Back to news details

Syrian economic experts to QNA: Lifting Caesar Act is a promising economic opportunity conditional on reforms

Repealing the Caesar Act sanctions on Syria opens a new window for the country for gradual recovery

Damascus, December 21 (QNA) - The step of repealing the Caesar Act sanctions on Syria carries exceptional economic significance, as it opens a new window for the country for a potential gradual recovery after years of restrictions that affected all aspects of the Syrian economy.

Despite the great importance of this decision, Syrian economic experts assert that repealing the Caesar Act does not guarantee an automatic economic recovery, but remains contingent on implementing effective structural reforms.

In this context, Dr. Firas Shabbo, Professor of Financial Management at Istanbul's Bashaksehir University, believes that repealing the Caesar Act would alleviate concerns related to sanctions and provide the exchange market with a degree of relative stability in the near term, considering that this improvement remains limited and not automatic unless accompanied by balanced monetary policies and reforms in currency and liquidity management by the Central Bank.

He explained that the roots of the exchange rate weakness are not limited to sanctions, but are also related to weak domestic production, low foreign exchange reserves, and liquidity fluctuations.

Shabbo said in a statement to Qatar News Agency (QNA) that lifting sanctions could contribute to facilitating the entry of remittances from expatriates through official channels, the arrival of some international investments and aid, as well as facilitating trade financing through letters of credit and regular imports.

He added that real hard currency flows will remain constrained by the ability of Syrian banks to reconnect with the global financial system and open correspondent banking relationships with international banks, a path that requires deep reforms in banking compliance and may take longer.

Regarding reviving production, he stressed that lifting sanctions opens an important window but is not the sole factor for a quick recovery, indicating that it requires availability of financing for industrial and agricultural projects, access to modern technology and equipment, stability of domestic and external demand, in addition to structural reforms in laws and institutions.

He stressed that lifting the Caesar Act is a necessary condition but not sufficient for the return of investments, which remain contingent on building confidence in the economy and financial institutions, providing a stable and clear business environment, a reliable banking system capable of transferring profits, and guarantees for managing political and economic risks.

He also pointed out that the sectors of electricity, energy, transportation, telecommunications, as well as real estate, housing, agriculture, food products, and logistics services are among the most ready to benefit from the next phase, affirming that the impact on citizens' daily lives will be gradual.

In a related context, Dr. Muhammad al-Faqih, faculty member at Yarmouk Private University and lecturer at the Faculty of Economics at Damascus University, confirmed that repealing the Caesar Act moves the Syrian economy from a state of near-complete isolation to conditional integration regionally and internationally.

In this regard, he believed that the depth of this transformation is not related to the legal decision alone, but to the path that fiscal and production policies will later take.

He considered that the near-term impact might appear in a relative improvement in the exchange rate, driven by expectations and improved general sentiment among citizens and investors, which enhances demand for the Syrian pound and reduces demand for the dollar as a safe haven.

He said in a similar statement to QNA that reopening official remittance channels will increase the supply of foreign currencies in the formal market and reduce external trade costs and associated risks, positively impacting economic activity.

He noted that the medium-term trajectory of the exchange rate will remain dependent on the Syrian economy's ability to generate stable foreign currency flows through exports, remittances, and investments, in addition to reducing the trade and budget deficits by expanding the productive base and improving public spending efficiency.

In the same context, he explained that lifting sanctions contributes to improving the efficiency of financial transfer channels by reconnecting Syrian banks to the international payments system, reducing compliance risks for correspondent banks, and strengthening the role of official transfer companies, allowing the Central Bank a more effective regulatory role in managing the foreign currency supply. On the real production front, al-Faqih expects the repeal to reduce the cost of importing production inputs, spare parts, and equipment, which was one of the most prominent obstacles for industrial, agricultural, and service sectors, noting that agriculture, food, pharmaceutical, textile industries, as well as energy, are likely to benefit from this improvement.

He stressed that lifting the Caesar Act, theoretically, is a necessary but not sufficient condition to attract investments, as the latter remain dependent on internal factors including political and security stability, legal framework, tax transparency, and anti-corruption efforts.

In contrast, he pointed to emerging preliminary positive indicators in the energy, transportation, and infrastructure sectors through contracts and public-private partnership projects, expecting that sectors capable of rapid benefit, such as light industries and logistics services, will begin to improve gradually, while energy and reconstruction sectors need longer periods due to high costs and financing complexities.

For his part, Dr. Hasan Ghurra, economic researcher at Jusoor Studies Center, considered that lifting the Caesar Act opens a window for gradual improvement in the Syrian economy, with a faster impact on market expectations and the flow of some hard currency, but it does not lead to comprehensive recovery or rapid improvement in Syrians' livelihoods unless accompanied by deep internal reforms and broader easing of other Western sanctions and banking restrictions.

He noted that the potential improvement in the exchange rate in the first weeks may be driven by reduced sanctions risks and improved expectations among traders, importers, and expatriates, but the sustainability of this improvement depends on the return of formal remittances, fiscal deficit control, and improvement of energy supplies and domestic production.

He said in a statement to QNA that lifting the Caesar Act reduces legal risks on a portion of remittances and investments, and opens the door for a gradual return of official channels instead of the parallel market, but it does not automatically cancel other US and European sanctions, nor does it guarantee full restoration of correspondent banking without improving the compliance environment and financial governance.

Dr. Hasan Ghurra believes that the repeal provides an initial boost to reducing the cost of importing inputs and improving energy availability, and expanding exports of some agricultural and industrial goods if corresponding restrictions are lifted.

As for the most ready sectors, he pointed out that energy, oil, and gas come first due to reduced contracting risks, followed by reconstruction and infrastructure, in addition to agriculture, food industries, telecommunications, and services, with the possibility of a gradual return of religious, cultural, and medical tourism.