Embargoes

In 2006, the U.S. National Security Strategy stated that the United States was facing challenges from Iran and its efforts and involvement in international terrorism. The GAO has since reviewed U.S. sanctions against Iran and the impact it has had and reviewed numerous data relating to Iran’s economy and energy sector.

After conducting research, the GAO concluded that Congress should consider requiring the National Security Council and key agencies to:

1. Assess data on Iran sanctions and complete an overall baseline assessment of sanctions
2. Develop a framework for ongoing assessments
3. Periodically report the results to Congress

Officials did report that U.S. sanctions involving Iran has slowed foreign investment in the country’s petroleum sector, however other evidence indicates that the extent of the reported impact. Read More

On December 19, 2007, the Department of State issued an amendment to the International Traffic in Arms Regulations concerning exports and sales which were prohibited by United Nations Security Council embargoes. The amended list will add countries subject to such embargos. The current list includes: Cote d’Ivoire, Democratic Republic of Congo, Iraq, Iran, Lebanon, Liberia, North Korea, Rwanda, Sierra Leone, Somalia, and Sudan.

More information:

Federal Register 72FR71575.pdf (PDF)

In the August 30, 2007 Federal Register, the Office of Foreign Assets Control (OFAC) made several amendments to the Cuban Assets Control Regulations, Burmese Sanctions Regulations, Sudanese Sanctions Regulations, and Iranian Transactions Regulations to extend the general licensing to cover services in connection with written publications. A key element of the amendments applies to electronic publications that are already exempt from OFAC jurisdiction. The amendments extend the exemption for informational materials to also apply to embedded software that is embedded in the informational materials and used to search, view or read the electronic publications.

Next time you board an airplane and immediately start grumbling over the lousy legroom or indifferent attitude of the (now probably pension-less) cabin crew, spare a thought for the poor Iranian air passenger.  A quarter-century of more-or-less steadily escalating US sanctions prohibiting sales of aircraft and aircraft parts have taken their toll on commercial aviation there.  Iran is now one of the most dangerous places in the world to fly - not in absolute terms but certainly compared to your chances in other countries.  And of course we are not even considering here the more direct actions the US has taken against Iranian commercial aviation.  The comprehensive US embargo has taken its toll on the Iranian aviation industry.

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Press reports around the globe have been publishing articles about potential sanctions or lifting of sanctions on various countries. Though there has been a lot of sanctions talk these days, as of today there have been few actual changes. As of January 1, 2004, the following is the status of sanctions of key countries listed in reports.

Syria

President Bush recently signed into law legislation that allows the imposition of sanctions (embargo) against Syria. The legislation essentially allows the President to impose an embargo at his discretion should Syria fail to meet certain benchmarks relating to Syrian troops in Lebanon and the Middle East peace process. The President has not imposed these sanctions, so as of this moment, Syrian controls remain as they have been, with non-EAR99 items require export and reexport licenses.

Libya

The US Libya embargo remains in full effect. After the Lockerbie settlement, in which Libya agreed to compensate families of the victims of the aircraft bombings, the UN lifted multilateral sanctions on Libya. However, the US maintained their unilateral sanctions on Libya, with all export from the US requiring licensing from Treasury and all reexports requiring licenses under the Export Administration Regulations. The US maintained unilateral sanctions out of concern for ongoing weapons proliferation programs.

Libya strong man Muammar Qadaffi recently has taken dramatic steps to end these weapons programs and to open the country up to inspectors in an attempt to have the US sanctions lifted. The US is likely to remain cautious in lifting sanctions. Though continued progress may result in an eventual lifting of the embargo, there does not appear to be any immediate movement on the US side to lift sanctions.

Iran

In a Treasury Press release issued on December 31, 2003 (see http://www.treas.gov/press/releases/js1076.htm), the Office of Foreign Assets Controls eased sanctions on Iran for transactions related to humanitarian relief for the earthquake victims in Bam. Contrary to some press reports which indicate a broader easing of sanctions, the changes are actually very limited in scope. They authorize cash donations to NGO’s for the earthquake victims, authorize humanitarian relief activities, and fast track licensing of NGO’s authorizing relief activity in Iran. There is no other movement to lift the embargo on Iran.

As we reported earlier, the US Government seems to be inching closer to placing an embargo on Syria. At this time, Syria remains highly controlled under the Export Administration Regulations, with all items in a classification other than EAR99 requiring an export or reexport license. According to press reports, the House International Relations Committee recently approved the Syria Accountability and Lebanese Sovereignty Restoration Act, mostly due to concerns surrounding Syria’s support of terrorists groups, which Syria of course denies. The bill authorizes the President to impose a ban on all US exports to and US investments in Syria. Current Washington speculation appears to point towards Congress likely passing the Syria sanctions bill before it takes its Fall break.

As we reported earlier, the US Government seems to be inching closer to placing an embargo on Syria. At this time, Syria remains highly controlled under the Export Administration Regulations, with all items in a classification other than EAR99 requiring an export or reexport license. According to press reports, the House International Relations Committee recently approved the Syria Accountability and Lebanese Sovereignty Restoration Act, mostly due to concerns surrounding Syria’s support of terrorists groups, which Syria of course denies.

The bill authorizes the President to impose a ban on all US exports to and US investments in Syria.

Recent terrorist attacks against Israel point towards US imposition of sanctions, but Syria’s support of the recent United States-sponsored United Nations resolution on Iraq may be an effort by Syria to convince Mr. Bush to not impose sanctions, should Congress pass the bill.

Current Washington speculation appears to point towards Congress likely passing the Syria sanctions bill before it takes its Fall break.

Do your sales reps keep bugging you with Iraq opportunities? Are you confused by the multiple Iraq Federal Register Notices in May talking about this General License or that? Well, so are many, including those answering the Q&A phone bank at the Office of Foreign Assets Control (OFAC). Here’s the current deal on Iraq: the embargo has been lifted. Items classified as EAR99, as well as those classified in most AT controlled Export Control Classification Numbers (ECCNs) no longer require export or reexport licenses to Iraq.

How did this happen? When the Iraq war began to wind down, the administration began feverishly trying to undo the embargo. But years of layered laws and rules are difficult to unravel, and so the process is occurring in steps. The UN also had to lift their sanctions. For the past few months, OFAC and the Bureau of Industry and Security (BIS) have attempted to untangle the mess through a series of website announcements and regulations changes. The most important step thus far was the General License issued by OFAC on May 23 that effectively lifted the embargo.

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The geopolitical events of the past few months have spurred speculation on country export control policy in the Middle East, particularly as related to Iraq and Syria.

At this time, there are feverish reviews underway at the Office of Foreign Assets Controls (OFAC) regarding Iraq sanctions and even new potential Syria sanctions.

Read More

What happens if you read one too many of those infamously noncommittal Office of Foreign Assets Control (OFAC) interpretations (see 2.1)?  You surf the web.  You don’t need to know Arabic, Farsi, Spanish or other embargoed languages to find sites which make you wonder why anybody even bothers discussing esoteric sanctions points.   Conveniently, many of these sites market their embargo defying wares in English.  Imagine what you would find if you searched in local languages?  Consider this article your English language on-line embargoed destination shopping guide.

Read More

The German Economy Minister Werner Mueller wants to restore trade relations between his country and Iran. Mueller told NTV Television that, “I expect with Iran we will soon be doing big business”.

He also stated that his ultimate goal is to restore export credit cover to many nations on the United States trade sanctions list by September of 2002. Mueller supported his ambition to trade with Iran by stating, “From power stations to other infrastructure, Iran is a good customer and the German economy has chances there”.

However, when asked about the possibilities of German trade with Iraq, the Economy Minister was hesitant. He acknowledged that at the current time, with Iraq’s largely negative image and position in world affairs, that trade with the Middle Eastern nation would be difficult at best.

In the January 4, 2002 Federal Register, President George W. Bush extended national emergency status in respect to nation and government of Libya for 1 year. This action is a continuation of Executive Order 12543, which was enacted by former President Ronald Reagan on January 7, 1986. This does not change the scope of the US trade embargo on Libya.

In one of his last acts in office, President Clinton issued Executive Order 13192 “lifting and modifying” the US embargo on Serbia. As a practical matter, however, the US embargo on export and reexports to Serbia remains in place, despite Clinton’s executive order, which was published in the January 23, 2001 Federal Register. Until the US Department of Commerce revises the Export Administration Regulations (”EAR”), all items subject to the EAR continue to require a US license when destined for Serbia. Commerce has stated that it hopes that within a couple of weeks it will publish a revision to the EAR that will return Serbia to its pre-embargo status.

The primary immediate impact of the executive order is that it creates a new prohibited parties list consisting of former President Slobodan Milosevic and certain of his family, friends, supporters and business partners. See Annex 1 at the end of this newsletter for the new list of FYRM (Federal Republic of Yugoslavia-Milosevic) entities. The Treasury Department did not include the FYRM list in the Federal Register notice, but it did publish the list on its web page at http://www.treas.gov/ofac/.

What is the restriction on doing business with FYRMs? No “US person” may participate in or facilitate, directly or indirectly, any transaction involving any listed FYRM or any other entity owned or controlled by, or acting on behalf of, Milosevic or a listed entity. For the purpose of this restriction, “US Person” includes:

• Any person in the United States;
• Any US corporation and its foreign branches, but not its foreign subsidiaries; and
• Any US citizen or permanent resident.

In the January 11, 2001 Federal Register the Treasury Department published the Taliban (Afghanistan) Sanctions Regulations to implement former President Clinton’s Executive Order 13129 of July 4, 1999. The US sanctions on the Taliban and Afghanistan have been in force since the issuance of the executive order. These regulations clarify many technical details of the sanctions.

For a summary analysis of the US sanctions on the Taliban and Afghanistan, see the July 1999 Aerospace Export Control Update.