On February 25, 2011, citing the extreme measures taken by Colonel Muammar Qadhafi, his government and close allies to repress the rebellion in Libya and the risk that Qadhafi and allies would misappropriate Libyan state assets, President Obama issued an Executive Order that, among other things, blocks all transactions involving property or property interests of the following persons:
- the Government of Libya, its agencies, instrumentalities, and controlled entities, including the Central Bank of Libya;
- Ayesha QADHAFI [Lieutenant General in the Libyan Army, born circa 1976 or 1977];
- Khamis QADHAFI [born 1980];
- Muammar QADHAFI [Head of State of Libya, born 1942];
- Mutassim QADHAFI [National Security Advisor and Lieutenant Colonel in the Libyan Army, born circa 1975];
- Saif Al-Islam QADHAFI [born June 5, 1972]; and
- persons later determined to be (a) senior officials of the Government of Libya, (b) children of Qadhafi, (c) responsible for participating or assisting in Libyan political repression, or (d) spouses and dependent children of any blocked person.
Effective 8 pm EST on February 25, 2011, US persons are prohibited from transferring, paying, withdrawing, exporting, or otherwise dealing in any property or property interests (direct, indirect, present, future, or contingent) of the targeted persons without authorization from the US Treasury Department's Office of Foreign Assets Control (OFAC).
Although Libyan nationals unassociated with the Government of Libya or targeted persons are not themselves blocked, the blocking order against the Libyan Government, its agencies, instrumentalities, and controlled entities is very broad, extending to financial or trade transactions with Libya's public sector entities or state-owned enterprises. It remains to be seen how broadly OFAC will implement the blocking order and interpret its scope. We caution, however, that OFAC has construed similar Executive Order language in the context of other sanctions programs to effect a total embargo of the targeted country. Given the speed with which events are moving, it is unclear when additional guidance will be forthcoming.
OFAC has issued General License Number 1 authorizing all transactions with financial institutions owned or controlled by the Government of Libya that are organized under laws of a country other than Libya, provided the transaction is consistent with local law. We believe this General License is designed to prevent non-targeted persons' assets in third-country Libyan banks from being frozen. It does not, however, appear to authorize broader financial or trade transactions involving the Government of Libya, even if conducted through such non-blocked financial institutions.
On Saturday, the United Nations Security Council imposed multilateral sanctions on Libya, primarily an arms embargo and a travel ban and asset freeze against particular members of the regime. The sanctions also prohibit UN member states from allowing mercenaries to participate in the events in Libya and, in an unprecedented move, refer the entire Libyan situation to the International Criminal Court. The UN sanctions appear to focus on stopping violence and repressive acts by the Libyan Government rather targeting the broader Libyan economy, for example by not moving against the country’s oil or shipping activities. The UN sanctions do not become effective until member states implement the restrictions in local law. We expect further action by the US Government in the coming days or weeks to implement those sanctions not already part of President Obama’s Executive Order. The European Union will be considering similar sanctions this week.