and Saudi Arabia backed growing calls to lift sanctions on Syria.

It is likely that an EU move on Syria sanctions would have limited impact as long as the US does not follow suit. European businesses may not want to risk running afoul of US sanctions, even if they are not breaking EU law. Also, the compliance environment would remain costly and labour intensive.

When trying to gauge the possible impact of the lifting of sanctions on Syria, many analysts look to Iran. In 2016, the EU lifted sanctions on Iran's banking sector. For two years, before Mr Trump reversed policy on Iran under his previous mandate, a number of European companies were able to invest in the country despite US sanctions remaining in place.

Yet reports at the time indicated that companies struggled with bureaucracy and reluctance among banks to provide financing. A study conducted by Crisis Group showed that sanctions were a primary obstacle for businesses considering investing in Iran after the Iran nuclear deal prompted sanctions relief.

Nearly one third of respondents to the study, which was conducted in 2018, said maintaining compliance with sanctions regulations was the primary obstacle to their introduction to the markets in Iran, ahead of access to financing and managing political risk. "The reputation of sanctions was so seared into their minds that they just didn't want to do business in the wrong place," Ms Delaney said. "We're probably looking at the same thing happening in Syria."