U.S. to allow foreign investment in northeast Syria without sanctions

MARRAKECH, Morocco, May 11 (Reuters) - The United States will allow some foreign investment in areas of northeast Syria outside government control without coming under sanctions, it said on Wednesday, a move it says is aimed at helping a region previously controlled by Islamic State.

Speaking in Marrakech at a meeting of the global coalition against Islamic State, U.S. acting assistant secretary of state Victoria Nuland said Washington would issue a general licence, which frees companies from U.S. sanctions restrictions.

“The United States intends in the next few days to issue a general license to facilitate private economic investment activity in non-regime held areas liberated from ISIS in Syria,” she said.

The Kurdish-led Syrian Democratic Forces (SDF) fought for years against Islamic State in northeast Syria with U.S. help, gaining control of a territory that the Damascus government says should come back under central control.

That area of northeast Syria, bordering Turkey and Iraq, contains some of the country’s limited oil reserves, agricultural land and one bank of the Euphrates.

However, a diplomat who has discussed the issue extensively with U.S. officials said the licence would apply to agriculture and reconstruction work, but not to oil.

Turkish-backed Syrian rebel forces also control an adjacent area of northern Syria captured from Islamic State.

Ankara regards the SDF as a terrorist group but would not oppose the licence because it covers investment in both the area held by the SDF and the area held by groups it supports, the diplomat said.

The United States has imposed tough sanctions on Syria over the government’s role in the civil war that has raged since 2011 but it has put money into “stabilisation” activities in the areas its allies took from Islamic State.

Last year it spent $45 million in those areas, Nuland said, telling coalition members that Washington wanted to raise $350 million for stabilisation activities in northeast Syria this year. The United States is seeking a similar amount for Iraq, she added.

She said investment in areas previously held by the militant group was needed to prevent a resurgence of Islamic State by allowing it to recruit and exploit local grievances.

Although Washington has issued two previous general licences for Syria, they were for specific materials relating first to publishing and then to COVID-19 supplies rather than to boost economic activity. (Reporting by Ahmed Eljechtimi in Marrakech and Maya Gebeily in Beirut; writing by Angus McDowall, Editing by William Maclean)