By Vittorio Maresca di Serracapriola and Natasha Hall
Issue 8: April 2026
At a Glance
- Syria Pushes for Removal of US State Sponsor of Terrorism Designation — Syrian officials urged Washington to lift the SST designation, calling it the final barrier to investment.
- EU Prepares Shift to Transition-Focused Sanctions Framework — The EU signaled plans to move away from Assad-era sanctions toward a regime targeting “spoilers” of Syria’s transition, while resuming political dialogue and cooperation with Damascus.
- Russia Becomes Syria’s Top Oil Supplier via Sanctioned Networks — Russian oil shipments surged, making Moscow Syria’s primary supplier as Damascus relies on sanctioned shipping networks.
- Lafarge Convicted for Financing Terrorism in Syria — A Paris court sentenced former executives of Lafarge, including CEO Bruno Lafont, for paying armed groups including the Islamic State and the Nusrah Front to maintain operations in Syria, marking the first conviction of a French company for terrorism financing and sanctions breaches.
- Banking Sector Reform Gains Momentum with Qatar-Backed Assessment — Syria signed an agreement with the Qatar Fund for Development and Oliver Wyman to assess governance, AML/CFT, and regulatory gaps in its financial sector, aiming to restore correspondent banking ties and reintegrate into global finance.
- Qatari Investment Signals Return of Regional Capital to Syrian Banking — Estithmar Holding agreed to acquire a 49% stake in Shahba Bank, marking one of the first foreign banking investments since Assad’s fall and testing the viability of financial sector re-entry.
Contents
Syria Urges US to Remove State Sponsor of Terrorism Designation to Unlock Investment
On 13 April, Syrian officials urged the US to remove Syria from the State Sponsor of Terrorism (SST) list so the country can fully recover from decades of Baathist rule. Finance Minister Yisr Barnieh, who led a Syrian delegation to Washington during the International Monetary Fund (IMF) and World Bank Spring Meetings, described delisting as the final milestone needed to unlock investment. Syrian officials also reportedly held talks in the second week of April with the US State Department on the SST designation.
CONTEXT AND ANALYSIS: The United States designated Syria as an SST in December 1979 because of its support for Palestinian armed factions and other non-state actors opposing Israel. Washington has maintained the designation ever since, citing continued ties between Damascus and groups it classifies as terrorist organizations. However, with the Assad regime now ousted and most sanctions lifted, policymakers have begun reassessing whether the designation still reflects current realities.
The SST designation carries significant legal, political, and reputational consequences. It restricts access to US foreign assistance, limits preferential trade benefits, bans defense-related exports, and imposes controls on dual-use goods. While the State Department maintains the designation, agencies such as the Department of Commerce’s Bureau of Industry and Security (BIS) enforce the associated export restrictions.
Beyond these formal constraints, the designation generates strong indirect effects. Because Washington typically applies the SST label to states it treats as international outliers, businesses and NGOs often assume engagement is broadly prohibited—even where legal channels exist—creating a chilling effect on investment and commercial activity.
The designation also exposes the Syrian government to terrorism-related litigation in US courts by removing sovereign immunity protections. This legal risk discourages financial institutions and private actors from engaging with Syria. Even Syria’s newly reopened account at the Federal Reserve Bank of New York remains restricted. Central Bank of Syria Governor Abdulkader Husrieh stated at the Middle East Institute that Damascus cannot use the account for commercial transactions because any such funds could be seized.
At the same time, the political rationale behind Syria’s designation has weakened. The new authorities no longer support US-designated groups, have adopted an adversarial posture toward Hezbollah, and have downgraded relations with Iran. Hay’at Tahrir al-Sham (HTS) has also avoided direct confrontation with Israel and criticized Iranian-backed militias operating in Syria. These shifts mark a departure from the regional alignments that originally justified the designation.
It is important to note that HTS and Syrian President Ahmad al-Sharaa were until recently designated as terrorists under US law. Washington may therefore retain the SST designation as a form of strategic leverage, particularly in relation to Israel, given the possibility of future tensions between the two countries.
The United States can remove Syria from the SST list through two procedures. The president may certify that Syria’s leadership and policies have fundamentally changed and that the government no longer supports international terrorism, or certify that Syria has not supported terrorism for at least six months and notify Congress 45 days before rescission takes effect. Whether Washington moves toward delisting remains uncertain, as the SST designation continues to provide leverage over the new Syrian administration.
EU Plans Shift from Assad-Era Sanctions Framework to Transition-Focused Measures on Syria
The EU announced plans to reframe and adapt its sanctions regime to maintain leverage while engaging Syria’s leadership and targeting actors undermining the transition. The announcement appears in a background paper prepared by the bloc’s diplomatic arm and circulated to member states in mid-April. The paper states that the EU will fully resume its 1978 cooperation agreement with Syria and launch formal structured talks with the country’s transitional authorities under a “High-Level Political Dialogue” framework on 11 May 2026.
CONTEXT AND ANALYSIS: In February 2026, the EU’s diplomatic service reportedly proposed shifting from a sanctions regime originally designed to punish Bashar al-Assad’s government to one aimed at managing Syria’s fragile transition. The new approach would target “active spoilers”—actors accused of undermining the transition—instead of focusing solely on figures associated with the former regime. These actors include armed groups, human-rights violators, corrupt reconstruction brokers, and drug-trafficking networks.
A diplomatic non-paper circulated to member states argues that the EU must adapt the sanctions regime to support its decision to resume political and economic engagement with Syria. It describes the current framework as a relic from the past that continues to deter legitimate business activity. During discussions on 24 February, officials proposed keeping existing restrictions on Assad-linked figures in place for now, leaving current listings unchanged. The non-paper also suggested that the bloc could delist Syria’s Interior and Defence ministries—both still under sanctions—to further facilitate cooperation with the post-Assad authorities.
By targeting active spoilers rather than the state apparatus itself, the EU may be mirroring the September 2025 decision of the US Treasury’s Office of Foreign Assets Control (OFAC) to rebrand its Syria sanctions framework as the Promoting Accountability for Assad and Regional Stabilization Sanctions Regulations. OFAC removed Syria from the category of comprehensively sanctioned jurisdictions and narrowed restrictions to specific individuals and entities implicated in human-rights abuses, war crimes, and narcotics trafficking.
If adopted, the EU’s approach would aim to reduce the systemic de-risking that continues to constrain legitimate commerce and humanitarian activity. However, it could also create new challenges for Syria. Many designated or sanctions-exposed actors remain tied to state institutions and commercially important sectors of the economy, which would likely increase due-diligence and compliance costs for foreign firms seeking to engage with the country.
Russia Becomes Syria’s Top Oil Supplier, Exposing the Limits of Sanctions Relief
Russia has reportedly become Syria’s dominant oil supplier even as Damascus has sought closer ties with Western governments following Assad’s fall. Syria’s transitional authorities maintain a lingering mistrust of Moscow because of its military backing of Assad; however, Reuters estimated in May 2026 that Russian oil shipments had risen by 75 percent year-to-date to roughly 60,000 barrels per day. With domestic production still far below demand, Syria now depends on Russian crude imports, replacing Iran as its primary supplier.
CONTEXT AND ANALYSIS: In the post-Assad transition, Russia moved quickly, supplying 16.8 million barrels in 2025 across 19 cargoes. Tankers now arrive at Syrian ports almost weekly, despite Western sanctions. The trade relies on a rotating fleet linked to Russia’s sanctioned or high-risk shipping networks, often using ship-to-ship transfers near Greece, Cyprus, or Egypt to obscure the origin of cargo. Some vessels are also tied to Iranian-linked trading networks.
These offshore transfers help reduce costs while obscuring the origin and ownership of cargo, both common methods of sanctions evasion. The use of ship-to-ship transfers suggests that Syrian and Russian actors still consider some concealment necessary despite recent sanctions easing.
Efforts to diversify oil supplies, including through outreach to Türkiye, have thus far failed. Financial constraints, commercial risk, and limited access to mainstream shipping and insurance markets leave Russian-linked networks as the most viable option.
Syria’s reliance on Russian oil reflects the persistent impact of sanctions and overcompliance, despite recent Western easing measures. While formal restrictions have been rolled back, Syria remains largely cut off from global finance, trade credit, and maritime services. This prevents it from sourcing oil through conventional channels.
As a result, Damascus has turned to Russian supply chains already structured to operate under sanctions. The use of sanctioned tankers and opaque logistics shows that Syria’s re-entry into energy markets is occurring through parallel high-risk systems, not formal reintegration. These networks pose reputational risks as Syria seeks to rebuild commercial credibility. Additionally, by relying on Russian oil shipped through sanctioned networks, Damascus risks straining its fragile re-engagement with the EU and the US. Continued imports could trigger closer scrutiny of Syria’s energy sector—particularly under a future US administration that adopts a harder line on sanctions enforcement against Russia—and, in a worst-case scenario, targeted re-designations or stricter enforcement against entities facilitating the trade.
The continued import of Russian oil also creates a policy dilemma for Western governments. While sanctions relief is intended to support Syria’s recovery, ongoing financial isolation is pushing Damascus toward deeper dependence on sanctioned actors, potentially reinforcing Russian economic influence. Alternative suppliers exist, including Gulf countries that have publicly expressed support for Syria’s reconstruction. Whether they are willing to adjust their policies and provide meaningful energy support, however, remains uncertain.
Syria’s reliance on Russian oil also reflects structural weaknesses: a small market and limited purchasing power make it difficult to secure long-term contracts with major producers, including Gulf exporters.
Lafarge Convicted for Financing Terrorist Groups in Syria
A Paris criminal court sentenced Bruno Lafont, the chief executive of Lafarge—one of the world’s biggest cement makers—to six years in jail after he was found guilty of paying designated terrorist groups to keep manufacturing in Syria when the country’s civil war broke out. On 13 April, the court determined that the company transferred EUR 5.6 million in “security payments” to the Islamic State, the Nusrah Front, and other armed groups operating near Lafarge’s Jalabiya cement plant in northern Syria. The court convicted the company and four former executives of financing terrorism and breaching EU sanctions in dealings with militant groups between 2011 and 2014. It also convicted four intermediaries and security managers—including Syrian intermediary Firas Tlass, who was sentenced in absentia—on terrorism-financing charges. Former deputy CEO Christian Herrault received a five-year prison sentence. Bruno Pescheux and Frédéric Jolibois received sentences of five and three years respectively.
CONTEXT AND ANALYSIS: French prosecutors opened their investigation in 2016 after evidence emerged that Lafarge had paid Islamist armed groups between 2013 and 2014 to maintain access to its Syrian plant. Although the company evacuated foreign staff in 2012, it kept local employees on site until armed fighters seized the Jalabiya facility in 2014.
In 2014, the UN Security Council added the Nusrah Front—the precursor to Hay’at Tahrir al-Sham—to the UN 1267 Sanctions Committee list after it pledged allegiance to al-Qaeda. UN member states were, therefore, required to implement asset freezes and sanctions against the group.
The ruling marks the first conviction of a French company for financing terrorism. It also confirms that the payment network coordinated by Firas Tlass did not operate under coercion or extortion, as the defense argued. Instead, the court determined that Lafarge relied on negotiated commercial arrangements with designated terrorist organizations to sustain operations.
Firas Tlass is the head of the Syrian Promise Movement and the Syrian National Party. He became one of Syria’s wealthiest businessmen through ventures including Palmyra Real Estate Development and the MAS Group, which operated in commodities trading, metals, and canned foods. Tlass was also a partner of Lafarge in its Syrian operations. His family has long-standing ties to the former Syrian regime: his father, Mustafa Tlass, was one of Hafez al-Assad’s closest allies.
Tlass’s conviction also raises broader compliance questions about the upstream financial architecture behind the payments. Even when routed through intermediaries or hawala networks, EUR 5.6 million could not have moved without passing through the regulated financial system at some stage. The court found that Tlass coordinated checkpoint access and sourced raw materials from suppliers operating under the authority of the Islamic State and the Nusrah Front, indicating structured and recurring payment channels.
The scale of the penalties is likely to deter corporate risk-taking in sanctioned conflict environments. The combination of executive prison sentences, terrorism-financing liability, and maximum corporate fines signals that companies cannot treat engagement with designated actors as a manageable cost of operating in high-risk jurisdictions. The ruling reinforces that maintaining commercial activity through intermediary networks in territory controlled by designated groups exposes both firms and executives to substantial legal risk.
Lafarge’s conviction also sets an important legal precedent. French parent companies can no longer rely on foreign subsidiaries to shield themselves from responsibility for serious human rights violations committed abroad. The judgment strengthens the principle that multinational corporations may be held directly accountable for their operations and partnerships in conflict-affected environments.
As European authorities increase scrutiny of corporate conduct in conflict-affected markets, the Lafarge judgment is likely to shape compliance expectations for companies operating in Syria and other sanctioned environments. It also remains to be seen how the ruling will affect the investment climate for French companies in Syria, particularly given that Lafarge began operating the Jalabiya plant shortly before the outbreak of the Syrian civil war.
Syria Signs a Banking Sector Assessment Deal with Qatar Fund for Development and Oliver Wyman
The Syrian Finance Minister Yisr Barnieh signed an agreement on 17 April with the Qatar Fund for Development and consulting firm Oliver Wyman to assess Syria’s financial and banking sector. The Qatar Fund for Development is financing the project, with support from the US Treasury Department and the World Bank. The project will conduct a comprehensive assessment of Syria’s banking sector and non-bank financial institutions and produce a clear roadmap and action plan to modernize the financial system.
CONTEXT AND ANALYSIS: For more than a decade, Western sanctions and the collapse of correspondent banking relationships have largely cut Syria’s banking system off from international financial networks. This isolation has constrained trade finance, limited access to reconstruction funding, and made remittance transfers significantly more difficult for millions of Syrians. Rebuilding these external financial links is therefore a prerequisite for any meaningful economic recovery and for restoring confidence among international partners and investors.
Syria’s financial and banking sector faces several structural weaknesses that continue to limit its reintegration into the global financial system. A central issue is opacity. Years of sanctions and financial isolation have left foreign institutions with very limited insight into how Syrian banks operate. Many international partners still lack clarity regarding these banks’ governance structures, ownership profiles, links to sanctioned individuals, and the strength of their anti-money laundering and counter-terrorism financing frameworks. This uncertainty alone remains a major deterrent to renewed engagement.
Regulatory shortcomings further complicate the picture. As Finance Minister Yisr Barnieh has acknowledged, the sector operates within an outdated legislative framework that no longer reflects developments in modern banking and financial supervision. Updating these laws will be essential if Syria hopes to meet international compliance expectations and rebuild trust with external partners.
Human capital constraints represent another obstacle. The conflict accelerated the departure of skilled financial professionals, reinforcing an earlier pattern of outward migration among specialized workers. Addressing this deficit will require both attracting experienced professionals back to Syria and investing in domestic training capacity. Plans to establish a specialized financial training academy suggest that authorities recognize this gap, but implementation will take time.
At the same time, sanctions have restricted access to modern financial infrastructure and technologies, limiting the sector’s operational capabilities and slowing modernization efforts—particularly in public banks, which still account for the largest share of the system.
While the planned sector-wide assessment could help identify reform priorities and improve transparency, its impact will depend heavily on the broader sanctions environment. As long as Syria remains designated as a State Sponsor of Terrorism and key US legislative measures such as the Syria Accountability Act remain in force, international banks are likely to remain cautious. Additionally, for many institutions, the high cost of due diligence in a heavily sanctioned and opaque environment continues to outweigh potential returns.
The timing of the assessment may also prove significant in relation to a possible Financial Action Task Force (FATF) mutual evaluation, as Syria remains on the FATF grey list. If authorities follow the review with credible reforms aligned with FATF expectations, the process could support efforts to restore correspondent banking relationships, which remains the single most important step toward reducing Syria’s financial isolation.
Estithmar Holding Moves Into Syria’s Banking Sector with a 49% Stake in Shahba Bank
Estithmar Holding has completed an agreement to invest in Syria’s Shahba Bank. Under the deal, concluded on 26 April 2026, Masaref Holding—a subsidiary of Estithmar Capital—will acquire a 49 percent stake in the bank. Masaref Holding LLC signed the agreement with representatives of Bemo Saudi Fransi Bank and Ahli Trust Bank. The parties will finalize the transaction once they meet several conditions. Most importantly, they must secure regulatory approvals from Syrian authorities, including the Central Bank of Syria, the Syrian Commission on Financial Markets and Securities, and the Competition Protection and Anti-Monopoly Commission.
CONTEXT AND ANALYSIS: In January 2026, reports indicated that the Qatari group Estithmar Holding planned to take control of Shahba Bank and acquire a 30 percent stake in the Syrian International Islamic Bank (SIIB). These moves would have marked the first foreign banking acquisitions in Syria since the fall of Bashar al-Assad. Estithmar is part of the Doha-based Power International Holding conglomerate, led by Syrian-Qatari brothers Moutaz and Ramez al-Khayat.
The Khayat brothers are reportedly pursuing business relationships with Jared Kushner, US President Donald Trump’s son-in-law. They have been negotiating a real estate partnership with Ivanka Trump, the president’s older daughter, and Jared Kushner, her husband, to help them finance a multibillion-dollar resort in Albania. They also reportedly floated a plan to build a golf course in Syria named for President Trump.
Notably, Estithmar appears to have dropped the SIIB acquisition, at least for now. In 2012, the US and EU sanctioned SIIB for acting on behalf of the Commercial Bank of Syria and for providing services to the Syrian Lebanese Commercial Bank—both under international sanctions at the time.
The Shahba Bank acquisition sends a positive signal. It highlights renewed Gulf interest in Syria’s banking sector and suggests that regional investors are willing to commit capital while many non-regional actors remain cautious. The deal functions both as a confidence indicator and as a test case for whether foreign capital and governance capacity can re-enter the sector.
The transaction also expands the Khayat brothers’ growing footprint in Syria. Their companies already hold contracts for power generation projects and for the redevelopment and expansion of Damascus International Airport. At the same time, the brothers have faced lawsuits in a British court alleging that they financed or assisted Al-Nusrah Front (an earlier iteration of Hay’at Tahrir al-Sham), including through accounts at Doha Bank. The case did not produce a ruling on the merits and stalled on jurisdictional and procedural grounds.
For Estithmar, the strategic logic extends beyond the acquisition itself. A banking presence in Syria can facilitate project execution by improving payment channels and expanding financing options for contractors and suppliers.