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What Does Removing Syria from the US List of State Sponsors of Terrorism Mean for Its Economy?

US President Donald Trump holds a bilateral meeting with Syrian President Ahmed al-Sharaa alongside the NATO leaders summit at the Bestepe Presidential Compound in Ankara, Türkiye, July 8, 2026. REUTERS/Jonathan Ernst
US President Donald Trump holds a bilateral meeting with Syrian President Ahmed al-Sharaa alongside the NATO leaders summit at the Bestepe Presidential Compound in Ankara, Türkiye, July 8, 2026. REUTERS/Jonathan Ernst
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What Does Removing Syria from the US List of State Sponsors of Terrorism Mean for Its Economy?

US President Donald Trump holds a bilateral meeting with Syrian President Ahmed al-Sharaa alongside the NATO leaders summit at the Bestepe Presidential Compound in Ankara, Türkiye, July 8, 2026. REUTERS/Jonathan Ernst
US President Donald Trump holds a bilateral meeting with Syrian President Ahmed al-Sharaa alongside the NATO leaders summit at the Bestepe Presidential Compound in Ankara, Türkiye, July 8, 2026. REUTERS/Jonathan Ernst

The US administration’s decision to begin the process of removing Syria from its list of State Sponsors of Terrorism (SST) - where it has remained since 1979 - marks the country’s most significant political and economic shift in decades.

The designation was more than a political label; it served as the legal cornerstone of the extensive US sanctions architecture imposed on Syria. Its removal could reopen the door to trade, investment, and large-scale reconstruction.

The announcement followed what Washington described as “positive changes” by the Syrian government and formal assurances from Syrian President Ahmed al-Sharaa that Syria would not support acts of international terrorism in the future.

Secretary of State Marco Rubio subsequently notified Congress of President Donald Trump’s intention to rescind the designation after the required 45-day congressional notification period, describing the move as “historic” and saying it offers Syria a genuine opportunity to rebuild and open a new chapter for its people.

Syrian officials welcomed the decision. Finance Minister Mohammad Yosr Barnieh called it “a historic moment” heralding a new era of prosperity, investment, and economic recovery. He said the move would open a new chapter for the Syrian economy, accelerate recovery, encourage investment, and facilitate Syria’s reintegration into the global economy.

Central Bank Governor Safwat Raslan likewise described the decision as “a positive turning point” that would strengthen confidence, attract investment, and help reintegrate Syria into the global financial system. He reaffirmed the central bank’s commitment to reforms, monetary stability, and long-term economic recovery.

Reconnecting to the Global Financial System

In practical terms, the decision paves the way for Syrian banks to gradually reconnect with the global financial system, correspondent banking networks, and the SWIFT international payments system. The terrorism designation had effectively prevented foreign correspondent banks from dealing with Syrian financial institutions for fear of US legal penalties.

Reintegration could improve access to trade finance and sharply reduce the cost of remittances from Syrians abroad. For years, expatriates have relied on costly informal channels to circumvent sanctions. Easier remittance flows would provide a direct boost to household incomes and financial stability.

Removing Barriers to Investment

For years, US secondary sanctions linked to the terrorism designation discouraged foreign companies from participating in reconstruction projects, fearing hefty fines or exclusion from the US market.

Highlighting the policy shift, the US administration quoted Trump as telling Al-Sharaa: “I promised to remove all the barriers preventing you from rebuilding your country, and very soon you will finally be able to do so.” Trump also said US companies are already interested in investing in Syria.

Removing the designation significantly reduces reputational risk and gives multinational companies greater legal and procedural certainty to invest in infrastructure, real estate, telecommunications, and other sectors.

Reviving Trade and the Energy Sector

Foreign trade is also expected to benefit. Previous restrictions limited imports of advanced industrial equipment and technology classified as “dual-use” goods with potential civilian and military applications. Easing those restrictions would allow Syrian manufacturers to import production lines, agricultural equipment, and medical supplies with far fewer regulatory hurdles.

The energy sector, which has suffered years of severe deterioration, could also benefit. International companies would be able to provide spare parts, technical expertise, and technology needed to rehabilitate damaged oil and gas fields and repair aging power plants, helping ease chronic electricity shortages and support industrial production.

Restoring Access to International Financing

Syria’s designation as a State Sponsor of Terrorism also triggered an effective US veto on loans, grants, technical assistance, and other support from international financial institutions, particularly the World Bank and the International Monetary Fund.

With the designation removed, Damascus could theoretically begin negotiations with these institutions to secure development financing, support economic restructuring, and implement monetary and fiscal reforms.

From Blanket Prohibition to Risk-Based Assessment

Legal experts say the decision fundamentally changes how international companies and financial institutions assess Syria.

Previously, US law effectively imposed a blanket prohibition on doing business with Syria, leaving banks and corporations with virtually no room for discretion. Now, the automatic legal barrier is removed. Banks and companies can independently assess the remaining legal and commercial risks and proceed with transactions that comply with other applicable sanctions. This represents a fundamental shift, giving investors and financial institutions flexibility that has not existed since Syria was added to the terrorism list in 1979.

Why the Economic Crisis Will Not End Overnight

Despite the significance of Rubio’s announcement and the June 30, 2025 executive order easing certain restrictions, the economic impact is unlikely to be immediate.

The biggest constraint is that removing Syria from the terrorism list does not dismantle the broader sanctions regime. Numerous US laws and executive orders targeting key economic sectors, entities, and individuals remain in force.

In addition, Syria is likely to face prolonged caution from international banks — a phenomenon known as “over-compliance.” Many financial institutions are expected to spend months, if not years, conducting extensive legal reviews before reopening accounts or facilitating trade with Syria, seeking to avoid penalties under the sanctions that remain in place.

Ultimately, Syria’s economic recovery will depend not only on the easing of US restrictions but also on its ability to implement deep structural and institutional reforms, improve the business environment, and maintain monetary stability.

Removing Syria from the State Sponsors of Terrorism list is a major step toward reducing reputational risk and reopening international markets. But a full recovery remains a long-term process that will require the gradual dismantling of the remaining sanctions, which continue to pose the greatest obstacle to Syria’s reintegration into the global economy.

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Who Benefits from the Damascus Bombings at Such a Sensitive Time?

Syrian security personnel inspect a burned vehicle near the Four Seasons Hotel after two explosions rocked the area earlier while Syrian President Ahmed al-Sharaa was meeting French President Emmanuel Macron at the presidential palace, in Damascus, Syria, Tuesday, July 7, 2026. (AP)
Syrian security personnel inspect a burned vehicle near the Four Seasons Hotel after two explosions rocked the area earlier while Syrian President Ahmed al-Sharaa was meeting French President Emmanuel Macron at the presidential palace, in Damascus, Syria, Tuesday, July 7, 2026. (AP)
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Who Benefits from the Damascus Bombings at Such a Sensitive Time?

Syrian security personnel inspect a burned vehicle near the Four Seasons Hotel after two explosions rocked the area earlier while Syrian President Ahmed al-Sharaa was meeting French President Emmanuel Macron at the presidential palace, in Damascus, Syria, Tuesday, July 7, 2026. (AP)
Syrian security personnel inspect a burned vehicle near the Four Seasons Hotel after two explosions rocked the area earlier while Syrian President Ahmed al-Sharaa was meeting French President Emmanuel Macron at the presidential palace, in Damascus, Syria, Tuesday, July 7, 2026. (AP)

Two successive explosions struck one of Syria’s most sensitive locations at a particularly delicate moment for the country’s authorities, occurring about 10 kilometers (6 miles) from where French President Emmanuel Macron was staying during his visit to Damascus.

Sources close to the Syrian government told Asharq Al-Awsat that several parties could stand to benefit from the attack, foremost among them remnants of the former regime and those opposed to the growing French-Syrian rapprochement.

Other sources monitoring the security situation, however, said initial indications point more toward ISIS, which remains Syria’s foremost security challenge.

At least 18 people were injured, including the assistant tourism minister and four police officers, in twin explosions near the Ministry of Tourism, close to the Four Seasons Hotel Damascus, where Macron was staying.

The attack came less than a week after a bombing at a lawyers’ cafe near the Palace of Justice that killed 10 civilians and wounded about 20 others.

Security expert Abdullah Al-Najjar told Asharq Al-Awsat that the bombings bore the hallmarks of remnants of the former regime seeking to derail the transitional justice process, “which will certainly reach them.”

The attack also aims to portray Syria as unsafe. He said the improvised explosive devices were crude and indiscriminate, targeting civilians and security personnel alike. Their purpose was to create the impression of weak security control rather than expose a genuine collapse in security.

Syria's Interior Minister Anas Khattab (C) inspects an area near the Four Seasons Hotel following two blasts in Damascus on July 7, 2026. (AFP)

He noted that any criminal could plant a crude explosive device in a trash container and another in a parked vehicle, like what happened in Tuesday’s attack.

Former diplomat and political analyst Bassam Barabandi told Asharq Al-Awsat that whenever Syria shows “serious signs” of recovery, forces threatened by the country’s improving fortunes respond.

In his view, the interests of remnants of the former regime converge with those of ISIS, Hezbollah, Iran, and Israel.

Barabandi noted that many individuals who served under the former regime remain embedded throughout Syrian society, while state institutions are still being rebuilt and newly recruited security personnel have yet to acquire the experience needed to fully maintain security.

The scale of the bombings suggests either individuals or small groups seeking revenge, or an organization capable of mounting larger operations whose objective is not widespread destruction in a country already devastated by war, but rather to spread instability across Syria, he remarked.

Barabandi also stressed that international support for stabilizing Syria remains strong and is likely to translate into greater assistance for rebuilding the country’s security institutions.

Major investments are unlikely to be affected because they are driven largely by political considerations, although local economies and small businesses are expected to bear the brunt of the impact, he added.

Syrian President Ahmed al-Sharaa, left, and French President Emmanuel Macron arrive for an agreement signing ceremony in Damascus, Syria, Tuesday, July 7, 2026. (AP)

Sources close to the government told Asharq Al-Awsat that crude explosive devices of this kind often evade explosives detection and are intended more for political messaging than military effect.

They added that preliminary assessments point more toward remnants of the former regime than ISIS, whose attacks typically target security personnel, soldiers, and those it considers apostates. ISIS operations also tend to inflict far greater casualties, unless the group has radically changed its tactics.

Security expert Diaa Qaddour described such assessments as speculative because so many parties could benefit from bombings at such a sensitive moment for Syria.

Nevertheless, he said it was impossible to ignore that ISIS remains “the largest and most prominent security challenge in Syria.”

Qaddour told Asharq Al-Awsat that Tuesday’s coordinated bombing resembled an attack in Damascus’ Bab Sharqi district in May near a Defense Ministry building that killed a soldier and wounded several civilians. ISIS claimed responsibility for that attack.

He stressed that the greater danger lies not only in the existence of an experienced ISIS cell operating in the heart of the capital and one of its most sensitive districts, but also in its ability to strike whenever it chooses despite extensive counterterrorism efforts by the Interior Ministry.

The recent rise in attacks has tarnished the image of the relative stability Syria had enjoyed in recent months, precisely the outcome sought by those behind the bombings, Qaddour said.

He urged the Interior Ministry and intelligence services to undertake a thorough review of their approach to security threats and develop a comprehensive strategy to eliminate or at least contain them.

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What to Know About China’s Rare Ballistic Missile Test and Why It Raises Concerns

In this photo released by Xinhua News Agency, a long-range ballistic missile bursts out of the sea during a test launched from a Chinese nuclear-powered submarines in the South Pacific on Monday, July 6, 2026. (Li Xiangchao/Xinhua via AP)
In this photo released by Xinhua News Agency, a long-range ballistic missile bursts out of the sea during a test launched from a Chinese nuclear-powered submarines in the South Pacific on Monday, July 6, 2026. (Li Xiangchao/Xinhua via AP)
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What to Know About China’s Rare Ballistic Missile Test and Why It Raises Concerns

In this photo released by Xinhua News Agency, a long-range ballistic missile bursts out of the sea during a test launched from a Chinese nuclear-powered submarines in the South Pacific on Monday, July 6, 2026. (Li Xiangchao/Xinhua via AP)
In this photo released by Xinhua News Agency, a long-range ballistic missile bursts out of the sea during a test launched from a Chinese nuclear-powered submarines in the South Pacific on Monday, July 6, 2026. (Li Xiangchao/Xinhua via AP)

China's navy test-launched a long-range ballistic missile Monday from a nuclear-powered submarine — a move that experts said showed Beijing's increasing skill and capability as part of its nuclear deterrence strategy.

The move also drew protests from the US, as well as countries in Asia and the Pacific. It was the second time China had fired a ballistic missile into international waters in recent years.

While it gave some countries in the region prior notice, some said it was not enough notice, and experts say the launch exacerbates tensions around increasing militarization in Asia.

Here's what we know, and what we don't, about the missile launch.

Experts think it could be a JL-2 or a JL-3 ballistic missile

China announced the missile test publicly on Monday only after the launch, saying that it was fired into the Pacific Ocean. In a brief statement, the official Xinhua News Agency said the launch was part of routine annual training, complied with international law and practice, and was not directed against any country or target. It didn't provide details about the type of missile.

The missile was carrying a dummy warhead, not a nuclear one. The act of launching in international waters was rare, although the US has also done so with its own missile testing.

Xinhua published a photo of the missile on Tuesday without additional details. Experts say it could be either a JL-2 or a JL-3, both submarine-launched ballistic missiles, though most said the available imagery was not clear enough to tell.

The state-owned tabloid Global Times said it was “most likely” a JL-3 missile with a range exceeding 10,000 kilometers (6,200 miles). The JL-2 has a shorter range.

The New Zealand government said the missile was launched into treaty waters in the South Pacific Nuclear Free Zone, violating the intention of the agreement.

The zone was established by the 1986 Treaty of Rarotonga, which prohibits nuclear weapons throughout the region. China ratified the protocols in 1987, pledging not to test nuclear weapons within the zone or threaten to use them against signatories with territory in the region.

Australia, Japan, and other countries protest While China has told other countries to “avoid over-interpretation” in response to the criticism, experts say the concerns from other countries have some basis.

Much of the concern is a result of lack of clear information, said Drew Thompson, a senior fellow at the S. Rajaratnam School of International Studies in Singapore. “China’s military modernization and buildup have occurred without concurrent increases in openness and transparency, resulting in uncertainty about China’s intentions.”

Australian Prime Minister Anthony Albanese said that China did not provide enough notice to the government.

“There is no doubt that this is a provocative act by China which does destabilize the region,” he told reporters Tuesday while in Honiara, in the Solomon Islands.

“This was a test of a nuclear-capable intercontinental ballistic missile fired from a nuclear-powered submarine. That is of real concern because what we need is less nuclear weapons, certainly not more. And the fact that this test took place yesterday with very little notice is of real concern,” Albanese added.

New Zealand had said the same Monday, with Foreign Minister Winston Peters calling it “unwelcome and concerning.”

Solomon Islands Prime Minister Matthew Wale, also speaking to reporters in Honiara Tuesday, said that “China is a good friend of Solomon Islands, but this is not something a friend does. This is not ... good in our region.”

“We don’t want to see any more countries — China, America, anybody — we don’t want anybody testing their ICBMs in the Pacific Islands region. Be our friend, but don’t threaten us,” Wale added.

Test comes amid increasing militarization in Asia

China's leader Xi Jinping has made modernization of the People's Liberation Army a top priority in his rule.

China already has the largest standing army in the world and the world's largest navy. While its nuclear arsenal lags that of the US and Russia, it has been actively expanding its stock of nuclear warheads. It has also actively been developing new longer-range missiles and advanced drones.

China’s defense budget, which is projected to be at $270 billion in 2026, has grown at roughly 7% for the past four years, and hovers below 2% of its gross domestic product. However, independent analysis suggests the real spending could be much higher. For example, the Stockholm International Peace Research Institute estimates the overall figure for 2024 at $313.7 billion.

Much of the security worries about whether or not China's military would get involved in a war centers on Taiwan, the self-ruled island that China claims as its own and for which it has not ruled out the use of force to bring it under its control.

China also regularly sends warplanes and navy ships in the waters around the island in what it says are military exercises.

In response to China's expanding military and activity, countries in the region have increased their own defense spending, including Japan which is breaking with its long-held cap of 1% of GDP to double the budget to 2%.

Meanwhile, the Philippines agreed to allow the US to expand its military presence in the country by adding access to four more bases.

“The Chinese launch exacerbates already deeply strained relations between Beijing and Tokyo. Since (Prime Minister Sanae) Takaichi’s comments last year suggesting that Japan would engage in a conflict over Taiwan, China has tightened export controls on Japan and accused it of embracing a ‘new time of militarism,’” said Emma Chanlett-Avery, director of Political-Security Affairs at the Asia Society Policy Institute.

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Lebanon’s South Takes a Breath as Families Return to Shattered Homes and Lives

This picture shows the destruction in the southern Lebanese village of Froun on June 30, 2026. (AFP)
This picture shows the destruction in the southern Lebanese village of Froun on June 30, 2026. (AFP)
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Lebanon’s South Takes a Breath as Families Return to Shattered Homes and Lives

This picture shows the destruction in the southern Lebanese village of Froun on June 30, 2026. (AFP)
This picture shows the destruction in the southern Lebanese village of Froun on June 30, 2026. (AFP)

On a beachfront in the coastal city of Tyre, war has finally abated just enough for children to play in the waves and families to gather under parasols as life slowly returns to southern Lebanon. But away from the shore, people coming home after months of exile are having to adapt to harsh new realities: the threat of conflict between Israel and Iran-backed Hezbollah flaring up again and the challenge of rebuilding from the destruction Israeli bombs have wreaked on their hometowns.

"People are coming back to Tyre to rebuild, to work — all the restaurants are open again," said local resident Ali Skaiky, wet from a swim in the sea and holding a rubber lilo.

"We still hear strikes and fighting at night, but it's far away. There's destruction beyond imagination, but we hope everything will stay calm."

Skaiky is among some 400,000 people who have returned to southern Lebanon in the weeks since a ceasefire between Israel and Hezbollah. The truce has not halted fighting, but it has lowered the ‌intensity.

Returnees are cleaning ‌debris from damaged homes, reopening businesses and trying to rebuild the routines the war ‌shattered. Yet ⁠for many, normality ⁠now means keeping a suitcase packed, following the news obsessively and never straying too far from home.

For Fadlallah Qassim, 42, returning home meant confronting the destruction the war had left behind, including a hit on his house.

"We returned to find the whole house caved in with rubble, and all the furniture ruined," he said. "I cleaned up, fixed it, and brought some basic things for the house, now my wife, children and I all live in one room."

In the nearby village of Srifa, where entire neighborhoods were damaged, Suzan Fakih, 55, said the hardest part of returning was realizing home no longer felt like home.

"The moment you arrive, it doesn't ⁠feel like your village anymore," she said. "Everything is black and grey. It hurts your soul. ‌You look around and think, 'This can't be the village I've lived in all ‌my life.'"

'YOU PACK YOUR BAGS AND RUN'

Srifa lies in the deep south of Lebanon, close to where Israeli troops occupy a strip ‌of territory and launch regular attacks on what the Israeli army says are Hezbollah targets. In areas nearby, Israel has ‌demolished almost entire villages.

Fakih said people remain haunted by the possibility they could be forced to flee again.

"I can't remember a time in my life when I wasn't living with a bag packed, ready to leave. A few quiet years pass, then you pack your bags and run again," she said.

The ongoing hostilities and levels of destruction have left 600,000 more people internally displaced, according to Lebanon's social ‌affairs ministry. Many families whose homes were destroyed are still living in schools or in the rented homes they fled to during the conflict.

Lebanon has suffered the deadliest spillover ⁠of the regional war triggered ⁠by the US-Israeli strikes on Iran in February.

The conflict spread to Lebanon on March 2, when Hezbollah fired on Israel in support of Tehran, triggering an Israeli air and ground campaign. More than 4,300 people have been killed in Lebanon, according to the country's health ministry.

RENTING BACKUP HOMES

Some 20 miles (32 km) farther north, Mohammad Sweid and other residents who recently returned to the Bekaa Valley town of Sohmor, said they live with the same uncertainty.

Sweid still pays rent for the house he and his family fled to during the war, keeping it as a backup home if they need to leave again.

"If something happens again, we may not find another place," the 31-year-old manual worker said.

In the Lebanese capital Beirut, whose Hezbollah-controlled southern suburb of Dahiyeh has been battered by Israel at intervals over the last two years for being home to Hezbollah's leadership, residents are also cautiously trying to rebuild their lives.

Moussa Ghamloush, 68, has been repairing his bomb-damaged home and reopening his restaurant, which was completely destroyed in a separate strike, but says his permanent home will always be Dahieh.

"We're not the kind of people who leave. Our roots are here. We stayed, and if there's a third war, we'll stay again."