December 9, 2021 | Policy Brief

Biden Administration Creates Potential Sanctions Loophole for Assad

December 9, 2021 | Policy Brief

Biden Administration Creates Potential Sanctions Loophole for Assad

The Biden administration in late November lifted a longstanding rule that forbade non-governmental organizations (NGOs) from doing business with the regime of Syrian despot Bashar al-Assad, justifying the move as a humanitarian gesture. In light of the regime’s pervasive diversion and expropriation of humanitarian assistance, the new rule may benefit Assad without meaningfully improving conditions for civilians.

The administration announced its decision in the final hours before the Thanksgiving holiday, indicating a desire to minimize publicity. To effect the change, the Treasury Department amended one of the general licenses that carve out exceptions to Treasury’s Syria Sanctions Regulations. Previously, that license allowed NGOs only to export or re-export to Syria certain services that would otherwise be prohibited. It now permits NGOs to transact with the government of Syria, including the central bank. It also permits NGOs to engage in economic activities defined as “new investment.”

By allowing new investment, the revised license facilitates “early-recovery activities,” a category of aid that goes beyond immediate relief and begins to resemble reconstruction efforts. Last July, after Russia withdrew its threat to veto UN cross-border aid into northwestern Syria, the Biden administration agreed to the passage of a Security Council resolution expressing support for early-recovery activities in areas under Assad’s control.

The United States and its European allies maintain a policy of opposing reconstruction in Syria until the Assad regime negotiates a peaceful resolution of the country’s 10-year conflict. Until July, U.S. policy included opposition to early-recovery activities, since their definition is nebulous, enabling the Assad regime to pursue reconstruction under the guise of early recovery. Support for early recovery could even facilitate the regime’s efforts to create permanent housing developments on land expropriated from displaced or expelled citizens.

In addition to amending its general license, the Treasury Department issued new guidance that provides examples of early-recovery activities, such as rehabilitating school buildings or irrigation systems. These are unobjectionable, yet the guidance makes no effort to clarify the limits of what constitutes early recovery, so the risk remains undiminished.

The Syrian regime has demonstrated its ability to manipulate aid providers, up to and including the United Nations, via intimidation, infiltration, and surveillance. To operate in areas under the regime’s control, aid organizations have no choice but to accept constant interference in their activities. Before allowing NGOs greater latitude to do business directly with the regime, the Biden administration should have put in place guardrails, such as independent monitoring requirements.

If the administration wants as much aid as possible to reach its intended recipients, its top priority should be reforming the UN aid delivery process. An analysis by the Center for Strategic and International Studies found that the Assad regime’s distortion of exchange rates “allowed it to divert 51 cents of every international aid dollar spent in Syria in 2020,” directing $60 million to the central bank instead of to civilians. Similar diversions in 2019 bring the total losses to more than $100 million. And this is only one means of diversion.

In the absence of reform, greenlighting early-recovery activities and NGO transactions with the regime also undermines the bipartisan Caesar Syria Civilian Protection Act of 2019. That law targets, inter alia, persons providing the Assad regime with construction and engineering services, since projects such as Marota City have become vehicles for high-level corruption.

While the administration is unlikely to reverse its new rules for NGOs in Syria, it can mitigate risks by strictly defining what constitutes “early recovery” and by explicitly prohibiting the use of property or other assets belonging to displaced Syrians or otherwise seized, expropriated, or confiscated by the regime for political purposes. Concurrently, the administration should impose sanctions against Syrian government officials and their associates engaged in the seizure of property or other assets of displaced Syrians.

Without peace, reconstruction only subsidizes the Assad regime.

David Adesnik is research director and a senior fellow at the Foundation for Defense of Democracies (FDD), where Matthew Zweig is a senior fellow. They both contribute to FDD’s Center on Economic and Financial Power (CEFP). For more analysis from the authors and CEFP, please subscribe HERE. Follow David and Matthew on Twitter @adesnik and @MatthewZweig1. Follow FDD on Twitter @FDD and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.


International Organizations Sanctions and Illicit Finance Syria