Syria is coming in from the cold - but exiles remain lukewarm about reinvesting in their homeland

Business consultant Ahmed Ghazzal, whose family was forced into exile by the Syrian Baath party in 1966, hopes the fall of president Bashar Al Assad and his regime is a chance to claim back assets in Idlib that were seized from his father and uncle almost 60 years ago.

Among them is a cotton-processing factory that was expropriated and nationalised in 1966. It then became part of the Assad family's business network, before it was occupied by Islamist groups when Idlib came under rebel control in 2015.

The new administration led by Ahmad Al Shara is encouraging the return of Syrian exiles who still have deep roots in the cities they were forced to flee, and established international networks from their years abroad.

The gradual lifting of UK and EU sanctions on Syria has led to hopes that the country will soon emerge from its economic isolation, but many such as Mr Ghazzal, who lives in Rome, fear there are still hurdles to jump before they can reinvest in the country.

The process to register and then reclaim the assets is long and the paperwork complicated. But Mr Ghazzal is doing it now because he worries that he and his cousin are the last generation in the family who can deal with the complex bureaucracy left behind by the Assad regime.

“We have boys who know nothing of that world. Now is the time to either legalise what was nationalised from us or lose it,” he told The National.

Mr Ghazzal is working with two lawyers in Idlib and Aleppo, and last week held a Zoom call with a newly appointed judge. He sensed the judge's willingness to bring back Syria’s old exiled families.

He recalled how former neighbours would “kiss our hands” whenever he returned to Idlib with his family - his last visit to the factory was in 2009. “They [the new administration] want us back because we show credibility."

Mr Ghazzal looks forward to re-establishing his family's roots in Idlib. But he is ambivalent about investing more significantly in Syria, owing to concerns about the security situation, the Islamist leaning of Syria’s administration, and the restrictions imposed by continuing sanctions.

“Our time to invest in Syria is gone. It should be up to the new generation,” he said.

A gradual reintegration

The Syrian administration regards sanctions as the key obstacle to Syria’s recovery, and has repeatedly called for them to be lifted.

Syria’s interim Minister of the Economy, Nidal Al Shaar, is reportedly touring Europe in a bid to get further sanctions relief, which is crucial to put the country devastated by more than 10 years of war on the road to recovery.

There were signs that the US, which still imposes the most severe set of sanctions on Syria under the Caesar Act, was “allowing” other countries to proceed with recovery efforts, said John Jenkins, a former UK ambassador to Syria and Saudi Arabia.

He spoke of the decision by Saudi Arabia and Qatar this week to pay off Syria’s $15 million debt with the World Bank. “You need to get the money flowing in. The first thing you need is that assistance,” Mr Jenkins said.

“The largest sums of aid and reconstruction money are likely to come from Riyadh and the regional Gulf states, but you will need to find a way to get the aid money in for reconstruction.”

Another key development was the French shipping company CMA CGM's 30-year deal to operate Syria's Latakia port, signed on Thursday, ending Russian control of it.

Last week, the UK lifted sanctions on entities such as the ministries of defence and interior, and to those on the central bank and financial and energy services this year.

“It is a step in the right direction. It creates a momentum that we are seeing develop among western governments,” said Ghayth Armanazi, a London-based former diplomat and author of a political memoir about Syria.

“It is very important that it grows in strength. Without the lifting of sanctions, the prospects for Syria are very grim. The country is on its knees and needs to start the recovery process, which will take a long time."

Lingering isolation

Despite these openings, European and British banks have been slow on the uptake.

Syrian banks are still struggling to open correspondence accounts with banks in Europe and the US, according to Faisal Al Kudsi, a finance professional in London. There are even anecdotal reports that the UK puts more constraints on Syrian banks than the US.

“As far as Syrian banks will be able to reopen their accounts with banks in Europe and the US, it is still a process in the making that has not yet been completed,” Mr Al Kudsi said.

Instead of banking, Syrians rely on money transfer agents for remittances, and a liquidity crisis has them queuing for hours for cash withdrawals at ATMs.

Mr Al Kudsi is from an exiled Syrian family. He owns boutique period hotels in Aleppo and Damascus, which have been closed since 2011. He had no plans to reopen these yet, he said, without a thriving cultural tourism industry.

Long-term investment was still a while away, owing to the uncertain security situation in Syria. “Even if sanctions are lifted, whoever is going to invest is going to look at the security situation,” he said.

Sanctions relief needs to be combined with efforts to "create jobs for locals" and facilitating overseas transfers, Bassel Hamwi who headed one Syria’s largest private banks and is now chief executive of HamwiConsult in New York, previously told The National.

Continued US sanctions through the Caesar Act remain “the biggest obstacle”. “That’s where much of the focus should be from those people that want to lift Syria out of poverty,” Mr Armanazi said.

The 2020 Act’s sanctions are expanded to include third-party entities doing business in Syria, meaning anyone dealing with a sanctioned entity in Syria would be at risk of sanctions as well.

That includes EU and UK-based companies, even if they no longer face sanctions at home.

The prospect of trade picking up again with the US Caesar Act still in place were “quite grim”, said Daniel Vinton, a political risk analyst at the London-based Enmetena Advisory.

This is partly because of a broad interpretation of what falls within the US nexus - from transacting in dollars to using US-made components or tech services, he said.

The US government suspended some of its sanctions for a six months period in the weeks after the toppling of the Assad regime. Yet, a Saudi and Qatari attempt to pay public sector salaries in Syria was reportedly postponed owing to the risk of breaching sanctions.

Republican Congressman Cory Mills set out the conditions for lifting US sanctions to Mr Al Sharaa last week, during a visit to Damascus.

These include destroying old chemical weapons from the former Assad regime, and co-ordinating with other US allies on counter-terrorism.

It is likely that Riyadh would seek further legal exemptions to get reconstruction money to Syria.

But UK and European companies are also wary of US President Donald Trump's volatile policies. "Given the current administration, there's a risk tolerance that that we're not meeting yet for any private firm that I'm aware of," Mr Vinton said.

“EU and UK companies, because they're much closer to American business, are going to be much more reticent,” he said.

“You’re going to want to see the engagement of at least the World Bank, the IMF and some EU multilateral banks way before anybody considers private investment.”

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