A combination of conflict, war, and international sanctions has had a huge impact on the Syrian economy. For the last 14 years, the United States, the European Union, the United Kingdom, and other countries have had trade sanctions against Damascus, severely limiting the country’s access to international finance, foreign banking, international payments, trade finance and foreign investments. Just recently, changes in the geopolitical and economic focus of other countries have allowed for some trade with Damascus.
Sanctions and Their Impact on Banking
The sanctions that Syria experienced included the attacks on the banking system, the energy system, and trade, where the intention was to attack the regime and attempt to cripple the revenue system that could create violence within the region.
Separation from International Financial Networks
More than a decade ago, Syrian banks were removed from the SWIFT system. This system is the spinal cord of the upper banking communications worldwide, so removing banks from it severely incapacitates their ability to appropriately perform international banking functions.
Severed Correspondent Banking Relationships
Syrian banks lost access to important relations for regulatory and compliance risks they have. This caused liquidity constraints, especially in the USD, and the loss of important tools like letters of credit.
Lack of Foreign Investment
Lack of financing caused a loss of confidence in domestic banks, and therefore, most foreign investors. This caused a loss of basic cross-border remittances, which are usually sent in 3rd country transaction systems. These are usually more expensive and slower, causing more inefficiency to the system and trade.
Cross Border Payments Under Sanctions
Sanctions cause complications to basic cross border payments:
Greater Restrictions on Trade Financing
International banks were often legally barred — or chose to avoid legal and reputational risk — from providing trade finance to Syrian importers and exporters. This made it difficult for companies to pay foreign suppliers or secure cost-effective import contracts.
Money Transfer Disruption
Remittance money transfers to family members in Syria and small local businesses from abroad are often closed, diverted to less costly but informal channels for slower transfers.
Increased Delay and Cost
While there are legal cross-border payments that can theoretically be done, there are a limited number of banks that are reviewed. These banks substantially increase the cost of doing business. Thus economically, these banks are a disincentive for doing legal international business.
The Removal of Sanctions and Integration into Global Systems
Starting with the year 2025, Syria underwent a major transformation with the first cases of positive and landmark policy changes:
The Lifting of Sanctions
The US government officially removed a significant number of sanctions affecting Syria and ceased to name the country as an enemy state, the European Union, and the UK then followed suite and lifted many of there sanctions as well. Further, some other countries such as Switzerland has also removed there major econo9mic sanctions affecting the central bank and financial services, in connection with the wider international efforts to normalize relations.
This alows for Syria to have the ability to reenter to the international financial sphere.
Reconnection to SWIFT
Damascus announced that the country would get back into the SWIFT payment system, improving international payments and making cross border payments much faster. Reentry into SWIFT allows for Syria to be able to directly, and informally make payments to other countries. This is a positive step towards having a formal banking system for the country.
World Bank Engagement
As the sanctions against Syria were eased, the World Bank has shown more optimism towards engagement. However, the focus now has to be on the macro-fiscal situation to be able to decide on the potential recovery. A recent World Bank report issued for 2025 outlines the economic base of Syria that has been eroded mainly due to the sanctions, but also highlights opportunities for support aimed at policy advocacy that is evidence-based.
Benefits for Business and Investment
There are several expected benefits with eased sanctions, as well as the country’s reintegration into global systems.
Access to Formal Finance Renewed: Trade finance, international banking, and remittances will be more accessible and are expected to readmit businesses.
Direct Investment: With the absence of sanctions, there are lower risk premiums, and thus foreign direct investment becomes more viable. Any investment in the country’s infrastructure, energy, and service industries will be a catalyst towards economic development in the heavily bypassed sectors.
Restoration of Financial Trust: Syria’s disconnection from the SWIFT network and other international banking systems, and Syria’s banking systems will restore international trust- thus enabling the country to gain new banking partnerships that foster economic growth.
Greater Trade Opportunities: Reductions in transaction costs and faster trade are expected with new cross-border payment systems, enabling Syria to trade more through developed global and regional supply chains.
Obstacles For Investments into Syria
While some advancements have been made, many obstacles continue to limit progress:
Modernisation of Banking: In terms of internationally accepted systems and standards, Syrian banks need to improve their systems, compliance and risk management frameworks and practices, including those for anti-money laundering and counter-terrorism financing, as well as compliance.
Trust Deficits: Years of isolation, limited liquidity, and ineffective governance continue to restrict customers and investors confidence within the domestic banking system.
Political and Security Risks: The overall political and security situation is likely to have an impact on investors and the speed of the country’s integration into global markets.
