New sanctions on Syria: Everything you need to know about the Caesar Act

After nine years of war in Syria, a new US law seeks to pressure the Bashar al-Assad regime into a political resolution and take steps toward transitional justice for its victims.

The new law, named the Caesar Syria Civil Protection Act, will target the regime and its allies with a wide-reaching network of sanctions.

“[It is] the beginning of a sustained campaign of economic and political pressure to deny the Assad regime revenue and support it uses to wage war and commit mass atrocities against the Syrian people,” said US secretary of state Mike Pompeo as he announced the first sanction designations on June 17.

“Anyone doing business with the Assad regime, no matter where in the world they are, is potentially exposed to travel restrictions and financial sanctions.”

The act was named after a defector from the Syrian intelligence services, codenamed Caesar, who, in 2014, smuggled over 53,000 pages of documents pertaining to state-endorsed torture out of Syria. The US strategy of applying extreme economic pressure comes as Syria faces bankruptcy and is struggling to attract the funds required to rebuild its devastated country.

Young Syrian refugees ride their bicycles at the Azraq camp for Syrian refugees in northern Jordan on August 2, 2018. (AFP)

But as the act came into effect, questions were raised about how it will impact the Syrian regime, which shuns any calls for reform, and its allies who have supported indiscriminate military campaigns against civilians. Further, questions were asked about what the economic implications of sanctions will be on ordinary Syrians.

What will the act do?

The original Caesar bill was presented to Congress in 2014 and passed with a unanimous vote as a defense act on December 17, 2019. As a congressional act, it cannot be revoked by a change in presidential administration.

The new act will apply what are known as secondary sanctions. Previous US and EU primary sanctions on Syria targeted individuals from the al-Assad regime’s inner circle. With secondary sanctions, any third-party that continues to work with designated individuals or sectors will also be liable to US sanctions.

The sanctions specifically target entities providing assistance to the al-Assad regime’s war efforts, within the military, reconstruction and energy sectors.

“Our strategic intent is to deprive the regime, its financiers and its enablers of the resources it needs to perpetuate the conflict,” said Anna Morris, deputy assistant secretary for the US Treasury’s office of global affairs, who spoke at an online discussion about the sanctions with members of the Syrian public.

The act also targets individuals deemed responsible for human rights abuses in Syria.

Internally displaced Syrians hold Syrian opposition flags during a protest in support of the Turkish army and Turkey backed Syrian rebels at the Bab el-Salam border crossing between the Syrian town of Azaz and the Turkish town of Kilis, in Syria, February 25, 2020. (Reuters)

“When the US issues sanctions it says to the world that these are bad actors who violate international law and threaten peace and security,” said Morris. “Banks internationally will take action to freeze accounts and to deny those sanctioned parties access to their finances.”

In accordance with the act, the Department of the Treasury has launched an inquiry into the Central Bank of Syria, to determine whether or not it is “a financial institution of primary money laundering concern.”

If deemed so, then sanctions on the central bank would “paralyze economic life in Syria,” explained Ayman Abdel Nour, president of Syrian Christians for Peace, a US-based non-profit that was involved in advocating and drafting the bill.

The sanctions will apply only to the regime-controlled areas of Syria and excludes any activities related to providing humanitarian aid.

Why are they doing this?

“The act is designed to protect the Syrian people from Assad,” said James Jeffrey, US Special Representative for Syria, at a public event this week.

It aims to pressure al-Assad into implementing the UN Security Council Resolution 2254, which calls for a ceasefire and a political settlement in Syria. The resolution passed in 2015 requires Assad to hold UN-supervised elections, and take steps toward accountability and transitional justice.

For Caesar Act sanctions to be lifted, the regime must meet the act’s seven conditions, which according to Jeffrey, are “consistent” with UNSC 2254.

“It does not deviate an iota from that. It is not regime change, it is not a separate deal with anybody. We are supporting the UN process,” he said.

Assad has shunned political concessions, believing that any sign of weakness would lead to his downfall. Moscow has pressed Assad for token reforms in line with the resolution. This would allow Syria to get the international funding it desperately needs for reconstruction.

As such, the sanctions will be combined with additional political and diplomatic pressure on Assad’s allies. After years of military support, Russia and Iran have sought to control sectors in Syria’s post-war economy. The regime’s economic isolation threatens these ambitions. “The Russians and Iranians know our agenda, they know what we’re willing to do, it’s up to them to take a step in the right direction,” said Jeffery.

Who has been sanctioned so far?

A group of 39 individuals, businesses and militias were designated on June 17, with more designations to follow in the coming months.

“We are waiting to see how wide the circle is that they will target,” said Rime Allaf, a Vienna-based political analyst.

The regime relies on a crony capitalist economy that was established in the early 2000s. Lucrative contracts were awarded to close family and friends of the president, which they used to bankroll al-Assad and help him evade sanctions.

“We have targeted enablers and financiers who were involved in the reconstruction of luxury properties on land that was expropriated from the Syrian people,” Morris said. “The US will not allow its financial system to be used for the regime to enrich itself on the backs of the Syrian people.”

Among those sanctioned for the first time was Asma al-Assad, the President’s wife and first lady.

“With the support of her husband and members of her Akhras family, [she] has become one of Syria’s most notorious war profiteers,” said US Secretary of State Mike Pompeo.

US Secretary of State Mike Pompeo gives a news conference in Washington, US, June 24, 2020. (Reuters)

Asma’s network of NGOs allowed the regime to co-opt billions of international aid throughout the conflict.

“[The designation] sends a message that she is also part of Assad’s mafia. We expect that the UN will start to withdraw the funding to her charities,” said Abdel Nour.

It has also targeted the wider family of regime insiders. Mohammed Hamsho, who has been subject to US and EU sanctions since 2011, was designated alongside his wife and children.

The Fatemiyoun Brigade, an Iranian-backed Afghan militia operating in Syria, was also designated.

How will the sanctions work on al-Assad and his allies?

Decades of sanctions on Assad’s inner circle did little to curb their wealth. This month, French courts ruled that Rifaat al-Assad, the president’s uncle living in France, had helped al-Assad launder money into Europe, and seized properties worth up to 130 million euros.

Secondary sanctions will help close the circle on this shadow economy.

“The regime will feel the pressure once it can no longer pay its friends,” said Allaf, referring to the chain of regime officials, business and militiamen whose loyalty was guaranteed by kickbacks.

In the past year, the regime has sought to extort money from its businessmen to help save its crumbling economy. This led to a public confrontation with Rami Makhlouf, the President’s cousin, and the most powerful businessman in Syria.

Read more: Inside Assad’s palace: Rami Makhlouf, money, power and the future of Syria

The sanctions will also deter any business interests or diplomatic rapprochement with Syria, as it seeks billions in foreign investment for its reconstruction.

“The Syrian market is negligible. Nobody will forgo potential opportunities in the US, Europe, Asia or Africa just to have a foot in Syria,” said Abdel Nour.

The sanctions will also affect neighboring Lebanon, whose economy is intertwined with Syria’s.

The impact for ordinary Syrians

There are concerns that the sanctions will harm ordinary Syrians, who have faced food shortages for months as the Syrian lira continues to plummet.

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An estimated 80 percent of Syrians live in poverty, and the Syrian pound fell to 3,500 pound on the dollar on the black market this month. This has led to exorbitant prices on basic goods, with many Syrians subsisting on bread. In the last months, the regime has struggled to purchase wheat that would feed its people, with a tender for purchase in March failing.

Supporters of Lebanon's Hezbollah leader Sayyed Hassan Nasrallah carry flags and pictures of Syria's President Bashar al-Assad during a rally marking al-Quds Day, (Jerusalem Day) in Maroun Al-Ras village, near the border with Israel, southern Lebanon June 8, 2018. (Reuters)

Many blame the regime for these existing economic pressures, pointing to the hundreds of millions of dollars spent on its recent military campaign in Idlib.

“There is no indication that the sanctions could make Syrians suffer more than they are suffering already,” said Allaf.

Damascus, meanwhile, has sought to blame Syria’s economic collapse on Western sanctions and the Caesar Act in particular. One misinformation campaign led to fears among the Syrian diaspora that remittances to their families back home could be negatively affected.

There are risks, however, that such extreme isolation could push the country’s shadow economy further underground. One often-cited example is the UN total embargo on Iraq in the 1990s. A deal known as the oil-for-food program allowed Iraq to sell its oil in exchange for food vouchers. In practice, Saddam and his cronies diverted the aid into money which they pocketed, while normal Iraqis starved.

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What’s more, Saddam used this diverted aid to fund an international campaign against the sanctions. This included bankrolling British politician George Galloway’s Mariam Appeal to protect Iraqi children, as reported by the UK’s Charities Commission in 2007.

“There is nothing different [about the Caesar Act] that could prevent this from happening in Syria” warned Allaf. “This is why sanctions alone can’t achieve much. They need to be combined with additional forms of diplomatic and political pressure.”

What next?

It will take months before the impact of the sanctions begin to unravel, experts have warned.

Those seeking justice and accountability were left with questions. “What does the act provide for us today as mothers, and what does it provide to the detainees?” asked a mother from Aleppo, whose son has been detained since 2012, at a public Q&A about the Caesar Act last week.

Meanwhile, illicit avenues of financial revenue, such as Hezbollah’s smuggling networks in Lebanon, will support the regime temporarily. In recent weeks, Syrian embassies in Europe launched an appeal for cash donations, in US dollars, allegedly to help fight the coronavirus outbreak.

“Assad will not suffocate immediately,” said Allaf, “But it is clear that the regime is running out of money.”