Recently, the EU consolidated and expanded its sanctions against Syria in light of the political situation in that country.
Council Regulation (EU) No 36/2012 of 19 January 2012 ("Regulation 36/2012") repealed and replaced Council Regulation (EU) No 442/2011 ("Regulation 442/2011"), which introduced restrictive measures in relation to Syria in May 2011,1 and both consolidates subsequent amendments to Regulation 442/2011 and further extends the existing restrictive measures.
On 24 January 2012, the EU included an additional 30 persons and entities to the sanctions list by Council Regulation (EU) No 55/2012.2
On 28 February 2012, by Council Regulation (EU) No 168/2012 ("Regulation 168/2012")3 and Council Decision 2012/122/CFSP,4 the EU has adopted a further round of sanctions against Syria, including an asset freeze on Syria's Central Bank and seven ministers, a ban on cargo flights from Syria into the EU and a ban on trade in gold, silver, platinum and diamonds. Furthermore, the partial suspension of the EU's Cooperation Agreement with Syria is extended.
The US Government continues to maintain comprehensive sanctions against the Government of Syria, including the CBS, as well as a broad ban on export of any services to Syria. Unlike the new EU measures, the US sanctions do not contain the wide ranging exceptions involving the CBS.
New restrictive measures under Regulation 36/2012
Regulation 36/2012 reinforced the EU's sanctions regime against Syria by providing for several additional restrictive measures to companies and individuals within EU jurisdiction.
- Export of telecommunications monitoring equipment
Articles 4 and 5 of Regulation 36/3012 provide for a prohibition on exporting equipment, technology, or software intended for use in the monitoring of the Internet or telephone communications by the Syrian regime. It is also prohibited to provide technical or financial assistance or brokering services in relation to such items, as well as to provide any telecommunication or Internet monitoring or interception services of any kind to, or for the direct or indirect benefit of, the State of Syria, its Government, its public bodies, corporations and agencies, or person acting on their behalf, unless authorised in advance by the competent authority in the Member State where the exporter is established. The equipment, technology, or software which is covered by the prohibition is set out in Annex V to the Regulation.
- Export of key equipment to Syrian oil and gas industry
Articles 8 and 9 of Regulation 36/2012 provide for a prohibition on exporting, and/or provision of services in relation to, key equipment or technology to the exploration, production, refining, and liquefaction sectors of the Syrian oil and gas industry. It is also prohibited to provide, directly or indirectly, technical and financial assistance or brokering services related to such key equipment and technology to any Syrian person, entity or body, or for use in Syria. The list of equipment or technology covered by the prohibitions is set out in Annex VI to the Regulation. However, the performance of an obligation arising from a contract concluded prior to 19 January 2012 is grandfathered, provided that the entity seeking to rely on this exemption has notified the relevant Member State authority at least 21 days in advance.
- Restrictions on participation in infrastructure projects
Article 12 prohibits the export of equipment or technology to be used in the construction or installation in Syria of new power plants for electricity production. It is also prohibited to provide, directly or indirectly, financial or technical assistance in relation to any such project. However, these prohibitions do not apply to the performance of a contract concluded prior to 19 January 2012, provided that the entity seeking to rely on this exemption has notified the relevant Member State authority at least 21 days in advance.
Furthermore, the restrictions in Article 13 on financing certain enterprises in Syria shall also apply to any Syrian person, entity or body engaged in the construction or installation of new power plants for electricity production. It is prohibited to grant any financial loan, create joint ventures, or acquire or extend a participation in any such person, entity or body. The prohibition is, however, without prejudice to the execution of a contract (or the extension thereof) relating to the construction or installation of new power plants for electricity production concluded prior to 19 January 2012.
- Restrictions on the provision of financial services
Article 24 prohibits trading in Syrian public or public-guaranteed bonds issued after 19 January 2012 to or from the State of Syria, its Government, its public bodies, corporations or agencies, or any Syrian credit and financial institution or anybody in their control. The provision of brokering services in relation to such bonds is also prohibited.Article 25 prohibits EU credit and financial institutions from carrying out certain activities in relation to Syrian credit and financial institutions, namely:
- opening a new bank account with any Syrian credit or financial institution;
- establishing a new correspondent banking relationship with any Syrian credit or financial institution;
- opening a new representative office in Syria or establishing a new branch or subsidiary in Syria; or
- establishing a new joint venture with any Syrian credit or financial institution.
In addition, no EU credit and financial institutions may:
- authorise Syrian credit and financial institutions to open a representative office in the EU;
- conclude agreements for or on their behalf pertaining to the opening of a representative office in the EU;
- grant an authorisation for taking up and pursuing the business of a credit or financial institution or for any other business requiring prior authorisation, by a representative office, branch or subsidiary of any Syrian credit or financial institution, if such was not operational before 19 January 2012; or
- have a Syrian credit or financial institution acquiring an interest or extending a participation in them.
- Insurance and Re-insurance
Article 26 prohibits the provision of insurance or re-insurance to the State of Syria, its Government, its public bodies, corporations or agencies, or person acting on their behalf. However, it is not prohibited to:
- provide compulsory or third party insurance to Syrian persons, entities or bodies based in the Union;
- provide insurance for Syrian diplomatic or consular missions in the Union;
- provide insurance, including health and travel insurance, and re-insurance relating thereto, to covered individuals acting in their private capacity; or
- provide insurance or re-insurance to the owner of a vessel, aircraft or vehicle chartered by the State of Syria, its Government, its public bodies, corporations or agencies provided that person or entity is not listed pursuant to the asset freeze provisions of Regulation 36/2012 (i.e. Article 14).
Article 26 also prohibits the extension or renewal of insurance and re-insurance agreements concluded before 19 January 2012 unless there is a prior contractual obligation on the part of the insurer/re-insurer to accept such extension or renewal of a policy. This means that contracts of insurance and re-insurance currently in place may run their course, subject to compliance with any other relevant provision of Regulation 36/2012.
- Asset freeze
Article 17 provides that the competent authorities in the Member States may authorise the release of certain frozen funds or economic resources if those funds/resources are necessary for the essential energy needs of the civilian population in Syria.
New restrictive measures under Regulation 168/2012
- Central Bank of Syria ("CBS")
The EU imposed an asset freeze on Syria's Central Bank and seven ministers. The EU has exceptionally taken measures against a central bank, notably against the Central Bank of Iran in January 2012. However, to minimize the disruptions in normal trade, the asset freeze against CBS allows Member States to authorize:
- transfers by or through CBS of funds or economic resources received by the CBS after 27 February 2012, provided that the payment will not, directly or indirectly, be received by any other listed persons or entities;
- transfers of funds or economic resources to or through CBS where the transfer is related to a payment by a non-listed person or entity due in connection with a specific trade contract, provided that the payment will not, directly or indirectly, be received by any other listed persons or entities; and
- transfers made by or through CBS of frozen funds or economic resources in order to provide financial institutions within the jurisdiction of the Member States with liquidity for the financing of trade.
These wide ranging exceptions reflect the important functions of the CBS within the Syrian economy particularly its role in facilitating Syrian trade. Depending on the actual involvement of the CBS in specific transactions, such as exchange of currencies, CBS' asset freeze may potentially have very wide impact on transfers of funds to and from Syria in relation to non-restricted transactions.
- Trade in gold, precious metals and diamonds
The EU has banned all trade in gold, precious metals and diamonds with the Government of Syria, its public bodies, corporations and agencies, the CBS and any person, entity or body acting on their behalf or at their direction, or any entity or body owned or controlled by them. The restriction applies to gold, precious metals and diamonds, irrespective of origin, as listed in Annex VIII to the Regulation 168/2012.
The related provision of direct or indirect technical assistance or brokering services, financing or financial assistance to the Syrian entities above engaged in trade of gold, precious metals and diamonds is also prohibited.
- Cargo flights
The EU called for Member States to adopt necessary measures to ban all cargo flights operated by Syrian carriers to EU airports, with the exception of mixed passenger and cargo flights