Syria: Off the Terror List

The News:

On August 24, Secretary of State Marco Rubio formally removed Syria from the list of state sponsors of terrorism, ending a designation in place since 1979, and revoked the designation of Hayat Tahrir al-Sham as a terrorist organization. The move followed President Trump's notification to Congress on July 8 and the expiry of the 45-day review period. Cuba, Iran, and North Korea are now the only countries remaining on the list.

Background:

The designation remained an obstacle to Syria's economic and financial ties even after Washington dismantled the broader sanctions program. The decision came after the fall of the Assad regime and the Trump administration's opening to the government of Ahmed al-Sharaa.

Causes:

The administration concluded that the new government is distancing itself from terrorist organizations and presenting itself as a counterterrorism partner. The decision also has a clear economic dimension: the designation restricted aid, arms and dual-use exports, and financial transactions, and kept banks and investors away. It is also part of a broader bet: linking Damascus to the international financial system to stabilize the government, prevent a return to chaos, and pull it away from Russia and Iran. During negotiations, Damascus agreed to significantly reduce its imports of Russian oil.

Implications:

The Treasury Department confirmed that U.S. financial institutions can now open correspondent relationships with Syrian banks as long as transactions do not involve sanctioned parties, and the results appeared quickly as Visa and Mastercard processed the first international payments in the country in late August. But the decision narrows future U.S. room for maneuver, since redesignation requires a documented pattern of support for terrorism and complex reviews. On the security front, the International Crisis Group estimates that about 5,000 foreign fighters remain within government forces, and the Soufan Center warns of possible defections by hardliners to the Islamic State, which could move the danger from outside the state to inside its institutions.

Why It Matters for the United States:

Washington is shifting from isolating Syria to trying to shape its trajectory from within. If the bet succeeds, it will gain new influence in Syria and the region at the expense of Moscow and Tehran; if chaos or extremism returns, the decision will look like premature legitimacy granted to a government that has yet to prove it can control the security situation. The decision removed the largest legal obstacles facing banks and companies and gave Damascus more room to build ties with the West, but it is no magic key: the legacy of war, a weak banking sector, security risks, and remaining targeted sanctions mean investment flows will depend on the government's ability to improve governance and reassure investors.