The Syrian government has seized the February 06 earthquake as an opportunity to call on Western governments to lift sanctions on Syria, claiming that they have severely impeded emergency response and humanitarian relief efforts to assist affected communities.
On February 09, during an interview with Sky News, Bouthaina Shaaban, adviser to President Bashar Al-Assad, called on the European Union (E.U.) and United States (U.S.) to lift sanctions on Syria “which are making life [in the country] impossible and causing the death of people under the rubbles.”
Two days before Ms Shaaban’s statement, Foreign Minister Faisal Mikdad told Lebanese media Al-Mayadeen TV that European countries should send humanitarian aid as soon as possible without using sanctions as a pretext to avoid participating in the humanitarian effort. The same day, during a press conference, Khaled Hboubati, head of the Syrian Arab Red Crescent said that sanctions are one of the main challenges facing rescue operations in the country.
Although the U.S. government emphasised that it would not coordinate with the Syrian government to facilitate humanitarian aid deliveries, on February 09, it issued a general licence expanding the scope of existing humanitarian exemptions to facilitate earthquake relief efforts in Syria.
Meanwhile, European officials stated that their restrictive measures on the Syrian regime would not impede humanitarian efforts. On February 08, the European Commission responded favourably to a humanitarian aid request by the Syrian government, signalling that it may be ready to work with the Syrian government in one way or another. On February 14, a plane carrying E.U. humanitarian aid destined for Syria landed in Beirut, and two more are reportedly on their way. The United Nations (U.N) International Organisation for Migration (IOM) will distribute the aid. However, whether the deal was brokered directly between the E.U. and the Syrian government or via an intermediary is unclear. The Syria Report reached out to the E.U. Delegation to Syria but has received no reply by the time of publishing.
The following sheds light on the ongoing debate about the impact of sanctions on humanitarian response.
Which countries have sanctioned Syria?
The U.S., the E.U., and a few countries traditionally allied to them, such as Switzerland, Canada or Australia, have sanctioned Syria. However, Syria is not sanctioned by African, South American, or Asian countries, except for Japan and South Korea.
In other words, contrary to claims by Syrian officials, the country is under no embargo and continues to trade freely with most countries in the world, including the E.U., from which it imported more than EUR 300 million in 2021, representing around 5-7 percent of its imports.
However, because of the size of their economies and the role of the dollar in global exchanges, the sanctions imposed by the E.U. and U.S. go beyond their direct trade ties to Syria.
What is the nature of the sanctions on Syria?
The E.U. and U.S. have blacklisted individuals and institutions affiliated with the Syrian regime, freezing the assets owned by these actors in their jurisdictions and banning individuals from travelling to their countries. In practice, the sanctions dissuade European and American businesses from conducting any transaction with blacklisted figures and entities.
Besides these lists, the nature of European and American sanctions is a bit different.
The E.U. has sanctioned a specific and limited number of sectors (petroleum, arms, luxury goods, telecommunication monitoring equipment, etc.) but authorises trade and investment in all other sectors. Therefore, European and Syrian companies can trade, and Europeans can invest in many sectors and industries usually competitive in Syria, such as food, textile, building materials, medicine, etc.
Also, while the E.U.’s blacklist contains all Syrian state-owned banks, there is no ban on dealing with Syrian private sector banks, which total 14 and are still part of the SWIFT system.
German bank Commerzbank, for instance, kept conducting business with Syria at least until 2016, well after sanctions were imposed.
The U.S. has imposed a broader ban on conducting commercial transactions with Syria through executive orders issued by former President Barack Obama in 2011. However, it issues general licences that exempt specific sectors or activities from the sanctions, including humanitarian-related transactions.
In other words, while for the E.U., sanctioned sectors are an exception to the general rule that allows continued business relations, for the U.S., the general rule is a broad ban, with exemptions for some sectors.
Given Syria’s limited trade ties with the U.S. before 2011, which mostly focused on agricultural goods which fall under a general licence, the consequences of the ban on trade and investment ties with the U.S. were limited.
However, the ban on Syrian banks, which prevents them from dealing with the American financial sector (i.e. the dollar, given that dollar transactions around the world are processed through New York), has most significantly impacted the Syrian economy.
This, together with the blacklists, is why banks worldwide are reluctant to deal with the Syrian financial sector. The USD 8.80 billion fees paid by French bank BNP Paribas in 2014 for conducting dollar transactions with Cuba, Iran, and Sudan is still in the mind of many bankers.
When dealing in currencies other than the dollar, transactions remain possible. However, banks are over-compliant and cautious about potential risks, such as sanctioned Syrian individuals using fronts to act on their behalf.
Consequently, although Syrian banks conduct transactions with the outside world, these transactions are limited, costlier, and often take more time to process.
In 2020, the enactment of the U.S. Caesar Act significantly broadened the scope of secondary sanctions on Syria, i.e. sanctions that target third-country companies and individuals from dealing with Syria. While it has been rarely used since it was enacted, the text acts as a Damocles Sword and is among the main impediments to investment by regime allies, such as China or the United Arab Emirates.
Humanitarian exemptions for sanctions targeting the regime
Although European sanctions prohibit “the sale, supply, transfer or export of certain equipment, goods, and technology which might be used for internal repression or for the manufacture and maintenance of products which could be used for internal repression,” they provide exemptions if the sanctioned commodities are intended for “food, agricultural, medical, or other humanitarian purposes, or for the benefit of UN Personnel, or personnel of the Union or its Member States.” Sanctioned commodities include dual-use goods that can be used for civilian and military purposes, such as telecommunications equipment, chemical products, and petroleum products.
Furthermore, while E.U. law states that member states should not issue grants, financial assistance, or loans to the Syrian government, the restriction does not apply to “humanitarian and developmental” activities.
Syrian individuals subjected to a travel ban, such as leading businesspersons, government officials, and members of security services, are even allowed to enter E.U. territory “on the grounds of urgent humanitarian need.” Exemptions can also be granted to sanctioned entities on humanitarian grounds.
The U.S. sanctions programme also provides several exemptions for humanitarian operations.
The Syrian Sanctions Regulations (SSR) authorise certain services in support of nongovernmental organisations’ activities, including “activities to support humanitarian projects to meet basic human needs in Syria, [such as] drought relief, assistance to refugees, internally displaced persons, and conflict victims, food and medicine distribution, and the provision of health services.” Although not specifically named, relief activities related to natural disasters, such as earthquakes, appear to fit within these exemptions.
The U.S. has also issued 23 Syria-related general licences (GL) since 2011, including some related to humanitarian aid and sanctions exemptions.
On June 12, 2013, the U.S. Department of Treasury published a GL authorising NGOs and INGOs to export and reexport services to Syria within the context of humanitarian projects. The licence also states that American NGOs can provide services inside Syria in support of humanitarian projects without the need for a specific licence from the U.S. Treasury. In addition, it authorises U.S. financial institutions to process transfers of funds in support of the aforementioned transactions and activities.
On November 24, 2022, the U.S. Treasury expanded the authorisations for NGOs to engage in certain transactions and not-for-profit activities in the Syrian humanitarian sector, including early recovery activities; new investments in Syria; the purchase of refined petroleum products of Syrian origin for use in Syria; and certain transactions with elements of the Syrian government.
While individuals are permitted to send personal remittances to Syria, provided it is not done through a state bank, they are not authorised to transfer funds for other purposes, even in support of authorised NGOs.
The U.S. Treasury’s latest general licence explicitly authorises “all transactions related to earthquake relief efforts in Syria that would otherwise be prohibited by the Syrian Sanctions Regulations” for six months. It is unclear, however, to whom these new exemptions apply.
In a press release, OFAC specified that “this new authorisation expands upon these broad humanitarian authorisations already in effect under the [SSR] for NGOs, international organisations, and the U.S. government.” Therefore, these exemptions may apply to individuals and companies seeking to donate directly in Syria, which was forbidden outside the framework of remittances.
This licence, however, does not authorise transactions related to the oil sector or individuals affiliated with the regime outside of the scope of humanitarian aid.
Over-compliance and the ‘chilling effect’
While sanctions do not formally prevent humanitarian aid, they do prevent certain financial transactions leading to issues of over-compliance and the so-called ‘chilling effect,’ both of which have consequences on the humanitarian sector.
In the past, local NGOs found their ability to respond quickly to emergencies sometimes hampered as compliance with sanctions is costly and time-consuming. Also, financial institutions are often reluctant to enter into intricate operations that generate only limited profit, a U.K.-based Syrian banker who asked not to be named for security reasons told The Syria Report.
While the issuance of general licences by the U.S. Treasury can facilitate financial transactions to a certain degree, due diligence work is still required.
For instance, GoFundMe, the largest online fundraising platform, allowed fundraising campaigns to aid Syria after having initially banned accounts of individuals who tried to do so, citing compliance regarding American laws issued by the US Treasury. However, the platform specifies that “all fundraisers to aid Syria must be reviewed before they can raise or withdraw funds,” according to their website.
Besides financial transactions, sanctions on dual-use items, whose definition can be broad, are problematic for NGOs operating in Syria given that they require specific licences, which add costs and cause delays. Dual-use items include spare parts for electrical generators, water pumps, or pipes, all of which are needed by the humanitarian sector.
According to unnamed European officials talking with Emirati media outlet The National, the E.U. is reportedly looking into easing restrictions on dual-use items. As of February 14, such a decision has yet to be taken.
Sanctions and humanitarian aid in opposition-held areas
The debate over sanctions can also be extended to opposition areas in Northwest Syria. Since the earthquake, only minimal aid has reached the region, although it is the most affected by the earthquake. Meanwhile, humanitarian organisations have faced several obstacles hampering their emergency response and disaster relief efforts.
These obstacles, however, are mostly linked to the fact that humanitarian aid to the region can only come through the Bab Al-Hawa border crossing with Turkey and, as of February 13, the Bab Al-Salameh and Al-Rai border crossings, located in areas controlled by the Turkish-backed Syrian Interim Government. Still, sanctions may also play a role.
Western and UN sanctions against Hayat Tahrir Al-Sham (HTS), an Islamist group that controls most of the Idlib government, have long discouraged humanitarian organisations from operating in HTS-controlled areas.
Joseph Daher, a Syrian-Swiss academic, told The Syria Report that humanitarian organisations are wary of getting involved in the Northwest because of the presence of HTS and that, following the group’s conquest of new areas, NGOs withdrew from the region or significantly diminished their activities.
Humanitarian aid entering Northwest Syria must flow through Bab Al-Hawa, located in HTS-held areas. Although a ‘civilian administration’ that supposedly has no ties to the HTS controls Bab Al-Hawa, the HTS controls everything beyond the crossing, which could pose a series of problems for NGOs operating there.
On December 09, the UN made efforts to reduce these obstacles. The UN Security Council (UNSC) passed a universal exemption for humanitarian assistance and activities across all UN sanctions regimes, including the Islamic State of Iraq and Syria and Al-Qaeda sanctions regime, under which the HTS is listed.
The resolution exempts the provision of humanitarian assistance and activities from the asset freezes imposed by UN sanctions and other impediments to the delivery of critical humanitarian aid to areas where UN sanctions are in place. It also aims to give confidence to banks, shipping companies, and insurance providers, which humanitarian and UN agencies depend on for their activities.
On the back of the resolution, the U.S. became the first country to implement the UNSC resolution and issued or amended general licences to ease aid delivery to ensure that authorisations for humanitarian support exist across its many sanctions programmes.
However, humanitarian organisations still face the so-called “chilling effect” of sanctions, which leads to over-compliance and impractical controls by risk-averse suppliers.
Mutasem Syoufi, executive director of The Day After, a Syrian non-profit organisation that implements humanitarian programs in and outside Syria, told The Syria Report that “donors remain cautious about implementing projects in Northwest Syria due to existing sanctions and restrictions.” He added that the possibility of the HTS co-opting aid deliveries also poses risks, further deterring organisations from operating in the region.
The extent to which sanctions have impacted earthquake-affected areas in Northwest Syria remains to be seen. However, the region faces other significant obstacles to an adequate humanitarian response, such as infrastructure damage to Turkish roads and airports.
It must be noted that various U.S.-issued financial transaction exemptions and general licences within the context of humanitarian aid do not significantly impact the Northwest because financial transactions are conducted through local banks, none of which currently operate in Northwest Syria, the Syrian banker told The Syria Report. Thus, locals and NGOs mostly rely on cash transactions and the Turkish banking system.
As noted by Mr Daher in a report named Invisible Sanctions: How over-compliance limits humanitarian work on Syria, “Syrian NGOs based in the Northwest […] withdraw their money from these PTT branches in Syria and pay their employees directly by cash or use hawala agencies, particularly for individuals residing in Idlib for security/safety reasons.” The growing Turkish influence in the Northwest led to the appearance across the region of the Turkish post office, or PTT, the main institution through which Syrians remit money in and out of northern Syria and pay their bills, many of which go to Turkish companies.