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What's the Caesar Act and how will new US sanctions impact Syria?

Broad scope and vague wording may have devastating consequences for Syrians after years of brutal war, experts say
Man holds sign supportive of Syria's President Bashar al-Assad and critical of US sanctions in Damascus on 11 June (AFP)
By Sheren Khalel in Washington

The United States has imposed a sweeping set of new sanctions against any country, individual or entity that provides support to the Syrian government - a campaign that experts warn may devastate the lives of ordinary Syrians trying to survive and rebuild after nine years of war. 

The Caesar Act, passed in Congress last year, took effect on Wednesday. It seeks to pressure Syrian President Bashar al-Assad into negotiations with Washington, while preventing foreign allies from assisting the reconstruction of Syria's devastated cities and economy. 

It targets the supporters of the Assad government in politics, business and banking. From Russia to Europe, the Gulf, Lebanon and beyond, the new sanctions may freeze assets and trigger travel bans and arrest warrants against violators. 

'Not only is it going to prevent these large-scale development projects, it's also going to prevent the ordinary Syrian from trying to rebuild their homes to establish any sense of normalcy or create any kind of way to recover or rebuild'

-Basma Alloush, Norwegian Refugee Council

The act, which is named after a Syrian military photographer who smuggled tens of thousands of gruesome photos out of the country that documented evidence of war crimes, was passed in December as part of the Trump administration's $738bn defence policy bill.

"Our sanctions under the Caesar Act and Executive Order 13894 are not intended to harm the Syrian people, but rather to promote accountability for the Assad regime's violence and destruction that has killed hundreds of thousands of civilians," the US State Department said in a statement on Wednesday.

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"This act is meant to send a clear signal that no foreign business should enter into business with or otherwise enrich such a regime," it added. 

Still, experts and human rights workers have warned that the broad scope and vague wording of the bill, which mostly focuses on energy and construction sectors, could have overreaching consequences. 

Over-compliance, a major risk

While the US has already imposed narrower bans against the Syrian government, the new sanctions triggered by the Caesar Act are more complicated and broad, increasing the risk that banks and foreign traders will avoid doing business with Syrians altogether, including harmless transactions with individual citizens as well as humanitarian aid efforts.

"A big issue we see with sanctions is this whole over-compliance issue, where a small trader in Lebanon, for instance, or a neighbouring country will be reluctant to work with any Syrian business person inside the country because of fears of running afoul of sanctions," said Basma Alloush, policy and advocacy adviser at the Norwegian Refugee Council.

"A bank is completely risk-averse with anything to do with Syria because they don't want to risk violating sanctions, which leads to over-compliance," Alloush told Middle East Eye. 

This includes the transfer of humanitarian aid. While the act, like many US sanction bills, has an exemption for such aid, in practice those exemptions do not always work. 

"The intention is not to target humanitarians, that's clear. What's not clear is how this exemption is going to be applied. The way the exemption is laid out is very vague and ill-defined," she said. 

Even the previous narrower sanctions that had already been levied against Syria have had a major impact on foreign aid, as well as on the country's healthcare industry.

"There's a serious shortage of medication in Syria, and even though Syria has its own pharmaceutical companies, some of the input materials that are required to create these medications are missing, so how are you going to help these pharmaceutical companies, which are not even sanctioned... because right now over-compliance has completely blocked that flow of supply," Alloush said.

Syria, Lebanon and economic collapse 

Syria is also in economic freefall and the value of its currency is plummeting. Before the war began nine years ago, $1 was equivalent to around 50 Syrian pounds. Today, the exchange rate has $1 trading at almost 3,000 Syrian pounds. 

The collapsed financial system has made Syrians more dependent on Lebanon's banking system, but it is facing its own financial crisis. 

With interlinked economies, the prospect of Lebanese banks dropping Syrian businesses for fear of sanction penalties has sparked concerns that the Caesar Act may worsen the situation in both countries.  

For instance, without access to Lebanese banks, goods and trading partners, the average Syrian may have no other choice but to turn to those empowered in their own country, likely Assad's allies. 

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"We can't sit there and turn a blind eye and think that [these sanctions are] not going to affect anyone, because they definitely will," Alloush said. 

"For those that have just this little bit of income left - if they haven't completely depleted their savings - and can maybe afford to rehabilitate a broken wall or some shattered glass ... there's going to be a lot of challenges to access the materials that they need and a lot of that is going to be controlled by the war economy and the warlords," Alloush said. 

That dependence on the war economy is also likely to include further price gouging.

Julien Barnes-Dacey, director of the Middle East and North Africa programme at the European Council of Foreign Relations (ECFR), said the Syrian government will probably be the first to benefit from a shift in civilians' buying power. 

"A natural result will be this chilling effect, which really tightens and restricts what is able to occur in the economy in a way which will first and foremost harm the Syrian population given that the regime will find it within its capabilities to channel the pain onto the wider country and kind of monopolise the networks of patronage and resources that it needs to ensure its own survival," Barnes-Dacey said. 

Halting reconstruction 

Meanwhile, the Caesar Act will prevent other countries from taking advantage of Syria's dire need for reconstruction. 

Russia, the United Arab Emirates, Bahrain, Iran, Turkey and others have expressed interest in reconstruction efforts in Syria, hoping to benefit from the future political and economic capital they may provide. 

Still, the reconstruction efforts have their own problems, as humanitarian organisations try to prevent privately owned Syrian land from being handed over to large corporations.

"But at the same time, the risk is that if the act is not implemented in a concrete, meticulous and closely monitored way, then … not only is it going to prevent these large-scale development projects, it's also going to prevent the ordinary Syrian from trying to rebuild their homes to establish any sense of normalcy or create any kind of way to recover or rebuild," Alloush said. 

'A whole set of unrealistic measures'

Foreign reconstruction deals also require the normalisation of relations with the Syrian government, a main goal of Russia and something the United States says it is seeking to prevent until Assad is prepared to make concessions. 

In order to lift Caesar Act sanctions, the Syrian government would have to agree to a list of seven criteria: Syria and Russia must cease using Syrian airspace to strike civilian spaces; zones controlled by Syria, Russia and Iran must allow humanitarian aid to enter; Syria must release all political prisoners and allow international investigators access to prisons; Syrian, Russian and other forces cannot bomb health centres; the Syrian regime must take legal steps against those who have committed war crimes and allow the return of refugees and compensate civilians for the deaths of their relatives.

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Washington has said its main goal is not regime change, but to bring the Assad government to adhere to international standards. However, major asks such as "release all political prisoners" indicate to some analysts that the US is setting its sights on economic disaster rather than serious negotiations. 

"The bill is tied to a whole set of unrealistic measures and the American system knows that's the case," Barnes-Dacey told MEE. 

"The true intent here seems to be to try and provoke economic implosion that forces the regime into more meaningful compromises. The aim here is not a negotiated solution; the real aim is economic implosion, which forces the regime and its backers to concede defeat." 

Barnes-Dacey likened the Caesar Act to the US's "maximum pressure" campaign against Iran. 

"It's exactly the same," he said, pointing to comments made by the US Special Envoy for Syria James Jeffery, one of the architects of the Trump administration's strategy in Syria. 

"He has identified it himself as 'maximum pressure' -  he used that term for this approach in Syria," Barnes-Dacey said. "This is first and foremost centred on this current concept of great power politics and ensuring that the Russians and Iranians can't get a victory in Syria.

"Syria is a theatre for these great power politics and the Caesar bill is seen as kind of the sharp end of that maximum pressure campaign." 

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