Investing in Syria: sanctions easing but security concerns remain

Sanctions easing, but not aligned

The Caesar Act’s repeal removes a significant US legal barrier to investment in Syria. However, investors must remain mindful of other states’ differing sanctions regimes.

Jennifer Upton, former Head of EU, UK and UN Sanctions at the UK’s Foreign, Commonwealth and Development Office, explained:

‘A US rollback is not a domino effect: the UK and EU operate separate sanctions regimes, shaped by different legal frameworks and political tests…
Even where London and Brussels have eased sectoral restrictions – as they did last year to support the rebuilding of Syria’s critical infrastructure and economy – targeted designations aimed at holding Assad and Assad-linked figures to account are likely to remain. Any further movement is more likely to come through delistings and incremental amendments than the wholesale dismantling of the Syria sanctions regime.’

Upton emphasised the challenge for international businesses: 

‘For investors, the key point is that sanctions easing is jurisdiction-specific: a transaction permitted under US rules may still be restricted under UK or EU measures, and vice versa.’

Investment conditions and residual risk

Despite the diverging sanctions regimes, the lifting of US restrictions on foreign investment and financial channels is encouraging for international investors. However, this is counterbalanced by continued security volatility.

The NDAA makes clear that US engagement with Syria comes with expectations, monitored every 180 days for four years. If non-compliant for two consecutive reporting periods, the President may ‘consider whether to impose targeted sanctions on individuals’ until expectations are met. This is a reminder that sanctions relief remains under scrutiny, and investors should anticipate a dynamic risk environment.

Security concerns

The US’ expectations are largely security-focused. As Alia Brahimi, Nonresident Senior Fellow at the Atlantic Council, told us that ‘the challenges for Syria are multivalent.’ She explained that efforts by other regional players, such as Israel, Türkiye and Iran, to influence developments in Syria also ‘threaten to ratchet up security tensions, to damage popular faith in the [President Ahmed al-]Sharaa’ government, and to undermine the sovereignty of the new Syria from within.’

Limiting military action against neighbouring countries

The NDAA requires Syria to refrain from ‘unilateral, unprovoked military action’ against neighbouring countries, explicitly referencing Israel. 

Israel has repeatedly conducted military action in Syria since December 2024, primarily in the south, where it occupies a former buffer zone, but also through air strikes on Damascus. Talks to negotiate a security agreement between Israel and Syria resumed in Paris on 5 January 2026, with US mediation, resulting in a joint mechanism for intelligence sharing and coordinating military de-escalation under US supervision.

Eliminating terror threats

The NDAA expects Syria to be ‘taking concrete and tangible action to eliminate the threat posed by ISIS and other terrorist groups.’

In November 2025, Syria joined the Global Coalition Against Daesh (ISIS). Brahimi explained that whilst this has ‘opened up access to training and widened intelligence channels’ for Syria, the ISIS threat remains. She added that:

‘ISIS is already on the offensive in Syria, trying to deal small cuts to the government and to various security forces here and there.’

This was demonstrated in mid-December 2025, when two US soldiers and a civilian interpreter were killed in Palmyra. The US attributed the attack to ISIS, responding with strikes. 

Despite the US response and a UK-France joint strike on ISIS assets in January 2026, concerns about an ISIS resurgence persist. In Brahimi’s words: 

‘The Syrian government can manage the threat for now… but [ISIS’] leaders are ultimately biding their time… I believe that [the government] would struggle with an ISIS that surges forward deliberately and in full force, when it eventually decides that it is the right time to strike.’

Protection of religious and ethnic minorities

Both Syria’s interim constitution, signed on 13 March 2025, and the NDAA commit Syria to upholding freedom of belief and protecting religious sects. The NDAA also requires that Syria be ‘actively prosecuting those that have committed serious abuses of internationally recognized human rights since December 8, 2024, including… the massacre of religious minorities.’

Syria has witnessed frequent violent attacks on minority groups since former President Bashar al-Assad was ousted in December 2024. These have largely targeted Alawites – the ethnoreligious group Assad belongs to – but also other minorities, including Christians and Druze.

Following local and international calls for accountability, Syria held its first public trial of those suspected to be involved in sectarian killings in November 2025. It also detained other suspected perpetrators of violence, including members of Syria’s forces.

Integration of the Syrian Democratic Forces

In March 2025, the Syrian government signed an agreement to integrate the Kurdish-led, US-backed Syrian Democratic Forces (SDF) into state institutions. The NDAA expects ‘tangible and credible steps’ to implement this. 

However, reconciliation appears distant. In mid-December, the government presented the SDF with a 13-point integration plan, setting an end-of-2025 deadline. But, despite meetings between Syrian officials and the SDF in early January, agreement on integration terms has yet to be reached. Brahimi cautioned that:

‘An imminent reconciliation is unlikely, as the positions of the two sides are too far apart.’

One reason, Brahimi explained, is disagreements over command structures: Kurdish leaders want SDF troops to integrate into the armed forces as cohesive units under their own leaders, while the Syrian government insists they join as individuals. Recent clashes between SDF and government forces in Aleppo also underscore the fragility of the process. 

Even so, Brahimi emphasised the US’s role in mediation efforts, explaining that:

‘The US serves as a meaningful partner to both the government in Damascus and the SDF … so the US is in a strong position to mediate and to incentivise both sides to continue the dialogue.’

Taken together, it is clear that Syria faces complex and multi-faceted challenges. Whilst the Caesar Act’s repeal offers promise, security threats remain a risk to the evolving US-Syria relationship and international investors alike. 

Risk Advisory’s in-house experts have advised clients on Syria and the wider Middle East region for many years, including market re-entry strategies, sanctions compliance and partner due diligence. We’d be more than happy to discuss any of this further if it’s of interest.