By Timour Azhari and Maya Gebeily
DAMASCUS (Reuters) – Qatar is holding off providing Syria’s new rulers with funds to increase public sector pay due to uncertainty over whether the transfers would breach U.S. sanctions, four sources said, a setback to efforts to revive the war-stricken economy.
The delay in Qatar’s plan to help pay for the increase, which Reuters reported in January, underlines the considerable challenges Syria’s new Islamist authorities face as they seek to stabilise the fractured state and assure foreign powers about their leadership.
While the previous U.S. administration issued a sanctions exemption on January 6 to allow transactions with Syria’s governing institutions for six months, Qatar does not see this as enough to cover payments it would need to make via the central bank to finance the salary increase, the sources said.
Three of the sources said Qatar, a wealthy U.S. ally with long-standing ties to groups that helped topple former Syrian president Bashar al-Assad in December, is waiting for clarity over U.S. President Donald Trump’s policy towards Damascus.
Syria’s new rulers are Islamists who had links to al Qaeda until their leader, Ahmed al-Sharaa, cut ties in 2016.
The country’s interim finance minister said last month that pay for many public sector workers would be increased by 400% from February at an estimated monthly cost of 1.65 trillion Syrian pounds ($130 million). He cited regional aid as one source of funding for the increase.
Reuters could not determine how much Qatar was planning to contribute.
The increase has yet to take effect.
Qatar’s Ministry of Foreign Affairs and a Syrian finance ministry spokesman didn’t immediately respond to a request for comment. The U.S. State Department, Treasury and White House also did not reply to Reuters’ questions.
One of the sources, a U.S. official, said Qatar had not begun paying salaries due to ambiguity over U.S. sanctions.
Another of the sources also said Qatar was not paying public sector salaries but noted that Doha had sent two shipments of liquefied petroleum gas to help alleviate crippling energy shortages.
ECONOMIC CRISIS
Boosting the economy is a top priority for Sharaa. The United Nations says nine out of 10 Syrians live in poverty.
His administration has also drawn up plans to cut a third of jobs in the sprawling public sector, which was widely seen under Assad as a way for his administration to secure loyalty through salaries.
The U.S. sanctions exemption, valid until July 7, allows the transfer of personal remittances through the Central Bank and some energy transactions.
Known as a general license, it marked an effort to ease the flow of humanitarian assistance.
But the action did not lift U.S. sanctions, the U.S. Treasury said at the time.
Sharaa has called repeatedly for the lifting of Western sanctions, imposed to isolate Assad for his brutal crackdown during Syria’s long civil war, which started in 2011, and to generate pressure for a political solution to the conflict.
Syrian Foreign Minister Asaad Hassan al-Shibani, in a speech on Tuesday, said the government had succeeded in getting some sanctions suspended or eased. Syrian officials have said the sanctions have ceased to be justified since Assad was toppled.
On Monday, European Union countries suspended a range of sanctions against Syria with immediate effect, including restrictions related to energy, banking, transport and reconstruction.
The Trump’s administration has said little about its Syria policy. U.S. Secretary of State Marco Rubio, speaking on February 16 during a trip to Jerusalem, struck a cautious tone, saying that while Assad’s fall was promising, it would not be a positive development if Syria replaced one destabilising force for another.
Western policy in Syria has been complicated by the jihadist origins of Sharaa’s Hayat Tahrir al-Sham (HTS), the armed group that led the campaign that toppled Assad and is designated a terrorist group by world powers.
HTS emerged from the Nusra Front, al Qaeda affiliate in Syria until Sharaa broke ties in 2016. HTS was officially dissolved in January.
(Additional reporting by Andrew Mills in Doha and Andrea Shalal and Daphne Psaledakis in Washington; Writing by Tom Perry; Editing by Daniel Flynn)
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