The Caesar Act and a Pathway Out of Conflict in Syria

By Steven Heydemann, Brookings Institution

On June 17, the most wide-ranging U.S. sanctions ever applied against Syria went into effect. The Caesar Syria Civilian Protection Act, passed into law as part of the most recent National Defense Authorization Act, dramatically expands the authority of the U.S. government to sanction businesses, individuals, and government institutions for economic activities that support the Assad regime’s ability to wage war.

Unlike previous sanctions, the Caesar Act brings under its jurisdiction third-country actors who engage in such activities, including the cross-border business networks that are crucial to the regime’s survival. Most at risk from the Caesar Act are wartime profiteers in Lebanon, including particularly Hezbollah, and the Assad regime’s authoritarian allies in Russia, China, and Iran.

On June 17, the Trump administration named 39 Syrian individuals and firms, including Bashar Assad and members of his family, as the first Caesar Act designees. According to State Department officials, this is only the beginning of what it expects will be “a summer of Caesar.” So far, no non-Syrians have been designated, but this will certainly happen soon.

Paraphrasing from the text of the law, the act requires the administration to determine, within 180 days of the NDAA’s signing in December 2019, whether the Central Bank of Syria is engaged in money laundering. It also requires the administration to impose sanctions on any foreign person who knowingly provides significant support to the Syrian government, entities owned or controlled by the government, or regime-affiliated military contractors, mercenaries, and paramilitary actors (whether formal or informal), including forces affiliated with Russia and Iran. It singles out the oil and gas and construction sectors as areas for possible sanctions. The law also targets the sale of aircraft and spare parts, including military aircraft such as helicopters, from which the regime uses barrel bombs against civilian targets. The law offers support for efforts to limit violence against civilians, and to hold the Assad regime accountable for war crimes and crimes against humanity.

The potential harm the act might cause to Syrian civilians is a serious issue, yet it has been designed to mitigate such effects. The Caesar Act includes language instructing the administration to “enhance the protection of civilians.” In its focus on targeted economic activity, it is explicitly designed to avoid penalizing humanitarian assistance, including medical and food supplies intended for civilian use. The sanctions defined in the Act are targeted, not general, to avoid overreach and unintended effects on those whose conduct is not directly covered.

Nor is the law so complex, ambiguous, or bewildering that its implementation will inevitably be muddled, as some critics have argued. Indeed, the language of the act is refreshingly clear and straightforward. The penalties it imposes are consistent with its objectives: to erode the regime’s capacity to wage war, and to create meaningful economic incentives to induce the Assad regime to free political detainees, end violence against civilians, and demonstrate “irreversible progress” toward the implementation of U.N. Security Council Resolution 2254, a Russian-backed initiative that leaves open the ultimate fate of Bashar Assad.

In expanding sanctions to include third parties, the Caesar Act explicitly tries to raise the costs of economic engagement with the Assad regime for actors who have, up until now, been much less constrained in providing the support it needs to wage war — including its relentless campaigns against civilians, hospitals, schools, and markets. Without such support, Assad’s war-making capacity will be weakened significantly. For the past decade, the financial and military support of the regime’s main external patrons — Russia, Iran, and China — have helped insulate it from the impact of previous sanctions (American, European, Canadian, British, Australian, and Japanese). The act will sharply curtail the regime’s ability to use Lebanon’s economy as a back channel to conduct business as usual, and the anticipated effects of the act have further roiled Lebanon’s broken economy. It also throws serious obstacles in the path of the Gulf regimes, including the United Arab Emirates, which have begun to normalize their ties with the Assad regime, abandoning their support of Syria’s opposition over the past decade.

Given its scope and potential impact, the Caesar Act’s impending implementation has provoked a wave of critical commentary. Not surprisingly, it has been sharply condemned by its targets, including Hezbollah’s Secretary General Hassan Nasrallah.

Yet the act has also been challenged by well-intentioned critics concerned about its effects on Syrian civilians. The arguments they offer are consistent with longstanding critiques of sanctions in general: that they are blunt, ineffective instruments that punish civilians while doing little to restrain the predatory violence of regimes, undermine the lavish lifestyles of autocrats, or compel them to change their behavior. In the Syrian case, the argument goes, having all but won on the battlefield while refusing to yield to previous sanctions, the Assad regime has no incentive to change course now. Nor are its autocratic allies, which have invested heavily in Assad’s survival, likely to view the Caesar Act as sufficient cause to withdraw their support. And if sanctions are unable to move the regime toward a meaningful political transition, what is the justification for the suffering they will bring to Syrians already reeling from 10 years of violent conflict and economic deprivation?

The intent of these critics is laudable. No one sets out to inflict hardship on non-combatants. The accompanying analysis, however, is deeply flawed.

Assad is the source of Syrians’ suffering
If Syria were governed by a regime that cared about the well-being of its citizens, even an autocratic regime, it would be reasonable to assume that sanctions relief would help beleaguered civilians. Syria is not such a case. Under Assad — who stands atop one of the most corrupt governments in the world — the regime will steal the benefits of sanctions relief for itself, its business cronies, and wartime profiteers. We know from recent experience that the regime steals humanitarian supplies entering the country under U.N. auspices, diverts medical and other supplies for its armed forces, and allocates scarce goods first to those in its good graces. Its abuse is so deeply entrenched and pervasive that in September 2016, the regime’s abuse of humanitarian assistance led 73 nongovernmental organizations working mainly in opposition-held areas to suspend their participation in U.N. relief programs.

The Assad regime has shut down international efforts to mitigate corrupt practices, rejecting donor demands for transparency and accountability in how humanitarian assistance is delivered. Rather, it heavy-handedly insists, in the name of defending its sovereignty, that all humanitarian support be under the control of government agencies, their proxies, or government-controlled NGOs that operate under the control of the regime’s security services.

The regime’s disregard for the well-being of Syrians is also evident in its refusal to permit cross-border delivery of assistance in areas still held by the opposition. Until this January, such aid could move into areas such as Idlib under the auspices of a U.N. Security Council resolution. Yet in January, Russia rejected renewal of the resolution. Only after intense diplomatic maneuvering did it grudgingly accept that lower levels of cross-border aid could continue to flow through an even more limited number of crossings. Appeals to expand aid flows with the onset of COVID-19 fell on deaf ears.

Other regime actions have been similarly damaging for Syrians struggling to survive as the economy collapses around them. In recent months, as the Syrian lira has lost value at a precipitous rate, the regime has shut down the informal money exchange (hawala) offices through which many Syrians received remittances from relatives in Lebanon and abroad — a crucial source of income in a country where conflict has driven 80% of the population into poverty. Remittances are now required to move through state-controlled banks and exchanges, which exchange them for Syrian currency at a rate 75% below its recent value. While the purchasing power of the lira erodes by the day, moreover, transactions in other currencies have been criminalized. The regime has imposed sharp new limits on the quantities of subsidized goods available to citizens through a state-run smart card system, yet citizens report that their accounts are being charged for food they never received — indicators that officials implementing the scheme are siphoning off goods for their own use or resale on black markets. In a desperate bid to hold onto foreign exchange, all but critical imports have been banned.

Moreover, high-profile economic struggles among the ruling elite in Syria have left even the regime’s base worse off. Bashar al-Assad’s recent campaign to claw back money from his cousin and leading bagman, Rami Makhlouf, has received widespread attention. Makhlouf deserves no sympathy, but among the casualties of this struggle are thousands of loyalist Alawi families who received cash assistance from a charity he established, al-Bustan, in an effort to cultivate his own social base (while also using his charity as a front to extort money from merchants and siphon it to his private militia). Since al-Bustan was shuttered, the regime has not acted to replace the social support it provided to families who sacrificed fathers, sons, and brothers to keep Assad in power.

The regime faces an economic precipice
The Caesar Act also comes into effect at a moment of heightened economic vulnerability on the part of the regime, increasing the sanctions’ chances of success.

In essence, every one of the pillars that Assad has relied on to keep his economy and his war machine afloat have crumbled. Lebanon’s economic free fall is accelerating, with the Lebanese lira hitting record lows in the past few days. Russia and Iran, battered by falling oil prices, sanctions, and the economic effects of the pandemic can no longer be counted on to bail Assad out.

Popular anger at the regime’s corruption and economic mismanagement is growing. In recent weeks, Syria has witnessed economic protests in towns like Suweida, the Druze capital of southern Syria, that remained largely neutral during the conflict. It has deepened grievances among the regime’s loyalist base, alienating and angering merchants and traders on whom the regime has depended. In response, Assad has moved to reshuffle his cabinet, replacing his minister of trade in May, and his prime minister in mid-June. His government is tightening economic restrictions while it struggles to pay for the wheat it will need to feed its population in the months ahead. Whatever the regime’s track record in resisting economic pressures in the past, the conditions it confronts now carry an order of magnitude greater risk, with much less likelihood that its allies will be able to bail it out.

In sum, Syrian civilians are indeed suffering, but to blame the yet-to-be-implemented Caesar Act for their fate is to ignore the culpability of the Assad regime in the destruction of Syria’s economy and the impoverishment of the population he holds in contempt. Criticism of the act neglects the weight of external factors, from Lebanon’s own economic crisis to the collapse of oil prices, the weakening of the Russian and Iranian economies, and the effects of COVID-19. Such criticism requires that we discount the impact of the regime’s corruption, its long history of brutal, predatory exploitation of its own citizens, and its willingness to sacrifice their lives to preserve the regime’s hold on power. To offer Syria sanctions relief, to imagine that the disappearance of the Caesar Act would leave ordinary Syrians better off, is deeply misguided. To identify the source of their suffering, we need look no further than the presidential palace in Damascus.

For its part, the Assad regime will continue to resist concessions and to reject compromises that might bring relief from sanctions. Syrian officials continue to offer the same belligerent comments that have long defined the regime’s rhetoric toward the U.S. Yet the current confluence of global, regional, and local economic conditions places the regime under greater pressure than it has ever previously experienced, even during its moments of greatest vulnerability during the civil war.

From the triumphalist celebratory outlook that the regime expressed only a year ago, it now confronts the very real prospect of that it will be left on its own to contend with economic collapse and the resurgence of mass popular upheaval. The Caesar Act may be the straw that forces the regime to accept that if it wishes to survive, it will have to change.