Author Archive


Jun

9

State Department Admits New Iran Sanctions’ Bark Is Worse Than Bite


Posted by at 6:40 pm on June 9, 2011
Category: Iran Sanctions

Mark Toner
ABOVE: Mark C. Toner


The State and Treasury Departments announced today new Iranian sanctions against Iran’s Islamic Revolutionary Guard Corps, the Basij Resistance Force, and Iran’s national police and its chief. These sanctions, which would block all assets in the United States held by these groups, arise from human rights’ abuses by Iran committed by these groups.

State Department Deputy Spokesperson Mark C. Toner was discussing these sanctions in today’s Daily Press Briefing when an astute reporter asked the obvious question: do these entities have any assets that will be blocked by these sanctions. I mean, really, does anyone actually think that the Islamic Revolutionary Guard, the Iranian police or their chief have any assets in the United States?

The interchange between Toner and the reporter is both amusing and instructive as Toner tries, not so deftly, to dodge the question:

QUESTION: I have two questions about the sanctions announcements that were made this morning jointly with Treasury. One, can you tell us to what extent, if at all, any of the three designated entities or the one designated individual have assets that fall under U.S. jurisdiction?

MR. TONER: I do not know that. I believe, as you said, that this action will block or freeze property and interest in property for designated persons or designated entities, and U.S. persons are prohibited from engaging in transactions involving the persons and entities.

QUESTION: (Sneeze.)

MR. TONER: God bless you. But I can’t give you a breakdown of what assets may be affected by that.

QUESTION: Can you check for us to see if the Departments of State or Treasury believe that these entities and the individual have any assets or any significant assets that would be captured or frozen by this? And if not, what is the significance of that –

MR. TONER: Well –

QUESTION: Wait. Let me finish.

MR. TONER: Okay.

QUESTION: What is the significance of it? In the past, you have sometimes argued that – or U.S. officials have sometimes argued that there is a multiplier effect because other financial institutions will steer clear of such entities or individuals for fear of falling afoul.

MR. TONER: That’s a good answer.

QUESTION: I know it is, and I understand this, but I’d really much rather have it out of a U.S. official than me, so if you can check.

MR. TONER: Well, certainly, Arshad. But I mean this – I – as I said, I can’t give you a clear breakdown and I would refer you to –

QUESTION: I didn’t ask for a breakdown. I asked for whether you have – they have any assets or any significant assets. I’m not asking for a breakdown. I’m asking, do they have any assets or significant assets?

MR. TONER: Okay. And I will endeavor to get that for you.

QUESTION: Thanks.

MR. TONER: But again, what’s important here is the bite, if you will, of these sanctions is only one element. It also sends a clear message that we won’t abide by Iran’s continued human rights abuses.

Yes, he really did say that the bark may be worse than the bite.

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Copyright © 2011 Clif Burns. All Rights Reserved.
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Jun

8

Making Law By Press Conference


Posted by at 8:23 pm on June 8, 2011
Category: Venezuela

Ileana Ros-Lehtinen
ABOVE:Asst. Sec. Steinberg


On May 24, the State Department announced sanctions against a number of companies including Petróleos de Venezuela (“PDVSA”). According to the State Department press release, PDVSA was sanctioned under the Iran Sanctions Act (“ISA”) of 1996, as amended by the Comprehensive Iran Sanctions, Accountability, and Divestment Act (“CISADA) of 2010 because of alleged shipments of a gasoline additive to Iran between December 2010 and March 2011. The specific sanctions imposed appear to be, at least according to the press release, a ban on U.S. government procurement, Ex-Im Bank financing, and the grant of any export licenses to PDVSA.

The exact scope of these sanctions is unknown because as of today, more than two weeks later, the State Department hasn’t done anything but issue a press release, mention the sanctions in a special press briefing by Assistant Secretary of State James Steinberg, and provide atelephonic background briefing to certain members of the press. But a Federal Register notice? Nope. The State Department hasn’t even filed the notice for future publication in the Federal Register. Without such filing, under section 1507 of the Federal Register Act, the sanctions have no effect against a person unless the State Department can prove that they have actual notice of the sanctions.

Leaving aside the technicalities of the Federal Register Act, administrative action solely by press release violates the basic principle that this is a country of written laws that are not secret and are available to everyone. No matter how annoyed the Department of State is with Hugo Chavez and Iran, that is no reason to suspend these basic principles.

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(No republication, syndication or use permitted without my consent.)

Jun

7

Live and Let Spy


Posted by at 6:31 pm on June 7, 2011
Category: BIS

Spy VanThe Fayetteville Observer provides details of an ongoing investigation of Raleigh-based Law Enforcement Associates, Inc. by the Bureau of Industry and Security (“BIS”) with respect to alleged unlicensed exports of surveillance equipment to Morocco, Egypt, the Netherlands, and Great Britain. The investigation started with the seizure of a van outfitted with covert listening gear that was destined for Morocco.

Alert readers will probably immediately wonder about BIS’s “no see through” rule, which looks at the proper classification of an item independently of its component parts. That rule is found as Interpretation 2 in section 770.2 of the Export Administration Regulations.

There are two requirements for the “no see through” rule to apply. First, the part must be physically integrated into the unit to be exported. Second, the parts must be:

normal and usual components of the machine or equipment being exported [and] the physical incorporation is not used as a device to evade the requirement for a license

The issue here is whether the “normal and usual component” requirement is met. The answer to that requires the answer to a more-or-less metaphysical question. If the item being exported is seen as a van, then arguably surreptitious listening devices are not normal and usual components (unless there is some dealer option I’ve missed). But, if the exported item is seen as a “surveillance van,” the listening devices are almost certainly normal and usual components. So to answer that question you’ll need to dig out your copy of Aristotle’s Metaphysics and reflect upon the difference between accident (συμβεβεκός) and essence (το τι ην ειναι). Good luck, as Plato used to say.

An alternate theory is that maybe BIS thinks that the van is itself the listening device covered by ECCN 5A980. That theory founders because that ECCN only covers items that are “primarily useful” for “surreptitious interception of wire, oral, or electronic communications.” My guess is that — without recourse to Aristotle — it is pretty easy to determine that the van is primarily useful for driving and, if sufficiently tricked out, for sleeping, not for surreptitious listening.

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Jun

6

U.S. Company Announces Retrieval Service for Cuban Documents


Posted by at 10:01 pm on June 6, 2011
Category: Cuba SanctionsOFAC

Cuban CertificatesJust how far does the information exception to our economic sanctions programs go? Of course, the traditional response from the Office of Foreign Asset Controls (“OFAC”), the agency that administers the U.S. economic sanctions regimes, is usually “Not very far.” The issue, here, is whether a particular activity is an export of information or an export of services (or some combination of the two.) Sometimes OFAC has tried to draw the distinction by saying that the exception does not apply to information not already in existence, although it makes a somewhat unaccountable (although welcome) exception for magazine subscriptions.

So where does this new Cuban document retrieval service fall? The service advertises that it uses “proprietary” means to retrieve Cuban birth certificates and other official certificates for people in the United States. Retrieving these documents from Cuban archives seems to pose few problems. But the service doesn’t stop there:

All documents retrieved from Cuba for any official use (Cuban passport, driver’s license and marriage applications etc) need to be “legalized” in Cuba in order to be recognized as an official document.

The certificates we provide are legalized with stamps and seals from the Ministerio de Relaciones Exteriores also known as MINREX.

Adding the legalization stamps, seals and other government doohickeys may be what steps over the line, because the retrieval company is not just exporting information already in existence but is taking existing information and providing services to alter it.

Section 515.545 of the Cuban Assets Control Regulations also seems to suggest that the legalization process may be one step too far:

This section does not authorize the remittance of royalties or other payments relating to works not yet in being, or for marketing and business consulting services, or artistic or other substantive
alteration or enhancements to informational materials

The company has said that this plan has been blessed by its lawyers and that they are not obtaining licenses for these transactions. I suppose that in the end the issue is whether the legalization of the document is or is not a “substantive alteration or enhancements.” I would be disinclined to opine to a client on that matter without at least some informal discussions with OFAC. So, I’m assuming that someone in OFAC likely provided at leat an informal reaction to the retrieval plan.

[Posting has been light lately due to demands at work This week my normal posting schedule ought to resume.]

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Copyright © 2011 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

May

26

SEC To TSRA: Drop Dead!


Posted by at 10:05 pm on May 26, 2011
Category: SanctionsSEC

UPS TruckYou may never have heard of the SEC’s Office of Global Security Risk and probably have no idea what they do. Well, although I know what they are supposed to do, I have always wondered what the people at that office do during the work day.

Now we know. They surf websites looking for sanctioned countries, like Syria and Sudan, in drop down address lists on the websites of U.S. companies. Allegedly this is to advise U.S. investors about publicly-traded companies that supposedly jeopardize their stockholders’ investments by dealing with sanctioned countries.

After a heavy day of web surfing the Office of Global Security Risk fired off this missive to UPS in respect to a price table it found on the UPS site.

We also note an Air Freight peak season surcharge table on your website which lists surcharge amounts for regions including Latin America and Europe, Middle East, Africa in the Destination section. According to the notes section, the destinations listed include Cuba under “Latin America (All Other Countries)” and Iran, Sudan and Syria under “Europe, Middle East, Africa.” Iran, Sudan and Cuba are identified by the U.S. State Department as state sponsors of terrorism and are subject to U.S. economic sanctions and export controls.

Apparently the SEC thinks that all exports to these countries are banned. The time that the OGS staff spent surfing the web apparently did not extend to researching economic sanctions laws and discovering, say, TSRA, which permits exports of agricultural products, medicine and medical devices to sanctioned countries. Or the Berman amendment which permits export of informational materials. Never mind any of the other exceptions.

UPS replied by saying this:

The appearance of any country on the sanctions list on a UPS listing of surcharge amounts, explained [UPS Vice-President Norman] Brothers, applies only to lawful deliveries. “During the period July 10, 2006 through December 31, 2010, UPS rejected at least 55 shipments destined for Syria because they were determined to be impermissible under U.S. export controls.”

The SEC was reportedly unembarrassed its crude understanding of U.S. export laws and immediately returned to more web surfing. You can start humming that Gershwin tune: “Nice work if you can get it.”

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Copyright © 2011 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)