Syria: (Partially) Open for Business and Investment

This year, the EU has liberalised its sanctions restrictions on trading with or investing in Syria. While some restrictions remain, the focus of these restrictive measures is on security concerns. As a result, EU operators will now face fewer barriers when looking to do business in Syria. Our Dispute Resolution and Financial Services teams explore the scope of the relaxation of the restrictions and what it means for European businesses.

What you need to know

In response to the fall of the Assad regime in Syria and its replacement by an interim government, the EU has removed some of its restrictions against trading with or investing in Syria.

Notable changes include the removal of restrictions against:

• Importing, transferring or purchasing Syrian crude oil or petroleum products, or providing related financing, financial assistance, or insurance / reinsurance policies
• Granting credit to Syrian parties, and
• Creating a joint venture with a Syrian party engaged in producing or refining crude oil or building power plants or a Syrian credit or financial institution

Some EU restrictions remain in place, particularly concerning dual-use items or engagement with Syrian parties still listed on the EU sanctions list. Before taking any steps, EU operators should confirm that their proposed activities will comply with EU sanctions.

With international trading relationships changing and access to some markets facing increased barriers, it is important to note the moments when restrictions are lifted and markets begin to open for business and investment. One example is Syria. In this article, we will briefly outline the recent changes in EU restrictive measures concerning Syria. We also highlight potential opportunities for European businesses to trade or invest in Syria.

Background

For much of recent history, trade with Syria has been prohibited or heavily restricted. For the EU, restrictions escalated in early 2012, when, in response to deteriorating local conditions and civil war, the EU implemented a comprehensive restrictive measures in Regulation (EU) No 36/2012. Regulation 36/2012 included several party-based and conduct-specific sanctions concerning Syria:

• Party-based: These are restrictions against parties designated by the EU. In formal terms, EU persons are restricted from making “funds” or “economic resources” available to those designated parties or any entities that are they own or control. “Funds” and “economic resources” are defined by Regulation 36/2012 and in practice have been interpreted to restrict large categories of activities, including providing goods or certain services or making payments.
• Conduct-based: These are generally restrictions against certain types of services, including restrictions on investing in some strategic sectors, like infrastructure projects, or offering insurance or reinsurance policies to some industries.

Due to the scale of these restrictions, Syria was largely written off for many businesses, whether in the areas of investment, manufacturing or other industries. In the limited circumstances where a business could engage with Syria, the cost of compliance was so high that it presented a prohibitive barrier, especially when a potential impact to their brands was considered. But restrictions have not stopped all activities with Syria, and some businesses have been prosecuted for sanctions violations. In Denmark, a director was sentenced to four months in prison and his firm was fined DKK 34 million, approximately €4.5 million, and was required to forfeit approximately €2.1 million for selling jet fuel to Syria.

Recent developments

Since the change in government in Syria in December 2024, several major jurisdictions have begun to reconsider the potential for future trading with or investing in Syria. Earlier this year, several of the party-based and conduct-based restrictions in Regulation 36/2012 were amended. Some of these changes are summarised below:

Party-based

Generally, the EU did a soft “reset”. Now only parties identified by the EU as “responsible for the violent repression against the civilian population in Syria, persons and entities who have benefited from or supported the al-Assad regime,” or parties associated with them, are designated. These parties include, for example:

• Leading businesspersons operating in Syria linked to the former al-Assad regime,
• Various Syrian Government Ministers in power between May 2011 and December 2024, and
• Members of the Syrian security and intelligence services between May 2011 and December 2024

This “reset” means that several prominent parties, including various banks and the Central Bank of Syria, are no longer designated. Consequently, it is no longer against EU law to provide them with “funds” or “economic resources,” and so opens the door to various economic opportunities.

Conduct-based

The EU removed various restrictions on importing or exporting certain products, as well as on certain financial services. Some of the restrictions that were removed include:

• Importing, transferring or purchasing Syrian crude oil or petroleum products, or providing financing, financial assistance, or insurance or reinsurance policies concerning these points
• Selling or exporting certain technologies intended for the Syrian oil and gas industry, or providing technical assistance, brokering services, financing, or financial assistance concerning these points
• Granting financial loans or credit to Syrian parties
• Creating a joint venture with a Syrian party engaged in producing or refining crude oil or building power plants or a Syrian credit or financial institution
• Selling or purchasing Syrian public or public-guaranteed bonds to or from a Syrian party
• Opening a bank account with a Syrian credit or financial institution
• Establishing a new correspondent banking relationship with a Syrian credit or financial institution

Current Situation

In our view, these recent changes illustrate that the EU wants to cautiously draw a line in the sand between the Syria that existed until December 2024 and the new Syria that is emerging under the current provisional government. Since the situation in Syria is still subject to change, and the EU, along with much of the world, wants to continue to restrict trade with those associated with the previous regime, the EU has not removed the entirety of its restrictive measures. Instead, recent changes are consistent with the EU’s broader overall strategy of a “gradual, reversible approach,” in which it has committed itself to “continue to examine possible further suspensions of restrictive measures on the basis of close monitoring of the situation in Syria.”

Overall, EU businesses should consider Syria partially open for business or investment, and may wish to cautiously explore the market. We caution that while there has been significant relaxation of the restrictive measures, many restrictions remain, including restrictions on transferring or exporting dual-use goods or items on the Common Military List. Likewise, numerous Syrian parties continue to be designated, so EU operators remain restricted from providing them with “funds” or “economic resources.” Accordingly, before engaging in business in Syria or with a Syrian party, we recommend EU businesses seek advice to ensure that the proposed activity – whether it be a loan sale of goods, or something else entirely – complies with the remaining EU restrictive measures. In addition, EU businesses will also likely want to understand potential liabilities under other sanctions regimes, including the UK or US.

In addition to international recognition through easing of restrictive measures, Syria has demonstrated an interest in opening up and receiving foreign direct investment. Recently, the interim president of Syria became the first Syrian leader in more than 60 years to speak before the United Nations, where he called for an end to sanctions and highlighted opportunities for foreign direct investment.

Conclusion

If you are interested in exploring opportunities associated with the easing of EU sanctions against Syria, or wish to discuss any of the above information, please contact a member of our Dispute Resolution or Financial Services teams.

The content of this article is provided for information purposes only and does not constitute legal or other advice.