This article is part of the August 2026 edition of the Syria Monthly Economic Digest. Click here to explore the full edition.
Key Developments: On August 24, the United States formally rescinded Syria’s designation as a State Sponsor of Terrorism (SST), posting the removal on the US Treasury’s website after the 45-day congressional notification period triggered by President Donald Trump’s July 8 notification expired. Secretary of State Marco Rubio announced that he had also delisted Hay’at Tahrir al-Sham as a Specially Designated Global Terrorist (SDGT), stating that the two actions “eliminate the final major barriers” to private-sector investment in Syria and citing the Syrian government’s counterterrorism record, including its accession to the Global Coalition to Defeat ISIS in November 2025 and operations against ISIS, Al-Qaeda, Hezbollah, and Iran-aligned networks. Syria had been designated since 1979, and its removal leaves Cuba, Iran, and North Korea on the list.
The rescission terminates or waives restrictions flowing from the designation under several statutes, including the Arms Export Control Act, the National Defense Authorization Act for Fiscal Year 2019, the Foreign Assistance Act of 1961, the Syria Accountability and Lebanese Sovereignty Restoration Act (SALSA) of 2003, and the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991.
The delisting followed months of negotiation spanning economic and security files. Damascus committed to sharply reducing Russian crude imports during the SST discussions, though US officials denied any formal linkage; Russian shipments had risen 75% this year to roughly 60,000 barrels per day, making Moscow Syria’s dominant supplier. Two further steps pointed in a similar direction: on August 9 the Syrian foreign ministry announced a memorandum of understanding converting the Hmeimim airbase and Tartous naval base into joint training centers and returning their civilian facilities to Damascus within three months, and a civil aviation delegation met Russian counterparts at Latakia International Airport on August 13 to begin handover procedures. Neither was framed as a concession to Washington, but both narrow Russia’s autonomous footprint in ways US policy has explicitly sought.
Why It Matters: While the rescission of the SST designation lifts one of the largest pieces of American legislation impeding Syria’s recovery, significant compliance obligations survive the rescission.
At the US government level, sanctions under the Countering America’s Adversaries Through Sanctions Act continue to apply, and Assad-era figures, human rights abusers, and Captagon traffickers remain on the Specially Designated Nationals list, as set out in the updated Tri-Seal Advisory. The Department of Commerce is still revising the Export Administration Regulations, and the State Department is also in the process of publishing an amendment removing the policy of denial1 under the International Traffic in Arms Regulations, though only once remaining statutory restrictions are resolved–principally the SALSA prohibition on exporting US Munitions List items, for which a waiver was transmitted to Congress alongside the rescission.
Direct US economic support remains constrained, as the US Development Finance Corporation still does not operate in Syria, absent its own regulatory action, and the Export–Import Bank of the United States (EXIM) as Syria remains on the risk-based country limitation schedule. Finally, any change to the visa-waiver exemption under INA Section 217(a)(12); that is, an obscure piece of ‘sanctions’ that prevents foreign nationals who visited ‘high-risk’ jurisdictions, including Syria, from benefiting from the Visa Waiver Program to enter the US, requires congressional action.
At the private sector level, however, the extent to which the SST rescission will have a direct, short-term effect is unclear. While many private sector actors have pointed to the SST as the main obstacle preventing their entry into the Syrian market, as reported to The Syria Dispatch, it is worth asking whether the designation was ever the main binding constraint. Syria was listed in 1979, yet traded with the United States and stayed connected to the banking system for much of the intervening period; the label’s direct effects fell mainly on bilateral assistance and defense exports, and much of its weight was reputational. On that reading, the restrictions under the SALSA of 2003 might have been more damaging to trade and investment, and the practical question is which of its provisions survive the August 24 waiver.
Another question is whether American companies will now use this last piece of legislation to justify staying far from the US market, as the American administration encourages them as much as possible to go into Syria, raising the question of the wider gap between legal permission and commercial behavior.
The US Treasury has already confirmed that American financial institutions may service Syrian clients, process payments involving Syrian banks, and establish correspondent relationships without involving sanctioned parties. The investor guides published by the US Embassy in Syria point in the same direction, presenting investment in Syria as something the US government views favorably. Washington has also acknowledged the constraints that remain, recently publishing a grant opportunity for projects benefiting Syria that “advance US commercial diplomacy and put American interests first.” That willingness to press American commercial interests in Syria sits within President Donald Trump’s stated foreign policy ambition of making America “safer, stronger, and more prosperous”.
Yet, the obstacles that remain today are operational rather than legal. Commercial and business activity remains constrained by the lack of established correspondent relationships, the scarcity of credit, persistent security risks in the east where the most valuable hydrocarbon assets sit, and weak frameworks for contract enforcement.
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A rule presuming that applications to export, reexport, or transfer defense items to designated proscribed countries will be rejected.