Apr
25
Lab Equipment Companies Added to Entity List
Posted by Clif Burns at 7:30 pm on April 25, 2012
Category: BIS • Iran Sanctions • Syria
Last week the Bureau of Industry and Security (“BIS”) added three parties to the Entity List and imposed license requirements for exports, re-exports and in country transfers to these parties for all items subject to the Export Administration Regulations, i.e., items exported from the United States or with certain percentages of U.S. content. The order adding the parties to the Entity List indicated that there would be a presumption of denial for all license applications involving the three parties.
As is typically the case, BIS provides only scant detail about what got these three parties into hot water beyond saying that they had been involved in the transhipment of items to Iran and Syria. Looking at the identity of the parties allows one to make some more reasonable assumptions about what was going on. One of the designated entities was Canada Lab Instruments in Montréal, which describes itself in a business directory as “supplying a wide range of environmental, laboratory, measuring and analytical instruments for researching and educational purposes from the most famous manufacturers.” The second entity, Abou Elkhir Al Joundi, is an individual who owns Canada Lab Instruments and was educated in Damascus, Syria. The third entity was “Masound [sic] Est. for Medical and Scientific Supplies” in Amman, Jordan, which describes itself in a business directory as involved in the distribution of medical and scientific laboratory equipment.
It seems, therefore, reasonable to assume that the three entities were put on the Entity List in connection with shipment of medical and lab equipment from Canada and through Jordan to Syria and Iran. The quantity and value of the shipments, however, cannot be determined and the BIS order gives no indication. This also does not seem to involve items of particular concern to the interests of the United States in Iran and Syria, particular since the medical equipment probably would have been eligible for licenses. But I guess if we are chasing folks for selling nail polish to Iran, everything is fair game.
As a side issue, if BIS wants to put people in jail for future unlicensed exports to the Jordan company, it at least ought to spell the name of the company correctly on the list establishing this license requirement. It’s “Masoud,” not “Masound.”
Apr
18
Updates on Bird Flu and Nail Polish
Posted by Clif Burns at 5:35 pm on April 18, 2012
Category: Deemed Exports • Iran Sanctions • OFAC
ABOVE: H5N1 virus
Civil disobedience and export laws: those are two concepts not often linked together. But it appears that a Dutch researcher on the H5N1 avian virus is planning to tell Dutch authorities to take a hike and will submit his research to a U.S. journal even though the Dutch government has declared that the research is export-controlled.
This issue was discussed in an earlier post on this blog that discussed how decisions by U.S. researchers to restrict dissemination of some research on the bird flu virus might disqualify the research from the fundamental research exception and make it difficult to share the research with colleagues in other countries. Those restrictions were ultimately removed and the research is not considered export controlled in the United States. Dutch authorities have relied on those initial restrictions to declare the research controlled and have told the researcher that he could not submit the research to foreign journals for publication.
Now Fouchier [the Dutch researcher] says that he is prepared to defy the government and submit the work anyway, an action that could cost him up to 6 years in prison or a $102,000 fine. …
“We simply will never apply for an export permit on a scientific manuscript for publication in a journal. We do not want to create a precedent here,” he told Nature. “We might end up in court indeed if they insist on censorship.”
As an unrelated update, this blog yesterday posted on the $450,000 fine levied on Essie Cosmetics for exports of nail polish to Iran. Several readers have emailed me to suggest that the high fine was based not on the strategic implications of nail polish exports but on, shall we say, an uncooperative attitude by Essie in dealing with OFAC. That’s not hard to believe because, notwithstanding Essie’s expensive dust-up with OFAC, the cosmetic company’s website still has Iran in the drop-down list of countries in forms on its website.
Apr
17
OFAC Strikes Another Blow Against Iran’s Nuclear Ambitions
Posted by Clif Burns at 6:51 pm on April 17, 2012
Category: Iran Sanctions • OFAC
In the last release of civil penalty information, the Office of Foreign Assets Control (“OFAC”) announced that it whacked Essie Cosmetics Ltd. with a whopping $450,000 fine for exports the company made to Iran in violation of the U.S. embargo on Iran. So what did Essie export to merit such an enormous fine? Uranium enrichment centrifuges? Missile guidance systems? No. Nail polish. Yes, you read that correctly: nail polish
The apparent violations relate to Essie and Individual’s knowing sale and export of nail care products on or about September 17, 2009, December 8, 2009 and February 23, 2010, to an Iranian distributor pursuant to an Exclusive Distributorship Agreement in apparent violation of § 560.204 of the ITR.
Well, it must have been boatloads of nail polish, right? No.
The total transaction value for the three transactions settled with OFAC was $33,299.
I guess the thinking was that it is pretty hard to enrich uranium, build nuclear weapons, threaten our allies, and engage in general terrorist activities if you aren’t wearing nail polish. I don’t know about you, but I’ll sleep better tonight knowing that a few people with unpolished nails are sitting at home rather than working on nuclear bombs.
Apr
10
Iran Fights Back (Or Not?)
Posted by Clif Burns at 6:30 pm on April 10, 2012
Category: Iran Sanctions • OFAC
This blog reported on March 29 that OFAC had provided guidance on various technologies eligible for export to Iran as incidental to the exchange of personal communication over the Internet. Most significantly, OFAC indicated a willingness to permit certain fee-based services, such as Skype and Google Voice, to Iranians under this exception. I had suggested that given comprehensive sanctions on major Iranian banks, ordinary Iranian citizens would be hard-pressed to actually pay for these services even if licensed.
Now it appears that Iran might even more effectively prohibit U.S. exports of services and software incidental to personal communications over the Internet. According to this story in Ars Technica, the Iranian government is planning to create a national intranet and cut off access to the Internet for ordinary citizens in Iran, possibly as early as October 2012. The source for this story is a report by Reporters Without Borders entitled Enemies of the Internet
After a number of other outlets picked up the story, Iran is now claiming, somewhat bizarrely, that the story of shutting down the Internet in Iran is an April Fool’s day hoax. Seriously, I guess the mullahs sat around and decided it would be hilarious to tell a whopper about the Internet on April Fool’s day. I think the only April Fool is anyone who actually believes the story that the report was an April Fool’s day joke. Iran’s history of pervasive Internet censorship is well detailed in the Reporters Without Borders report, so the idea of a “clean” national intranet in Iran to replace the real Internet hardly strains credibility.
Mar
29
I Think This Is What You Call Cold Comfort
Posted by Clif Burns at 8:37 pm on March 29, 2012
Category: Iran Sanctions • OFAC
Last week, the Office of Foreign Assets Control (“OFAC”) issued an interpretative guidance on section 560.545 of the Iranian Transactions Regulations which permits exports from the United States to Iran of services incidental to the exchange of personal information over the Internet. The rule requires that such services be “publicly available at no cost to the user.” The guidance gives some examples that seem to have been obviously covered even without the guidance:
- Personal Communications (e.g., Yahoo Messenger, Google Talk, Microsoft Live, Skype (non-fee based))
- Updates to Personal Communications Software Personal Data Storage (e.g., Dropbox)
- Browsers/Updates (e.g., Google Chrome, Firefox, Internet Explorer)
- Plug-ins (e.g., Flashplayer, Shockwave, Java)
- Document Readers (e.g., Acrobat Readers)
- Free Mobile Apps Related to Personal Communications
- RSS Feed Readers and Aggregators (e.g., Google Feed Burner)
More significant is what the guidance has to say about paid services which aren’t covered by section 560.545. According to the guidance, fee-based personal communications are now covered by the favorable licensing policy set forth in the Statement of Licensing Policy On Support of Democracy and Human Rights in Iran. Specifically, this favorable policy will cover paid web hosting services, paid mobile apps and paid internet communications services such as Skype and Google Voice. The policy also covers payment to Iranians in connection with online advertising on Iranian websites.
This all laudable, but it seems unlikely that anyone will be able to take advantage of these new policies. Specifically, how are Iranians going to pay for these services without routing them through one of the many designated Iranian banks? All such payments will wind up being blocked. Even if the payments are somehow routed only through the few banks that are not designated, it’s not clear how the transfers from individual Iranians will be able to reference the specific licenses to avoid being rejected by U.S. banks.
So although Iranians might find some comfort in OFAC’s lip service on democracy in Iraq, it will be cold comfort if they actually try to obtain the paid services in question.
