In a May 13, 2025, speech in Riyadh, President Donald Trump surprised the world by pledging to lift all US sanctions on Syria. Trump’s unexpected announcement was followed the next day by his unprecedented meeting with Syria’s new president, Ahmed al-Sharaa, hosted by Saudi Crown Prince Mohammed bin Salman. Trump’s moves signaled a major shift from more than a decade of American policy that had aimed to isolate the Bashar al-Assad regime, which was toppled by al-Sharaa and other rebels in December 2024 after nearly 14 years of civil war. Following the Riyadh meeting, Trump praised al-Sharaa—previously known by his alias Abu Mohammed al-Jolani—as “a strong leader who wants peace, not war.”
In accordance with Trump’s promise, the process of removing US sanctions on Syria is now underway. (The European Union and the United Kingdom also have taken steps to remove many of their sanctions on Syria). As ending a complex, multi-layered sanctions regime is legally and politically complicated, not all US sanctions have been lifted yet (some can only be repealed by Congress, not by the President). But Trump’s actions since his May announcement, and the general direction of travel in Washington, suggest that the US sanctions regime on Syria is indeed headed toward its full end. This is a huge, potentially positive development for Syria, which is struggling to rebuild after more than a decade of ruinous war and economic devastation. With the lifting of sanctions, Syria’s international assets can be unfrozen, international businesses can re-enter the Syrian economy, and Syria can regain access to global financial systems and credit from which it was cut off. Although continuing eruptions of sectarian violence inside Syria and ongoing Israeli bombings (most recently of government facilities, including the Defense Ministry in Damascus) threaten to derail Syria’s fragile recovery, a stabilized and economically revitalized Syria freed from Iranian hegemony could reshape the balance of power in the Middle East.
The end of Syria’s sanctions regime will have a significant impact on Lebanon.
The end of Syria’s punishing sanctions regime also stands to have a significant impact on neighboring Lebanon, which has long been deeply entangled with Syria’s politics and economy. The revitalization of Syria’s economy will mean the end of Lebanon’s role as a financial intermediary and conduit for Syria during the latter’s international isolation. But it could also mean the repatriation of the 1.5 million Syrian refugees whom Lebanon has been hosting for more than a decade at considerable cost. And it could offer opportunities for Lebanese businesses to participate in Syria’s reconstruction, thereby contributing to Lebanon’s own economic recovery.
Syria: Pariah to Partner?
Syria, which under the Assad regime was a pariah of the United States and European governments, is emerging as a potentially pivotal state in the Middle East. President al-Sharaa—who as leader of rebel group Hay’at Tahrir al-Sham (HTS) led the defeat of the Assad regime with the help of a coalition of anti-Assad factions, Sunni tribal leaders, and defectors from the Syrian Arab Army—has positioned himself as a moderate nationalist. (The United States recently revoked its terrorist designation of HTS.) Al-Sharaa’s government has made overtures to the West, committed to fighting extremist groups, and aligned itself with regional powers such as Saudi Arabia, Turkey, and Abraham Accords member the United Arab Emirates (UAE).
Indeed, Trump’s view that al-Sharaa is open to normalizing ties with Israel—a historically unthinkable stance for any Syrian leader—apparently contributed to the US president’s decision to lift sanctions and to meet with the new Syrian president, despite his al-Qaeda past. The White House announced that in the Riyadh meeting, Trump had urged al-Sharaa (among other US demands) to join the US-backed Abraham Accords by normalizing ties with Israel. According to Israeli media sources, al-Sharaa told Trump that the Syrian government would not contest Israeli sovereignty over the Golan Heights. Later, Israeli news outlet i24 reported that al-Sharaa asked Israel to hand over one-third of the Heights, but gave Israel the right to lease this third for 25 years. If true, this would pave the way for ending decades of Syrian claims to the Golan territory, a move that would foster trust in Washington and Tel Aviv.
A Shift in Regional Alliances
Also shaping the US posture toward the new leaders in Damascus is the prospect of a Syria freed from decades of close alignment with Iran. Al-Sharaa has adopted a staunchly anti-Iranian posture, which, along with the defeat of the Assad regime, has resulted in the departure of fighters from Iran-backed Hezbollah and the Islamic Revolutionary Guard Corps’ (IRGC) Quds Force from Syrian territory. The demise of close Iranian ally Bashar al-Assad and the withdrawal of Iranian and Iranian-backed forces from Syria has significantly reduced Tehran’s influence there. This is a major setback for Iran, which had used the country as a corridor and supply line for Lebanon’s Hezbollah and its other Axis of Resistance allies.
By distancing itself from Iran, al-Sharaa’s government is aligning itself more closely with the GCC states.
By distancing itself from Iran, al-Sharaa’s government is aligning itself more closely with Gulf Cooperation Council states like Saudi Arabia and the UAE. This heralds the possibility of a Syria embedded within a US-aligned axis of Arab states, a shift that would dramatically alter the strategic map of the Levant.
The End of Sanctions: Potential for Economic Rebirth?
US sanctions on Syria date back 45 years, beginning with terrorism sanctions, but were significantly expanded during the 2011-2024 civil war to punish and pressure the Assad regime. Following up on his May 2025 Riyadh announcement, on June 30, President Trump signed an executive order revoking previous executive orders that had placed comprehensive sanctions on Syria. Notably, perhaps the most crippling part of the American sanctions regime, the Caesar Syria Civilian Protection Act of 2019, remains in place until Congress repeals it, though legislation to do so is pending before lawmakers. Once all sanctions are lifted, international businesses will be able to fully operate in Syria without the threat of secondary sanctions, and western corporations may more easily explore partnerships in reconstruction and infrastructure development. Damascus has quickly seized the opportunity: it plans to host economic forums, especially in the Gulf countries that are actively exploring investment opportunities in Syria as a way of expanding their influence. The aim is to encourage foreign direct investment in key sectors such as agriculture, oil, real estate, and tourism. “We are opening Syria to the world again,” declared Syrian Finance Minister Yisr Barnieh to global investors.
Experts caution, however, that lifting sanctions alone will not solve Syria’s deep-rooted economic problems. Nearly 14 years of war displaced more than 14 million Syrians and had a catastrophic impact on Syrian infrastructure, destroying the industrial base of once-vibrant urban centers such as Aleppo and Homs. The country continues to face a humanitarian crisis, with many Syrians still living in internal displacement camps with only meager services, at a time when much foreign aid has been cut. Estimates of the cost of Syria’s reconstruction range from $250 to $400 billion, amounts far beyond the capacity of any single nation to cover. Moreover, corruption, fragmented governance, and legal complexity continue to be major impediments to investment.
Corruption, enabled by decades of authoritarian rule, is especially widespread, encompassing the military and security apparatus, state institutions, state-owned enterprises, and even humanitarian aid distribution. Until Syria enacts reforms to create a functioning economy, establish a more business-friendly environment conducive to private sector-led growth and infrastructure reconstruction, and to provide legal protections for investors, Syria will remain a risky investment climate.
Still, the lifting of sanctions to date is a powerful psychological and political signal that Syria is no longer off-limits. Gulf investment—especially from the UAE, which had restored ties with Damascus in 2023—is already providing early capital injections.
The Stakes for Lebanon
An unintended consequence of Syria’s re-joining of the international community may be the emergence of an economic rivalry with Lebanon, which is facing its own severe economic challenges. Lebanon has not recovered from its 2019-2021 financial crisis, which devastated the economy and drove nearly half the population into poverty, or from the estimated $8 billion in damage to the country caused by Israel’s 2024 bombing campaign against Hezbollah.
During Syria’s long isolation, Beirut and its ports served as critical lifelines, providing entry points for goods, financial services, and humanitarian aid destined for Syria, and offering more direct and cheaper access than Syria’s own ports. With Syria now reconnected to global markets, Lebanon’s intermediary role is likely to diminish. Indeed, the reopening of Syrian ports such as Tartus and Latakia and the rehabilitation of Damascus International Airport may divert traffic away from Lebanon. Lebanon could lose hundreds of millions of dollars annually in customs duties and airport fees as traffic and financial flows shift to Syrian institutions and as the Syrian financial system and economy stabilize. When Syria was cut off from the international banking system, many remittances to Syrians were routed through Lebanon. Now that direct financial ties to Syria are possible, the Lebanon route may dry up. Such a development will add more strain to Lebanon’s economy.
It is unclear if the lifting of sanctions will be enough to convince Syrians in Lebanon to return home.
As for the return of Syrian refugees from Lebanon to their homeland, prospects for a mass return remain uncertain. The social and economic burden on Lebanon of hosting refugees is inflaming sectarian tensions and straining public services inside Lebanon. It is unclear if the lifting of sanctions will be enough to convince Syrian families in Lebanon that it is safe to return home, even if Damascus is encouraging their repatriation. The situation is particularly volatile for Alawite refugees in Lebanon, who this spring fled across the border following deadly sectarian violence in Syria that saw Sunni militias targeting Alawite communities.
A UN-backed plan offering financial incentives to Syrians in Lebanon—$100 per person and $400 per family upon return to Syria—may entice thousands to repatriate in the months ahead.
Lebanon should seize the opportunity to address its refugee crisis, including by urging the international community to make refugee returns and repatriation a cornerstone of the post-war stabilization agenda. Syrian government-led efforts to create economic zones strategically located in the stable regions of Syria, as well as safe return corridors—ideally in partnership with international development institutions and private-sector actors—would facilitate repatriation. An internationally funded rebuilding of towns in these zones could generate employment and housing by prioritizing the hiring of returning refugees and internally displaced persons. The linking of return to livelihood opportunities would help offer a sustainable path to refugee reintegration while reducing Lebanon’s burden. That said, this would necessitate a confluence of factors in addition to political will—namely, security guarantees, host country leadership and coordination, and reconstruction funding.
A Fragile New Era?
The lifting of US sanctions on Syria is not simply a bilateral gesture—it is a potential geopolitical earthquake. The move will accelerate Syria’s reintegration into the regional and international order and provide Damascus with much-needed breathing room to rebuild its devastated economy and country.
But the road ahead is fraught. Syria’s new government needs to carry out political reforms, realize economic promises, and carefully manage regional tensions, especially with Lebanon and Israel. So far, despite a history of conflict and occupation, some positive cooperation has taken place to curb smuggling and trafficking (the militant group Hezbollah’s financial lifeline) through the borders. Al-Sharaa has publicly committed to ending the Captagon drug trade, and has seized labs, farms, and factories involved in the narcotic’s production. In March 2025, Lebanon and Syria signed a security agreement to demarcate and secure their border.
Whether this moment will be remembered as a turning point for Syria depends on how the next chapters unfold. What is certain is that Syria and Lebanon, once bound by conflict and misfortune, now have a chance to work in tandem for the economic recovery of each. Lebanon can leverage its service and banking sectors for a future role for Lebanese enterprise in Syria, while preparing for when the Syrian reconstruction phase eventually comes to an end and Syrian initiatives inevitably take over.
For Lebanon, the stakes are high. If its leadership fails to act with urgency and vision with regard to Syria, the country risks becoming economically marginalized and geopolitically irrelevant in a region rapidly reconfiguring around new alliances and development opportunities. Lebanon should avoid being a passive observer of Syria’s reintegration. Instead, it should reimagine its future through improved economic performance, reconstruction partnerships, and a proactive refugee policy. Otherwise, Lebanon will find itself isolated at a moment when the region is moving forward without it.
The views expressed in this publication are the author’s own and do not necessarily reflect the position of Arab Center Washington DC, its staff, or its Board of Directors.
Featured image credit: SPA
