U.S. permits some foreign investment in northern Syria despite sanctions

By Humeyra Pamuk and Daphne Psaledakis

WASHINGTON (Reuters) -The United States on Thursday authorized some foreign investment in areas of northern Syria that are outside government control, in what it said was a strategy designed to defeat Islamic State through economic stabilization.

The U.S. Treasury Department approved activities in 12 sectors including agriculture, construction and finance, but made clear that it did not permit any transactions with the government of Syrian President Bashar al-Assad or those designated under U.S. sanctions during the 11-year-long Syrian civil war.

Preoccupied by Russia’s invasion of Ukraine and the challenge of China, the Biden administration has largely focused its Syria policy to ensuring Islamic State does not re-emerge and aid is delivered to Syrian civilians in need.

Thursday’s general license marks a broadening of the policy by what U.S. officials said was promoting better economic opportunities for people who are not targeted by the sanctions and live in areas that are vulnerable to a resurgence by Islamic State, also known as ISIS.

In a call with reporters, U.S. officials rejected assertions that the move could be seen as helpful to efforts by some Arab allies to bring back Assad in from the cold, and repeated that Washington had no intention of lifting sanctions on him.

“Private sector investment in these areas will help reduce the likelihood of ISIS resurgence by combating the desperate conditions that enable the terrorist groups’ recruitment and support network,” a senior administration official said.

He added there was interest from private companies including those working in neighboring countries, but he did not provide names.

The license also authorized purchases of oil products such as gasoline in the area, except for transactions involving the government of Syria or those designated under U.S. sanctions.

It did not permit the import of Syrian origin petroleum or petroleum products to the United States.

Assad’s forces have recovered most of Syria but some areas remain outside his control. Turkish forces are deployed in much of the north and northwest, the last rebel stronghold, and U.S. forces are stationed in the Kurdish-controlled east and northeast.

Washington has been in consultations with Turkey and other allies over this move, U.S. officials said. Ankara regards the U.S.-backed Syrian Democratic Forces (SDF) that are in control of parts of northeastern Syria as a terrorist group.

ISIS had taken over large swathes of territory in 2014 in Iraq and Syria and declared a caliphate, which was in 2019 completely dismantled and its fighters defeated by U.S. and Iraqi forces.

Some Arab states initiated a rapprochement last year with Assad’s government after shunning it during the civil war.

The United States says it does not encourage those attempts to normalize or upgrade diplomatic relations with Assad but did not stop some Arab allies of Washington from re-establishing ties with Damascus.

The administration wants to hold Assad and his government accountable, U.S. officials said, over allegations by Western countries of human rights abuses.

“We’ve twice imposed new sanctions under this administration on the Assad regime specifically for the issue of human rights abuses and atrocities and are looking to continuously roll out additional sanctions,” one administration official said.

(Reporting by Humeyra Pamuk, Daphne Psaledakis, Timothy Gardner, Chris Gallagher and Tim Ahmann; additional reporting by Doina Chiacu; Editing by Andrew Heavens and Grant McCool)