As the political landscapes in both Libya and Syria continue to evolve, so too have the EU and US economic sanctions programs against those countries, but in opposite directions. The ouster of Muammar Gadhafi in Libya and the country’s continued steps toward stability have been recognized in both the EU and US, which have responded with measures to ease sanctions and support reforms. In Syria, on the other hand, escalating violence and growing disapproval by EU and US the Syria’s leadership have led to the imposition of greater economic sanctions.
The following is an overview of the sanctions programs maintained against Libya and Syria on both sides of the Atlantic and recent changes to those programs.
Sanctions Against Libya
EU Council Decision 2001/137 and Regulation 204/2011 imposed restrictive measures in view of the situation in Libya in March 2011. The sanctions have been amended several times since. Prohibited is the export of military items and equipment for internal repression as well as the provision of related technical assistance, brokering services or financing. Furthermore, the EU imposed a flight ban in Libya’s airspace and on flights of Libyan aircraft in EU airspace, as well as pre-arrival and pre-departure information and reporting requirements. Listed individuals, including members of the Gadhafi family, are prohibited from travelling to the EU, and the funds of those listed have been frozen. EU citizens are prohibited from providing any funds or economic resources to those listed natural or legal persons.
In view of the recent developments the EU is in the process of successively lifting the sanctions. Decisions 2011/521 and 2011/543 implemented by Regulations 872/2011 and 925/2011 delisted certain Libya-based banks, oil companies and port authorities in September.
Subsequent Decision 2011/625 and Regulations 941/2011 and 965/2011, implementing UN Security Council Resolution 2009(2011), further lift the sanctions. They provide for certain exemptions to the arms embargo if notified and not opposed by the sanction committee within five days – notably the supply, sale or transfer of (i) arms and related materiel of all types, including technical assistance, training, financial and other assistance, if intended for security or disarmament assistance to Libya’s authorities; and (b) small arms, light weapons and related materiel, temporarily exported to Libya for the sole use of UN personnel, representatives of the media, and humanitarian and development workers and associated personnel.
Furthermore, the Libyan National Oil Corporation (NOC), the Zueitina Oil Company as well as the Central Bank of Libya, the Libyan Arab Foreign Bank, the Libyan Investment Authority and the Libyan Africa Investment Portfolio were delisted. However, all funds, financial assets and other economic resources owned or controlled by these financial institutions that were frozen as of September 16, 2011 remain frozen.
US economic sanctions targeted Libya’s government and its former leadership, but recent carve-outs to the sanctions program have eased most restriction. As described in greater detail in the International Trade and Technology Transfer Reporter 2011, Issue 1, the US adopted, in February of this year, blocking measures that apply to property and interests in property held by Muammar Gadhafi, his regime and family, as well as to Libya’s government, its agencies, instrumentalities and controlled entities, and the Central Bank of Libya. In addition, the US Department of State implemented the United Nations Security Council arms embargo against Libya by adopting a policy of denial for all requests for licenses or other approvals to export or otherwise transfer defense articles and services to Libya, except where in furtherance of the national security and foreign policy of the US. Both the Department of State and the Department of Commerce suspended licenses for all exports to Libya.
Since February, the White House has implemented several important measures to ease sanctions against Libya in the form of general licenses issued by the Department of the Treasury’s Office of Foreign Assets Control (OFAC).
General License 6, effective July 15, 2011, authorizes all transactions with the Transitional National Council of Libya, except those that involve previously blocked persons or property. In September, OFAC issued General Licenses 7A and 8A following the United Nations Security Council’s decision to lift most multilateral sanctions against Libya’s government. General License 7A authorizes US persons to engage in transactions with the NOC, including entities owned or controlled by the NOC, and unblocks property and interests in property of the NOC and its subsidiaries. General License 8A authorizes US persons to engage in transactions involving the government of Libya, its agencies, instrumentalities and controlled entities, and the Central Bank of Libya. Importantly, General License 8A does not unblock any blocked property or authorize transactions involving listed person or entities. These OFAC actions do not affect export license requirements or policies imposed by the Department of Commerce or Department of State, which still remain in effect.
Sanctions Against Syria
EU Council Decision 2011/273 and Council Regulation 442/2011 form the basis of the Syria embargo that came into effect on May 10, 2011 (and has been amended several times since). The Syria sanctions initially comprised an export ban for military items, internal repression equipment and related technical assistance, brokering and financial services. Furthermore, as is the case for Libya, listed individuals are prohibited from travelling to the EU, their funds are frozen and EU citizens are prohibited from providing any funds or economic resources to those listed persons.
Increasing worries about Syria’s internal situation led the EU to strengthen the existing measures. Council Decision 2011/522 and Council Regulation 878/2011 imposed an additional ban on the purchase, import or transport of crude oil or petroleum products if the products originate in Syria or are exported from Syria. Also prohibited is the provision of financing, financial assistance, insurance or reinsurance in relation to these prohibitions. An exception exists for contracts concluded before September 2, 2011 if executed prior to or on November 15, 2011. Purchase of a crude oil or petroleum product that had been exported from Syria prior to September 2, 2011 or in accordance with the previous sentence before or on November 15, 2011 will remain permitted. The Council Decision and Regulation further subject additional individuals and companies to the sanctions.
Most recently, Decision 2011/628/GASP and Regulation 950/2011 imposed a prohibition on the financing, acquisition or extension of a participation, or the creation of a joint venture, with any Syrian person engaged in the exploration, production or refining of crude oil. Exceptions exist for the execution of an obligation arising from contracts or agreements concluded before September 23, 2011 and extension of a participation, if such extension is an obligation under an agreement concluded before September 23, 2011. Note that the term Syrian person is very broad and includes (i) the state of Syria or any public authority thereof; (ii) any natural person in, or resident in, Syria; (iii) any legal person, entity or body having its registered office in Syria; and most notably (iv) any legal person, entity or body, inside or outside Syria, owned or controlled directly or indirectly by one or more of the aforementioned persons. Decision 2011/628/GASP and Regulation 950/2011 also prohibit the sale, supply purchase or export, directly or indirectly, of new Syrian denominated banknotes and coinage, printed or minted in the EU, to the Central Bank of Syria. They also further extend the list of controlled individuals. The EU is currently preparing the listing of additional entities (together with a derogation permitting, for a limited period, the use of frozen funds subsequently received by the entity in connection with the financing of trade with nondesignated persons).
US economic sanctions against Syria have until recently consisted of measures blocking property and interests in property of various government officials in Syria as well as restrictions on exports of defense articles and services, items on the Commerce Control List and other items subject to the EAR list (other than EAR99 food and medicine).
Two executive orders issued within the last few months significantly expanded US sanctions against Syria. Executive Order 13573 issued May 18, 2011 added to the list of Syria blocked parties senior officials of Syria’s government and any person or entity determined by OFAC to be an agency or instrumentality of the government. Then, on August 17, 2011, Executive Order 13582 blocked property and interests in property of Syria’s government and prohibited US persons from new investments in Syria, from providing services to Syria, or from importing or otherwise being involved in transactions relating to petroleum products of Syrian origin.
To implement Executive Order 13582, OFAC recently issued numerous general licenses related to transactions with Syria. These general licenses set forth certain narrow authorizations relating to the following types of transactions: transactions necessary to wind down contracts involving Syria’s government; transactions relating to US persons residing in Syria; transactions associated with the United Nations and related programs and funds; transactions by banks operating accounts for nonblocked persons in Syria; transactions involving certain services provided by nongovernmental organizations; third-country diplomatic and consular funds transfers; payments for overflights of Syrian airspace; and certain telecommunications transactions.
The recent EU and US responses to events in Libya and Syria demonstrate the fluidity and complexity of these sanctions programs. Companies are advised to consider carefully any proposed dealings with these countries and to ensure that decisions account for the most recent modifications to the sanctions programs.