June 24, 2022 | Policy Brief

U.S.-Backed Gas Deal Will Benefit Assad Regime

June 24, 2022 | Policy Brief

U.S.-Backed Gas Deal Will Benefit Assad Regime

At a ceremony in Beirut, the governments of Lebanon, Syria, and Egypt signed a deal on Tuesday that would bring 650 million cubic meters of Egyptian gas per year to Lebanon via Syria. The Biden administration has spent months reassuring Cairo and Beirut that the agreement would not run afoul of U.S. sanctions on the Bashar al-Assad regime, yet the sanctions expressly prohibit doing business with Damascus, regardless of whether the compensation is in cash or in kind.

In December 2019, bipartisan majorities in Congress approved the human rights law known as the Caesar Syria Civilian Protection Act, which requires the executive branch to impose sanctions on foreign persons who knowingly support the Assad regime. During its first months in office, the Biden administration pledged to enforce the Caesar Act, yet has added only a handful of targets to the sanctions blacklist, none of them economically significant.

Senior lawmakers from both parties have made clear that Congress expects the White House to isolate the Assad regime, whose atrocities continue unabated. Republicans specifically warned that Assad’s inclusion in regional energy agreements is incompatible with the Caesar Act.

Earlier this month, U.S. energy envoy Amos Hochstein testified that the administration had given “pre-clearance” for gas and electric power agreements involving Syria but would not make a formal determination about the applicability of sanctions until the gas deal was finalized. (The participating governments finalized the electricity deal in January.)

Hochstein attributed the slow progress of negotiations in part to the difficulty of crafting the agreement “to stay out of benefitting Assad.” He appeared to be telling lawmakers that the gas deal would be consistent with the Caesar Act if no benefits accrued to the regime. Yet Hochstein said previously that Damascus would receive compensation in kind for conveying gas and electricity to Lebanon. All told, the Assad regime will receive an estimated $40 million to $50 million worth of natural gas and electric power for serving as a conduit.

Both Hochstein and Barbara Leaf, the assistant secretary of state for Near Eastern affairs, have emphasized that Damascus will not receive payment in cash for its services. Yet the text of the Caesar Act makes plain that the form of payment is irrelevant to the applicability of sanctions. Section 7412 mandates sanctions on any person who “knowingly provides significant financial, material, or technological support” to the regime. This formulation is common in statutes that authorize sanctions. Its purpose is to clarify that categories of support other than cash or financial instruments constitute prohibited forms of assistance.

Hochstein and Leaf also underscored the importance of alleviating severe power shortages in Lebanon, where the national grid provides as little as two hours per day of electricity. Yet even by regional standards, the Lebanese power sector is exceptionally corrupt and inefficient, so it is uncertain how much everyday citizens will benefit from the agreements. In addition to requiring U.S. approval, the two deals depend on World Bank financing, which the bank has conditioned on comprehensive reform of the energy sector. The Biden administration should not pressure the bank to certify partial or cosmetic reforms as sufficient.

But first, the administration itself should conduct an objective and transparent evaluation of whether the gas and power agreements are subject to the Caesar Act or other sanctions laws. So far, it has offered shifting and incomplete explanations for its belief that Caesar sanctions do not apply. Congress will likely need to exercise its oversight authorities to ensure the administration presents a coherent and legal justification for its ruling on the gas and power agreements.

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


Arab Politics Egypt Lebanon Sanctions and Illicit Finance Syria