US Looks To Strengthen Syrian Economy Without Strengthening Assad

New license opens door for investment in some areas of Syria outside of Damascus’ control

With much of the Arab world now engaging again with Syrian President Bashar Assad, and with no political process for Syria on the horizon, it’s clear that Assad has won the country’s catastrophic civil war.

The United States, with few options at its disposal, is now trying to prevent an even worse situation that would see a further resurgence of the Islamic State in regions of Syria still outside of Damascus’ control. To that end, the US Treasury Department announced late last week that it will be issuing a general license that authorizes private-sector investment and other activities in non-regime-held areas of northeast and northwest Syria. The move will enable companies to engage in the fields of agriculture, telecommunications, power grid infrastructure, construction, manufacturing, trade, finance, and clean energy. Oil from those exempted areas can also now be purchased, on the condition that it does not benefit the Assad government.

“Our aim with this authorization is to prevent the resurgence of ISIS by mitigating growing economic insecurity and restoring essential services in areas liberated from the terrorist group. The general license is designed to improve the economic conditions in non-regime-held areas of northeast and northwest Syria in support of ongoing US-led D-ISIS (defeat ISIS) stabilization efforts. The authorization does not permit any activity with the government of Syria or other sanctioned persons and does not alter existing counterterrorism sanctions. Our stabilization efforts – including restoring essential services, bolstering livelihood opportunities to help Syrians return to normal life, and providing support for individuals returning from displacement as well as the communities receiving them – are critical components of our D-ISIS strategy,” Ethan Goldrich, deputy assistant secretary of state for Syria and the Levant in the Bureau of Near Eastern Affairs, told reporters.

State Department officials stressed that the license did not constitute sanctions relief for the Assad regime, and that normalization with Assad’s government would not be forthcoming. Officials also stressed that the effort was an economic measure, and not a political one, though it is essentially impossible to decouple the two.

“On the whole, I think it represents an opportunity for both the northeast and northwest to stabilize. I’m in favor of trying. But, accompanying that is going to have to be a pretty strong oversight mechanism that will keep tabs on business activities, in the northeast in particular, to make sure the Assad regime and its allies cannot slip in front companies or front actors,” Joel Rayburn, former US deputy assistant secretary of state for Levant affairs and former special envoy for Syria, told The Media Line.

“The effect that the license could have would be most pronounced in the northwest, where the communities that are in liberated territories have access to the Turkish economy in a way that the northeast doesn’t,” added Rayburn, who was responsible for implementing the US diplomatic strategy concerning Syria, including the implementation of sanctions against the Syrian regime under the Caesar Syria Civilian Protection Act of 2019 and other US sanctions authorities.

Asked about the general feeling of the Arab world regarding the Treasury announcement, Goldrich said he couldn’t speak on behalf of any country, but that “we consulted extensively with our key allies and partners, as we have had a few meetings over the past few months. We had meetings in Brussels in December and Washington in March; we joined a meeting the French hosted in Paris and had another meeting in Brussels this week. And we have kept meeting participants informed that we have a general license that was in preparation and eventually being issued. … We think that there are opportunities for companies from many different countries to invest there and to help the people in the region through private investment. So now that we have published the license, we’re looking forward to seeing which companies and countries become involved.”

Rayburn believes there won’t be investment on a large scale due to the unstable nature of the non-regime-held areas, but that there are openings for certain sectors to make an impact.

“I haven’t seen any big companies chomping at the bit, but I think in the northwest it would be an opportunity for the local communities there to do more with the Syrian diaspora, in particular. For the northeast, their options are more limited, because they are politically at odds with Turkey, so there are some obstacles there. But I think in the northwest, in particular, there is some eagerness in the Syrian diaspora, both in Turkey and beyond the region, in the United States, to be able to do some modest investments that can help stabilize the economy,” said Rayburn.

“I think financial services that can be paired with telecoms are the first area where they can benefit. Also, education services that can be provided remotely – things like study software, online courses where the providers outside of Syria have been reluctant to do it with Syrian recipients – and this license should make it much easier for those people in the northeast and northwest to have those education services,” Rayburn added.

For its part, Turkey has condemned the licensing scheme as an attempt to legitimize the People’s Protection Units (YPG), a US-backed Kurdish militia deemed a terror organization by Turkey. Turkey also questioned why the opposition-held northwestern province of Idlib was not included in the exemptions. The YPG has been active in fighting Islamic State elements.

The Islamic State also factors into a humanitarian crisis along the Syrian-Jordan border. Earlier this year, lawmakers in the US urged the administration of President Joe Biden to address the situation at the Rukban refugee camp, located in no man’s land in Syria’s southeastern desert. Jordan refuses to open its border to the refugees for fear that ISIS elements have infiltrated the camp, Russia and Syria won’t allow access to humanitarian aid and the US refuses to deliver aid from its base 10 miles away, largely to avoid committing itself to a longer-term humanitarian operation.

“I would just say that we’re aware of the situation and conditions in the Rukban camp, and we look to try to improve the situation in whatever ways that we can, and we understand that the inability to get crossline assistance to the camp from other parts of Syria is the most important problem. It exacerbates all the other problems that they’re dealing with,” said Goldrich in response to a query from The Media Line.