Caesar sanctions will not change decision-making in Damascus
- Middle East
- Delivering Growth and Opportunity
Caesar sanctions will not change decision-making in Damascus
The US administration has framed its Caesar Syria Civilian Protection Act as a new means of containing the Syrian government and its backers. However, the act will most disadvantage the civilians it claims to protect.
- The US will not significantly disrupt, let alone dislodge, the Syrian government by further sanctioning individuals, businesses and governments that support President Bashar al-Assad’s government.
- Instead, Damascus will continue to pursue a maximalist military policy to assert control over the country – at the expense of civilians – and Assad will use established networks to evade sanctions.
- Outside Syria, the Caesar act will not prevent groups such as Hizbullah and the Iranian government from supporting Assad, and will instead add to the financial hardship of citizens in those countries.
- Foreign businesses will face integrity risks in Lebanon, Syria and Iran, where sanctions evasion persists. The US remains committed to extending sanctions against these countries.
The US Congress’s passing of the Caesar act in December 2019 has significantly expanded Washington’s ability to target governments, companies and individuals that seek to profit from the Syrian conflict or help Assad maintain military operations. The act is a step up from previous sanctions programmes the US has implemented in Syria and provides the administration of US President Donald Trump with the power to pursue third-party, non-US violators. This will bring Lebanese, Iranian, Russian – Syria’s three-largest supporters – and other actors further into its crosshairs.
The act has been a long time in the making and is named after a former member of Syria’s military police who defected in 2014. Codenamed “Caesar”, he smuggled tens of thousands of photos documenting his government’s abuse of detainees since the conflict began in 2011.
Since 2014, Assad has consolidated his military and political control over large swathes of the country and become more secure in his position. In the face of a host of US and EU sanctions, Assad has shown no inclination to seriously engage in a peace process, nor has he entertained any international initiative that would lead to his removal.
Frustratingly for the international community, sanctions in recent years have resulted in very little change: Assad continues his military campaign – often causing civilian casualties – and despite a range of sanctions, he still has plenty of family members, friends, and other businesspeople that he can call on to establish front companies to evade sanctions.
More importantly, Assad’s long track record demonstrates that he is more concerned with consolidating his own position than limiting the suffering of Syrian people. The Syrian government continues to deny humanitarian aid to opposition areas, to indiscriminately target civilians and civilian infrastructure, and to recapture territory using siege warfare – one of Assad’s most tried and tested tactics.
The socio-economic hardships that Syrians face will not drive Assad to the bargaining table – if that were the case, he would already be negotiating a political transition. Instead, Assad remains resolute in his position, despite the cost of an almost-decade long war, the decimation of Syria’s business sector, and the country’s ongoing economic collapse. Washington’s idea that Assad cares enough about Syrians to begin making concessions to gain sanctions relief is flawed.
The Caesar act will sanction individuals, businesses, and political and security actors that have sought to aid Assad in his military campaigns for their own benefit. Lebanese Shia movement Hizbullah, which is backed by Iran, has sought to achieve two primary goals in Syria: to open a second front against Israel and to secure land routes from Iran to Lebanon (via Iraq and Syria) for weapons transfers. Meanwhile, Iran views Syria as an arena where it can expand its regional influence and establish a permanent military presence. The US has heavily sanctioned both Iran and Hizbullah as part of Washington’s “maximum pressure” against Iran and its nuclear programme. However, like those long-standing sanctions on both Hizbullah and Iran, the Caesar sanctions will not force Syria, Hizbullah and Iran to comply with US foreign policy objectives, and instead will exacerbate the financial hardship of citizens in those countries.
Lebanon. Sanctions aside, widespread corruption and fiscal mismanagement have propelled the country towards economic collapse. During this time, the US has maintained its pre-Caesar sanctions and secondary sanctions against Hizbullah members and conduits, especially in the financial sector. The Caesar act will exacerbate a multitude of long-standing economic issues and will create higher hurdles yet for foreign companies seeking to do business in Lebanon, if they choose to invest at all. The new sanctions will add to the onerous and costly levels of due diligence that foreign companies must conduct in Lebanon and will further corrode the environment for foreign investment.
The added complication of the Caesar act is likely to make investors across sectors – but especially those in energy, aviation, transport, reconstruction, healthcare and real estate – view Lebanon as an unnecessary risk. Hizbullah has significant interests in some of these sectors, which would therefore require investors of any nationality to demonstrate that their operations do not violate the Caesar act.
Iran. The Caesar act is unlikely to add large-scale pressure to Iran’s economy that it does not already face from pre-existing sanctions. However, the act will make it more challenging to simulate Tehran’s economy whilst the Syria conflict continues. During this time, the act will complicate socioeconomic challenges that Iranian’s have to face from those sanctions Iran already faces, After Washington withdrew from the Iran nuclear deal in May 2018, it sanctioned most of Iran’s business sectors in an attempt to force Tehran to renegotiate. As Tehran’s external sources of revenue have dried up, Iran’s economy has contracted. As a result, the brunt of the US’s “maximum pressure” campaign is being felt by Iran’s public, but this has not brought Iran’s leaders to the negotiating table.
Over the coming year, Hizbullah and the Iranian and Syrian governments will continue to share knowledge and expertise with each other to help them evade the Caesar act and other US sanctions. Because these external parties will continue to assist Assad’s government through military support, sanctions evasion and supplies of key commodities, the US will impose additional sanctions against Syria and Iranian government officials, military officers, and businesspeople.
Foreign businesses operating in these countries – and further afield in Russia, another Assad supporter – will therefore have to clearly demonstrate that they have not knowingly engaged with any individuals or entities that support the Syrian government. The costs and time required to do this will be significant, even for those organisations focusing on development and reconstruction. The scope of the Caesar act, Washington’s desire to limit Iran’s regional influence, and a wish to see Assad toppled means that the onus will now fall more heavily on businesses to demonstrate they are operating in the Middle East in a way that does not undermine US foreign policy interests.
The Global Insight