• In a dramatic foreign policy reversal, President Donald Trump has lifted all U.S. sanctions on Syria following a historic meeting with Syrian President Ahmed al-Sharaa in Riyadh.
  • The administration is now actively mediating between Syria and Israel, urging a "strong and true dialogue" and pushing for normalization and a return to the 1974 Disengagement Agreement.
  • The move is expected to unlock significant economic reconstruction in Syria, with Gulf states poised to lead investment, but hinges on Syria's cooperation with Israel and expulsion of foreign militants.

A Diplomatic Reversal

President Donald Trump’s meeting with Syrian President Ahmed al-Sharaa in Riyadh on May 14 marked the first high-level U.S.-Syria contact in a quarter-century and triggered an immediate, seismic shift in policy. Standing alongside the newly installed leader, Trump announced the lifting of all U.S. sanctions on Syria, a move that will unfreeze the country’s international assets and restore its access to global financial systems. The president framed the decision as a cornerstone of a new strategy to foster regional stability, pledging his administration would “do everything we can to make Syria successful.”

Central to this new approach is a forceful push for direct engagement between Syria and Israel. Trump emphasized the critical importance of Israel maintaining a “strong and true dialogue” with Damascus, according to officials familiar with the discussions. This rhetoric signals a sharp pivot from the administration’s previous stance of non-involvement and places intense, immediate pressure on Israel to recalibrate its Syria policy. U.S. mediators are now actively working to broker a security pact that would normalize relations, halt Israeli military incursions, and reestablish the terms of the 1974 Disengagement Agreement, which has been repeatedly violated.

The Economic Stakes

The lifting of sanctions is not merely a diplomatic gesture; it’s an economic starter pistol. Analysts expect a rapid influx of foreign capital into Syria’s decimated construction, energy, and trade sectors. Gulf Arab states, particularly Saudi Arabia—whose Crown Prince Mohammed bin Salman was instrumental in facilitating the Riyadh meeting—are positioned to be the primary architects of Syria’s reconstruction. The move is widely celebrated within Syria, where the public anticipates eased inflation, job creation, and improved access to goods and medicine.

However, the economic opening is explicitly conditional. U.S. and regional sources indicate that sanctions relief is tied to Syria’s cooperation on two fronts: maintaining a productive dialogue with Israel and expelling foreign militant groups from its territory. This creates a fragile linkage between diplomacy, security, and economic recovery. “What institutional investors are really focused on is regulatory stability,” said one financier monitoring the situation, speaking on condition of anonymity. “The promise is there, but the on-the-ground implementation will dictate the flow of capital.”

A Fragile Path Forward

The U.S.-brokered process is already encountering friction. Within Syria, there is notable public anger, reported by regional media, that talks with Israel are being prioritized over an internal national dialogue to address crises like the ongoing situation in Suweida. In Israel, security concerns run deep, particularly regarding the Druze minority and the potential for instability if normalization proceeds without ironclad security guarantees. The U.S. is specifically urging Israel to withdraw its forces to pre-December 2024 positions in the Golan Heights, a demand that has sparked intense debate within the Israeli security establishment.

The long-term ambition, as hinted by administration officials, is to eventually bring Syria into the fold of the Abraham Accords. For now, the immediate future hinges on continued U.S. mediation. Short-term goals include solidifying the Syria-Israel security understanding and accelerating the first wave of reconstruction projects. While the rapprochement represents the most significant geopolitical shift in the region in years, its sustainability is an open question. It depends entirely on the new Syrian government's ability to deliver stability, the willingness of regional actors to invest deeply, and Israel’s acceptance of a new strategic reality along its northern border. As one European diplomat noted, “The table is set, but the meal is far from served.”