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May

15

DDTC Announces Partial Lifting of Somalia Arms Embargo

Posted by Clif Burns at 5:23 pm on May 15, 2007

Abandoned Tank in Mogadishu, Somalia The Directorate of Defense Trade Controls (“DDTC”) announced today that it was amending section 126.1 of the ITAR to reflect a partial lifting of the arms embargo against Somalia. These amendments are being adopted to implement revisions made to the Somalia arms embargo by U.N. Security Council Resolution 1744 adopted on February 21, 2007. Thee three month delay in announcing the amendments, which have not yet even been published in the Federal Register, indicates that revising the arms embargo on Somalia was not exactly put on the front burner at DDTC.

In January this year, an offensive by Ethiopian troops overthrew the fundamentalist Islamic militia that had ruled the country and allowed the emergence of the Transitional Federal Government of Somalia (“TFG”). The TFG is the result of mediation by the Intergovernmental Authority on Development. Formed in late 2004, the TFG governed from neighboring Kenya and then moved to Baidoa, a city in Western Sudan. On January 8, 2007, the TFG established itself in Mogadishu, the capital of Somalia. Shorthly thereafter, the African Union announced that it was opening a mission in Somalia aimed at promoting stability in Somalia as the TFG attempts to establish itself, consolidate power, and transition to a democracy through elections in 2009.

The UN resolution lifted the arms embargo in two respects. First, it permits export to Somalia of “weapons and military equipment, technical training and assistance intended solely for the support of or use by” the AU Mission. Second, it permits exports of the such military supplies, assistance and training “intended solely for the purpose of helping develop security sector institutions, consistent with the political process” leading to the establishment of the TFG and elections in 2009. The meaning of “security sector institutions” is unclear, but all such exports need to be notified to the Security Council Committee on Somalia and may proceed only in the absence of a negative decision by the Council within five days of such notification.

Continued violence and unrest in Somalia suggest that the January victory of the Islamic militias may not have been complete and call into question whether the TFG will be able to bring stability to the nation with a view towards elections in 2009. The U.S. seems to harbor some skepticism about the situation in Somalia, and this could well explain the delay by DDTC in implementing Resolution 1744.

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May

10

OFAC Pans New Michael Moore Film

Posted by Clif Burns at 9:42 pm on May 10, 2007

Promo Still for Sicko Michael Moore probably didn’t get a Christmas card from the Bushes this year — or any year for that matter. But he did recently get a nice letter from OFAC telling him we was under investigation.

It seems that Moore made a trip to Cuba in March 2007 while filming his new film “Sicko” and it seems that he didn’t have a license. So why didn’t OFAC simply fire off a charging letter and tell Moore to open up his checkbook? Because, as the OFAC letter states,

OFAC has information indicating that you claimed to qualify under the provision for general license [sic] for full-time journalists

That evidence is probably an April 15 New York Post article where a producer for the film told the Post reporter that the film crew traveled to Cuba pursuant to a “”general license that allows for journalistic endeavors there.”

The OFAC letter demands that, if Moore is claiming the general license for journalists, Moore should:

provide evidence [he is] regularly employed as a journalist by a news-reporting organization.

The general license for journalists to travel to Cuba is set forth in 31 C.F.R. Â§ 515.563 and it covers travel to Cuba by individuals “regularly employed as a journalist by a news-reporting organization.”

Now Moore’s occupation and employment are not exactly state secrets and should be well known even to folks chained to their desks in the Cuba section at OFAC. He’s a documentary film-maker. Documentary film-makers are journalists. He’s employed by his production company Dog Eat Dog which makes documentaries. Companies that make documentaries are news-reporting organizations plain and simple.

This is the first instance I am aware of where OFAC has challenged the bona fides of a documentary film-maker who has traveled to Cuba on the general license to make a documentary film. Charlize Theron traveled to Cuba, apparently on a general license, to make her documentary on Cuban hip-hop and she hasn’t been asked to cough up her journalistic credentials. Perhaps that was because her documentary criticized Castro’s pervasive censorship of the arts in Cuba.

Moore may be controversial. People might not agree with what he says and think he’s a big fat liar. But that doesn’t mean that he isn’t a journalist or that his documentary film company isn’t a news-gathering organization.

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May

9

Internet Download From Iran Leads to Criminal Prosecution in U.S.

Posted by Clif Burns at 9:50 pm on May 9, 2007

Category: Criminal Penalties • Sanctions

3KeyMaster Screen Shot Reader Mike Deal forwarded to me some of the documents filed in the prosecution of Mohammad Alavi, who has been charged with exporting copies of simulation software to Iran in violation of the Iranian Transaction Regulations. The affidavit filed in support of the arrest warrant provides some interesting background to the Alavi case.

According to that affidavit, Alavi was a naturalized U.S. citizen who was born in Tehran. He had worked at the Palo Verde Nuclear Generating Station since 1989 as a software engineer. In the summer of 2006, Alavi requested, and was granted, access to the site of Western Services Corporation in order to obtain a registration key to use Western Services Corporation’s software 3KeyMaster. That software is used, among other things, to simulate operations of power plants, including nuclear plants, fossil fuel plants and co-generation facilities. It is not used to control the actual operation of any power facilities.

Alavi resigned his position at Palo Verde in July 2006. Shortly after Alavi’s last day at Palo Verde, he traveled with his wife to Iran. In October 2006, while Alavi was in Iran, Alavi’s user name and password was used to log onto the Western Services site and download another registration key. The IP Address of the computer that logged on to the Western Services, 84.47.215.172, traced back to an Internet service provider located in Tehran, Iran. Alavi was arrested on his return to the United States on April 9.

The circumstantial case against Alavi, at least as set forth in the affidavit, seems strong. Each computer on which the 3KeyMaster software is downloaded needs a separate registration key for the software to operate. The registration key is generated by the Western Services website based on the serial number of the computer’s hard drive. The only reason for Alavi to log on to the Western Services site while in Iran was to obtain a 3KeyMaster registration key for the computer in Iran from which he logged on.

But Alavi may not be the only one who violated the Iran sanctions here. Western Services, after all, supplied the registration key even though the IP Address to which it supplied the key traced back to Iran. Without the registration key, the software would not continue to work. And a simple reverse DNS look-up by Western Services on the IP Address 84.47.215.172 would show that the computer was located in Iran. Click here to see for yourself.

The issue here is whether providers of Internet services should be required to take steps to determine the location of the computer requesting those services. As we previously noted, Google Earth took such steps to prevent download of the Google Earth software to computers located in Sudan. Should this be done by everyone providing services over the Internet? Did Western Services have an obligation to do a reverse DNS look-up before allowing a user to download a registration key? Let me hear your thoughts on this in the comments.

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May

8

Rift Between DoD and DDTC Exposed

Posted by Clif Burns at 11:13 pm on May 8, 2007

Category: DDTC

Night Vision Goggles Rumors of disagreements between the Directorate of Defense Trade Controls (“DDTC”) and the Defense Department over export controls administered by the DDTC were confirmed today by an article in Defense News. That article reported that the DoD has commissioned a study from Washington think tank, the Center for Strategic and International Services, to evaluate current export controls on defense items:

Spurred by complaints by the U.S. Central Command that export controls were hampering the war effort in Iraq, the Pentagon has hired a think tank to study export-control regulations that impede turning technology over to U.S. allies and the Iraqi military.

Rules block the U.S. military from supplying some allies and Iraqis with sensitive equipment, such as certain kinds of communications gear and night-vision goggles. That means U.S. troops must continue performing dangerous missions rather than handing them off to others, said David Scruggs, a defense industry expert at the Center for Strategic and International Studies (CSIS).

Traditionally, the Pentagon has wanted to safeguard U.S. technology for use by U.S. troops. Now, however, . . . â€œtheyâ€™re getting high-level people coming out of the field saying this is hurting us.â€ Export controls that prevent transferring technology are â€œcausing casualties.â€

That’s pretty strong language.

The study is expected to take a year. Reforming current regulations would, of course, take even longer than that.

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May

7

This Mobile Home Don’t Feel Like Home No More

Posted by Clif Burns at 8:52 pm on May 7, 2007

Category: OFAC

Trailer Park Last week OFAC released it’s monthly report of civil penalties. One entry bears quoting in its entirety:

One individual has agreed to a settlement totaling $485 for allegedly engaging in transactions with an entity previously identified as a Specially Designated Narcotics Trafficker (â€œSDNTâ€) violating 31 C.F.R. Part 598: OFAC alleged that from February to June 2002, the individual made payments by cash and credit card to the SDNT representing rent for space for the use of a trailer. The individual did not voluntarily disclose this matter to OFAC.

Now, perhaps there’s more here than meets the eye, but what meets the eye is a monumental waste of taxpayer resources.

Just imagine the look on the face of the trailer park tenant when he received a letter from the Department of Treasury telling him it was illegal for him to pay his rent and then imagine his phone call with OFAC.

Tenant: “An SD what?”

OFAC Agent: “An SDNT. That means Specially Designated Narcotics Trafficker.”

Tenant: “Well, how the hell was I supposed to know that?”

OFAC Agent: “There’s a list of all the SDNTs. You can find it on your computer.”

Tenant: “You think if I could afford a computer I’d be living in a trailer and paying $200 per month rent?”

OFAC Agent: “If you don’t have a computer you can go to your library and look in the Federal Register. Although you’d have to look through them all.”

Tenant: “Okay, so let’s imagine I went and did that and found out that my landlord is a drug dealer in those Federal Register things. You mean I gotta stop paying him my rent? Are you nuts? These guys have guns.”

OFAC Agent: “That’s not really our problem, sir”

So what’s next? OFAC fines Miami couple $70 for paying bill in restaurant owned by SDNT? Nine-year-old fined $1.79 for buying pack of chewing gum in store owned by SDNT?

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