Archive for February, 2011



Libya: The Hammer Begins to Fall

Posted by at 7:11 pm on February 28, 2011
Category: Libya Sanctions

Col. GadaffiNow that most U.S. citizens appear to have been evacuated from Libya, the White House has begun to re-impose sanctions on Libya, although they are far from comprehensive. On Friday, February 25, President Obama release an Executive Order that blocked the assets of the government of Libya, Colonel Gadaffi and his family and prohibited the provision or receipt of goods, funds or services to and from these entities and individuals. The Executive Order also invoked section 203(b)(2) of the International Emergency Economic Powers Act, 50 U.S.C. 1702(b)(2), to prohibit humanitarian donations of food, clothing or medicine to Gaddafi and his family, although such donations seem unlikely in any event. It is doubtful that any clothing that could be donated to the Colonel would even meet his bizarre sartorial standards.

In addition to the Colonel himself, the Executive Order designated Ayesha, his only daughter; Saif al-Islam, his second oldest son; Mutassim, his fourth eldest son; and Khami, his seventh son. Sons Muhammed, al-Saadi, Hannibal and Saif al-Arab have, at least for the moment, escaped the OFAC ban hammer. Khamis was no doubt singled out for his recruitment of the mercenary force used against protesters in Libya.

The designation order reflects considerable uncertainty about the correct transliteration of the Colonel’s family name. Ayesha and Mutassim have the surname Gaddafi listed first, whereas the Colonel, Saif al-Islam and Khamis have their surname spelled Qadhafi. In all fairness, ABC says that there are 112 known spellings of the Colonel’s name and there was even a 1981 Saturday Night Live skit based entirely on confusion about how to spell his name. And Gaddafi’s own website,, spells the name in a way found almost nowhere else.

In addition to the sanctions imposed on the Colonel and some of his children, the Directorate of Defense Trade Controls (“DDTC”) announced today that all export licenses it had issued for exports to Libya had been suspended until further notice and that no exemption set forth in the International Traffic in Arms Regulations could be utilized for exports of defense articles and services to Libya. Currently only non-lethal defense articles and services and safety-of-use items, such as technical manuals and ejection seats for military aircraft, that are parts for lethal defense articles could be authorized for export to Libya.

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Libya Sanctions: Easier Said Than Done

Posted by at 9:39 pm on February 24, 2011
Category: Libya Sanctions

Col. GaddafiA thoughtful article from the McClatchey News Service explains why no matter how attractive it may seem now to impose economic sanctions on Libya, that is something easier said than done. Administration aides in Washington told McClatchey that even though Obama has so far not called directly for sanctions against Libya, the White House would seek such sanctions in cooperation with international partners.

The first complication, of course, is that the United States does not want to jeopardize the safety of the many Americans that remain trapped in Libya. Although many U.S. citizens have been able to leave on a State Department chartered ferry from Tripoli to Malta, many more U.S. citizens who are working on oil fields are stranded in remote locations. A second problem with sanctions is that, to the extent they try to cut off sales of Libyan oil, they will have a detrimental impact on U.S. consumers by increasing the price of oil. Third, unilateral U.S. sanctions would have little impact on Libya because there is very little trade between the U.S. and Libya. Those are all fair points.

Libya is already subject to an arms embargo under section 126.1 of the International Traffic in Arms Regulations. Exceptions to the embargo are made for non-lethal defense articles and safety-of-use items, such as technical manuals and ejection seats for military aircraft, as parts for lethal defense articles. The use of military aircraft against the civilian population of Libya could serve as a justification for the elimination of these exceptions, but there is no indication that this is currently being contemplated.

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Don’t Believe Everything You Read in the Newspaper

Posted by at 9:20 pm on February 23, 2011
Category: ITAR

Frank GaffneyI’m just going to let this quote from Frank Gaffney in an opinion column in the Washington Times speak for itself:

“Given the well-known corruption practices by EADS, it would make common sense that it not be awarded Pentagon contracts. In fact, Congress has passed the Foreign Corrupt Practices Act that bars companies who engage in bribery overseas from competing for United States government programs.

“The U.S. Department of Justice has appallingly interpreted the laws to cover only U.S.-based companies – therefore exempting EADS. But it gets worse. The federal government has gone even further and exempted EADS from the Buy American Act, the Berry Amendment, the International Trafficking and Arms Regulations and the Cost Accounting Standards. Complying with these expensive regulations is mandatory for any American company looking to do business with the Pentagon, but waived for a foreign competitor such as EADS.”

Gaffney is quoting approvingly Representative Todd Tiahrt, a U.S. Congressman from Kansas. I’m sure that the Department of Justice as well as DDTC will be just as surprised as you and I are that DOJ had exempted EADS from all defense-related export controls. If I figure out how to get an exemption from the ITAR from Justice, you’ll be the first to hear about it here.

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OFAC Protects US From Sarasota-Havana Regatta For Another Year

Posted by at 5:41 pm on February 22, 2011
Category: Cuba Sanctions

Sarasota-Havana RegattaFile this under the category of all the ways that OFAC helps me sleep better at night. The Sarasota Yacht Club, which was probably founded by Che Guevara, cooked up a scheme to threaten U.S. national security by having a bunch of wealthy yacht owners sail some boats in May to Cuba, something that had wisely not been permitted since 1994. As proof of their devious intentions, the yacht club asked the Office of Foreign Assets Control for permission to conduct this revolutionary regatta. Well, you will be pleased to know that OFAC bravely acted on this request by sitting on it until the deadline for organizing the regatta expired. You can breathe that sigh of relief now.

The club had signed up 184 boats and had hoped that the regatta would provide a little boost to the Sarasota economy. Now they’re going to Miami instead.

Interestingly the previously-linked article on OFAC’s refusal to permit the regatta to proceed, made no mention of any request by the boat owners to get approval from the Bureau of Industry and Security (“BIS”) for the exports of the 184 boats to Cuba. (Sailing a U.S. vessel into Cuban waters, even if only temporarily, is considered an export of that boat to Cuba.) OFAC licenses travel to Cuba and BIS licenses exports of U.S. goods to Cuba. As this blog reported a few years back, BIS fined one boat owner for exporting his boat to Cuba in connection with the ill-fated Conch Republic Regatta from Key West to Havana. So not only did OFAC’s inaction protect the U.S. from the Cuban threat to our national security, but also it may have protected boat owners who thought they could blithely sale to Cuba just because OFAC had said so, if it had in fact said so.

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Proposed Legislation Seeks To Strengthen Iran Sanctions

Posted by at 9:36 pm on February 16, 2011
Category: Iran Sanctions

Mahmoud AhmadinejadU.S. Senators Kirsten Gillibrand (D-NY) and Mark Kirk (R-IL), and U.S. Representatives Ted Deutch (D-FL) and Dan Burton (R-IN) today introduced the Iran Transparency and Accountability Act designed to strengthen U.S. unilateral sanctions against Iran. Although the text of the bill is not yet on Thomas, the bill is described by a press release from Senator Gillibrand.

The bill has two major provisions. First, the bill would require publicly-traded companies to report to the SEC any dealings that the companies have with Iran including, presumably, dealings that are licensed and permissible under existing rules and legislation such as trade in agricultural and informational products. Further, the bill would require the SEC to post these dealings on its website.

The second part of the bill would deal with an unresolved issue from the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (“CISADA”). Part of CISADA, which this blog reported on here, required the Office of Foreign Assets Control (“OFAC”) to promulgate regulations requiring U.S. financial institutions with foreign bank correspondent accounts to undertake one or more of four activities designed to determine whether the foreign banks are providing services to Iran in aid of its proliferation goals. These include audits and “due diligence” on the foreign banks. No time limit was imposed by CISADA within which OFAC had to adopt these regulations, and there is no indication that has taken any steps at this point to adopt the required regulations. The proposed legislation would require audit rules to be promulgated within 90 days of enactment of the proposed law.

Needless to say, rules requiring U.S. banks to perform audits on its foreign correspondent banks to determine if they are dealing with Iranian banks will be costly and burdensome and could threaten U.S. trade with our allies and trading partners. Moreover, requiring these rules to be rushed through OFAC in 90 days or less is likely to lead to poorly thought-out rules which would exacerbate this negative impact on U.S. trade with countries other than Iran.

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