President Donald Trump on Wednesday notified the US Congress of his intent to rescind Syria's designation as a state sponsor of terrorism, removing a major obstacle in Damascus's economic recovery.
The action requires Congress to conduct a 45-day review to finalise the decision.
"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 State Department said in a statement.
"A stable, unified Syria at peace with itself and its neighbours benefits not only the region, but the entire world."
Mr Trump earlier indicated his intent to initiate the delisting process.
“I think I will. Why wouldn't I?” he told reporters alongside Syrian President Ahmad Al Shara at the Nato summit in Turkey.
"Any problems with that? I think we should," Mr Trump added, turning to US Secretary of State Marco Rubio. 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 conditions 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 also includes Iran, Cuba and North Korea, in 1979.
Washington last year lifted sanctions imposed under the Caesar Act, but the state sponsor of terrorism designation was regarded as a major block in Syria's economic recovery after the Assad regime fell in December 2024. 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 counterterrorism 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.
French President Emmanuel Macron visited Damascus on Monday in the first visit by a western leader to post-civil war Syria.
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 visited Washington in April, when officials held talks with the Treasury Department and the State Department.
A bipartisan group of US politicians last week urged Mr Rubio to delist Syria as a state sponsor of terrorism, saying Mr Al Shara has shown a commitment to fighting terrorism and that the designation is harming its economy.
The lawmakers 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.
