The US sanctions law against the Syrian regime, called the Caesar Syria Civilian Protection Act, or the Caesar Act for short, entered into force on 17 June 2020. The Act targets several sectors of the Syrian economy and sanctions entities, businesses and individuals, both regional and international, that provide military and economic support to the Syrian regime. The Act is estimated to have significant economic and political impact that would change the balances among actors in the Syrian issue and bring about new dynamics that could affect the outputs of the promised political solution.
This paper sheds light on the nature, goals and economic and political implications of this Act.
What is the Caesar Act?
The Act is named after a Syrian army officer who defected from the Syrian regime and leaked nearly 55 thousand pictures of nearly 11 thousand detainees who were killed under torture in Syrian prisons. The pictures were validated by the Federal Bureau of Investigation (FBI). The Congress with both its chambers endorsed the Act that was incorporated into the National Defense Authorization Act for Fiscal Year 2020 and signed by President Donald Trump on 20 December 2019.
1- Stages of implementation of the Act
The implementation of the Caesar Act passes through several stages. The list of sanctions will be updated and new entities will be added either by an ad hoc committee for monitoring and following the extent of commitment by countries, firms and individuals, or by the US President Donald Trump who is mandated to determine, 180 days after the Act enters into force, whether the Central Bank of Syria constitutes a tool for money laundering.
The first stage started on 17 June 2020 when the US imposed sanctions on 39 entities and figures associated with the Syrian regime. The US Department of State said in a statement issued the same day that the sanctions cover the “architect[s] of this suffering” Bashar al-Assad, his wife Asma, the funders of the “atrocities” Mohammed Hashmo and the Iranian militia Fatemiyoun Division, in addition to Maher al-Assad along with his Fourth Division of the regime’s troops and his two commanders Ghassan Ali Bilal and Samer al-Dana. The sanctions also extend to Bushra al-Assad (Bashar al-Asaad’s sister), Manal al-Assad (Maher al-Asaad’s wife), Ahmad Sabir Hamsho, Amr Hamsho, Ali Hamsho, Rania al-Dabbas, and Sumaia Hamcho.
The implementation of Phase Two starts between July and August 2020. During that phase, sanctions will be imposed on military, financial and economic associates of the Syrian regime, such as the Wagner Group, pro-Iranian militias, partisan entities, and individuals. Sanctions will also be imposed on firms and individuals violating the decision in neighbouring countries. The sanctions will extend to whoever provided economic, political and military support to the Syrian regime starting from 19 December 2019, which is the date of signing the Act.
2- Sectors targeted by the Act
The Caesar Act’s sanctions target entities working for the Assad regime in four sectors, namely: oil and natural gas, military aircraft, construction and engineering, and goods, services and technology. This includes both direct and indirect support provided to the regime, such as the support by Iranian- and Russian-backed militias operating in Syria. In addition, the Act requires that the Trump administration determine whether the Central Bank of Syria constitutes an entity of “primary money laundering concern” pursuant to Section 311 of the USA Patriot Act.
The three main domains liable to the sanctions are the following:
3- Who might be targeted by the sanctions?
4- Goals of the Act
5- Conditions of suspending the sanctions
The Act has determined the duration of the sanctions by five years, but it has also granted the US President the power to lift the sanctions provided that the following demands are met:
The Syrian regime cannot fulfil those conditions, particularly the condition of holding perpetrators of war crimes to account because this charge extends to all pillars of the regime, from Bashar al-Assad and his brother Maher to all heads of the security services and military divisions, which would mean that the regime would destroy its structure by its own hands.
Possible implications of the Caesar Act
As planned, the implementation of the Caesar Act threatens to have numerous implications for all levels of life in Syria, including:
1- Collapse of the economy
The Act is expected to greatly contribute to the collapse of the Syrian lira in light of the disruption of all sources of production, the shortage of income sources, and the regression of the allies, particularly Iran on which the regime used to rely in injecting hard currency into Syria, as a result of Iran’s deteriorating economic conditions. Besides, the energy sector, which is the top target of the sanctions, is associated with a large number of productive sectors that will consequently be disrupted, thus intensifying the economic collapse. The Syrian lira had lost nearly 70 percent of its value since April 2020. While its value was nearly 1,600 Syrian liras against the dollar in mid-May 2020, that value declined to nearly 3,000 liras immediately before the release of the Act. While this decline is attributable to multiple factors, mainly the crisis of Lebanese banks that have limited the volume of foreign currency withdrawals for their clients, some of whom are Syrians, the struggle within the Syrian regime between Bashar al-Assad and Rami Makhlouf, which made a number of businessmen smuggle their capital out of the country, the start of implementation of the Caesar Act will lead to a further collapse of the Syrian currency, which would necessarily lead to a significant decline in the purchasing power of Syrians.
2- Disruption of the regime functions
The sanctions will lead to a decline in the national income to its lowest levels. This would mean that the regime will go bankrupt and become incapable of carrying out its functions, as its capacity to pay the salaries to the bulk of its civilian and military staff will be undermined. This would have serious implications at multiple levels, as follows:
Winners and losers from the Act
The Caesar Act is expected to have a significant impact on the power balances with respect to actors in the Syrian political scene. The Act lays the foundations for a new pattern of power equations based largely on the actors’ economic effectiveness while greatly weakening the military conflict pattern that was advantageous to the Assad regime and its Russian and Iranian allies. This equation brings about both winners and losers.
Potential implications for the situation on the ground
It is unlikely that the military situation on the ground will witness significant changes in the short run. The relevant parties, particularly Russia, Iran and the Assad regime, will be focusing their attention on searching for economic and political means to ease the sanctions on the Syrian regime and prevent it from collapse, especially that the US interpretations of the Act underline preventing the regime and its allies from using their military power to change conditions in Syria, particularly in Idlib. This means that the Act draws red lines with respect to any moves in this direction.
Despite the heightened tension in Idlib, particularly in the Jabal Zawiya area that overlooks the M4 highway and the tension between Russia and Turkey on the Libyan front, which was reflected by the postponement of the visit by the Russian ministers of foreign affairs and defence to Turkey to hold talks on the conditions in Syria and Libya, Russia will be cautious at this stage about taking escalatory steps in Syria before discovering the nature of US inclinations in the period following the entry into force of the Caesar Act.
However, this would not prevent the Russian policy, which is based on a combination of the use of diplomacy and military strikes, from thinking of activating the situation, particularly in Idlib which is considered easier than areas east of the Euphrates, in order to achieve a twofold goal: testing the US reaction at this stage and reminding Turkey of the size of its power after it has sought to cross the Russian red lines in Libya.
Accordingly, in the stage ahead, it is likely that one or more of the below scenarios will materialise:
First scenario: resort by Russia to understandings and bargaining with internal and external powers to preserve it geopolitical interests in Syria. Russia will seek to activate the diplomatic channels with the US, considering that the Russian Deputy Foreign Minister Sergei Ryabkov has recently stated that Russia is ready to engage immediately in a broad dialogue with the US on all issues pertaining to the situation in Syria. On the other hand, Russia seeks to revive the Astana process, reconcile the Turkish and Iranian viewpoints, put pressure on the Assad regime in order to resume the negotiations of the Constitutional Committee (in this context, the UN Special Envoy for Syria Geir Pedersen has, in a recent statement, expressed his hope that the Syrian Constitutional Committee would hold its third session in August 2020), seriously engage in the path of settlement and freezing of hostilities in Idlib, and preserve resources to support the economy in the stage ahead, with the aim of reversing the deterioration of the Syrian economy and preserving the political regime moving forward.
This scenario is the most likely since it coincides with Russia’s desires to achieve positive results from its military intervention in Syria and avoid sinking in a quagmire that would deplete its economic and military capabilities.
Second scenario: the direct use of force in Idlib or through proxies in the areas east of the Euphrates. The materialization of this scenario is contingent on the failure of the Russian diplomatic moves and the ultimate closure by the US of the door in the face of Russian endeavours unless the conditions determined by the US to ease the sanctions are met. In that case, Russia would be forced to resort to the strategy of the “war of activation” so that it would not be dragged into a dilemma that would deplete it both economically and militarily. This scenario would not be resorted to before all the diplomatic means have been exhausted.
Third scenario: maintaining the status quo in case the diplomacy road was bumpy and futile and the war road costly and irrational. In that case, Russia would bet on the US elections in November 2020 and the likelihood of the advent of a Democratic administration that does not care much about the Syrian issue (such as Obama’s Democratic administration) or on a change in the priorities of the Trump administration during its second term in office.
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