US President Donald Trump on Wednesday notified Congress of his intent to rescind Syria's designation as a state sponsor of terror, which would clear a major hurdle in Damascus's economic recoverys.
The action requires Congress to conduct a 45-day review to finalise the decision, the State Department said in a statement.
"Lifting sanctions on Syria will unlock international trade and investment, give Syria a chance to rebuild, and open up a new chapter for the Syrian people," the department said. "A stable, unified Syria at peace with itself and its neighbours benefits not only the region, but the entire world."
Mr Trump earlier on Wednesday indicated his intent to initiate the delisting process.
“I think I will. Why wouldn't I?” he told reporters before a meeting with Syrian President Ahmad Al Shara at a Nato summit in Turkey.
Turning to US Secretary of State Marco Rubio, Mr Trump said: “Any problems with that? I think we should.” He had directed Mr Rubio in June last year to review the designation.
The state sponsor of terrorism designation carries restrictions on US foreign assistance, a ban on defence exports and sales, certain financial restrictions and controls over exports of dual-use items.
“We don’t have a specific timeline to share at the moment,” a State Department official told The National. “There are a number of steps that would need to be taken by both the department and the President before the SST designation could be removed."
Syria was placed on the US blacklist - which now also includes Iran, Cuba and North Korea - in 1979 over the regime of ousted president Bashar Al Assad's support for militants such as Hezbollah.
The designation was regarded as a major block in Syria's economic recovery after the regime fell in December 2024 and Washington's later move to lift sanctions imposed under the Caesar Act. The World Bank estimates the country's reconstruction will cost $216 billion.
In May, the State Department released an investor handbook and guides for US companies to enter the Syrian market. Damascus's designation status remains a point of friction for would-be investors, however, while anti-money laundering and counter-terrorism concerns are also constraining factors.
"It's been over a year now since the vast majority of sanctions on Syria were removed, and ... very little has materially changed in Syria," said Stephen Fallon, founder of DBM Consulting.
While the designation remains a sticking point for US investment, Syria has been attracting major foreign investment from its Gulf neighbours and Turkey.
Non-oil trade between the UAE and Syria rose to $1.4 billion last year, a year-on-year increase of more than 130 per cent, Dr Thani Al Zeyoudi, Minister of Foreign Trade, said during an investment forum in Damascus in May. In February, Saudi Arabia and Syria a signed a major investment pledge that involved energy, real estate, telecoms and aviation.
A Syrian delegation also visited Washington in April, and officials held talks with the Treasury and State departments. A bipartisan group of US politicians last week urged Mr Rubio to de-list Syria as a state sponsor of terror, saying Mr Al Shara has shown a commitment to fighting terrorism and that the designation is harming its economy.
The politicians said the legal grounds for the designation no longer apply and the listing “remains a significant barrier to achieving the Trump administration and congressional priority of giving Syria a chance to succeed”.
In addition to countering ISIS in Syria, Damascus has taken “serious steps” to counter Hezbollah’s networks in the country, particularly by tackling transnational flows of weapons and money, they said. Mr Trump said he believes Syria could help with Hezbollah and Lebanon.
"For the last year-and-a-half-plus, Syria has not been a state sponsor of terror at a government level. So the question is, what were they [the US] waiting for? Why are they doing it [now]?" Mr Fallon said.
Thomas Watkins contributed to this report
