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Archive for October, 2009

Oct

8

Spy Games

Posted by Clif Burns at 8:04 pm on October 8, 2009

In March, Dawn Hanna was convicted by a jury in Detroit for exporting mobile telecom equipment to Saddam Hussein in violation of the U.S. embargo against Iraq in place at the time of the export. Hanna claimed throughout her trial that the purchaser of the equipment told her that the end user was in Turkey. The government’s sentencing memo, however, cited a number of communications and emails from Hanna where she seemed quite aware that the items were destined for Iraq and not Turkey.

The case, however, recently took an interesting turn of sorts. Apparently the person who approached Hanna to purchase the equipment, a Jordanian named Emad al-Yawer, has come forward and claimed that he was working for the CIA when he approached Hanna. According to al-Yawer, in an affidavit filed in April, the CIA wanted to alter the equipment to track Saddam and listen to his conversations. As al-Yawer said somewhat more colorfully in a recent interview with a Detroit television station:

The whole idea was, once they get to Saddam, send a smart bomb and blow him into smithereens

The judge apparently did not find the new evidence sufficient to grant Hanna a new trial. Prosecutors in the case have said that the new evidence remains under seal, although apparently a redacted version of the al-Yawer affidavit is available on a website set up by Dawn Hanna’s parents.

Of course, the interesting question here is whether it matters at all that al-Yawer was working for (or with) the CIA. Even if he was cooperating with the CIA, the efforts by Hanna’s defenders to say that the sale of the equipment to Hussein was the government’s fault doesn’t seem that convincing. Certainly this argument wouldn’t have been convincing if the purchaser was an undercover U.S. government agent. I suppose that if the alleged CIA agents had directed al-Yawer to buy the equipment from Hanna, this argument might have some legs. Similarly, if the CIA had contacted Hanna directly, identified themselves as CIA agents, enlisted her help in exporting the equipment, and then had her prosecuted, Hanna might have an argument. But there is no evidence that any of this happened.

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Oct

7

OFAC Guidance Imposes New Burdens on Exports of Medical Devices

Posted by Clif Burns at 11:47 pm on October 7, 2009

Category: OFAC

Star Trek Dermal Regenerator The Treasury Department’s Office of Foreign Assets Control (“OFAC”) issued a guidance today on exports of medical parts to support medical devices legally exported under OFAC licenses to Iran or Sudan, the two countries for which OFAC exercises licensing authority over medical devices. And, not surprisingly, OFAC continues its efforts to resist the mandate of the Trade Sanctions Reform and Export Enhancement Act of 2000, which sought, on obvious humanitarian grounds, to prevent OFAC and other export agencies, from restricting exports of food, medicine and medical devices to sanctioned countries.

Under the new guidance, rather than saying simply that exports of replacement parts are ordinarily incident to the export of medical device itself, and therefore allowed, OFAC imposes burdensome conditions on those exports. The potential impact of this red tape on ordinary citizens in Iran and Sudan who are sick or dying just doesn’t matter. Worse, such punitive measures directed at the sick and dying are not going to cause Iran to give up its nuclear aspirations or cause the regime in Sudan to rethink its genocidal policies.

First, if the part that needs to be replaced fails during the one-year period of validity of the export license for the medical device itself, the part can be exported, but only as a one-for-one replacement. But there is another, and more significant, catch. The replacement part must have obtained a specific classification as EAR99 from the Bureau of Industry and Security (“BIS”). And even if the exporter has a classification for the medical device as EAR99, it doesn’t count unless that classification specifically mentions the replacement part in question.

Medical devices on this list don’t require a specific BIS classification, but the list doesn’t include parts. So even though an OFAC license for a digital blood pressure monitor doesn’t require a specific classification from BIS, exporting a replacement display screen for that device does!

Second, if the underlying license has expired, a new OFAC license is required to export the replacement parts. And, again, a specific BIS classification is required for each of the replacement parts exported, even if the device itself was classified as EAR99 or was on the exempted list and did not require a BIS classification. OFAC license approvals can take from 40 days to six months or more, which means that patients may go without care while the exporter waits for a BIS classification and an OFAC license.

Third, even an import of the device back to the United States for repair will require a license — as will the re-export after the device is repaired. The application will require, among other things, a “statement regarding the circumstances under which the medical device broke.” It’s not clear that simply saying that the device was being used and it just failed will suffice as a justification for a license.

If you are an exporter of medical devices under TSRA licenses to either Iran or Sudan, you should make sure that any request for a required BIS classification of the device also includes a request for classification of the important parts of that device.Â You also should be aware that you can’t solve this problem by continually renewing the license. Parts can only be shipped without a license under this guidance if they are shipped during the original period of validity of the license under which the medical device for which the parts are destined was exported.

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Oct

6

N.J. Pol Nixes N.Y. Philharmonic Gig in Cuba

Posted by Clif Burns at 7:32 pm on October 6, 2009

Category: Cuba Sanctions • OFAC

Empty Stage Last week the New York Philharmonic announced that it had been forced to cancel its planned concert in Cuba at the end of October. Although the Office of Foreign Assets Control (“OFAC”) granted licenses to let the instrumentalists travel to Cuba, it declined to permit the orchestra’s patrons who were footing the bill for the trip to tag along.

This decision seems at odds with current initiatives by the White House to ease travel restrictions to Cuba. It now appears that the outcome was the handiwork of New Jersey Senator Bob Menendez, who threatened to vote against health reform if a single note of Gershwin was heard in a Havana concert hall. Menendez was reportedly infuriated by the recent success of a concert by a Colombian pop-star in Cuba, and didn’t want such a horrifying event to recur if the New York orchestra traveled to the island. Apparently for every note of Beethoven that a Cuban hears, RaÃºl Castro gets another week in office and Fidel draws another thousand breaths.

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Oct

5

A “Red Flag” Flies Over Ras Al-Khaimah

Posted by Clif Burns at 7:12 pm on October 5, 2009

Category: Iran Sanctions

Ras Al-Khaimah Last week, Canadian officials announced that they had intercepted navigational microchips headed for Iran. More interestingly, in an interview that George Webb, the head of Canada Border Services Agency’s Counter Proliferation Section, gave to Canada’s National Post after the interception, Webb stated that Iran appears to have shifted its transhipment efforts from Dubai to Ras Al-Khaimah.

Unless you are a follower of the America’s Cup, you may not have ever heard of Ras Al-Khaimah, which at least for the moment is scheduled to host the prestigious regatta in February 2010. It is the northernmost emirate in the U.A.E. and borders on the Strait of Hormuz. Once known as Juffar and a former notorious base for pirates in the region, it now is the home of the most important container port in the U.A.E. and is also the closest port in the UAE to Bandar-e-Abbas in Iran. It also appears to be, according to Webb, almost completely under the influence of Iran. And, as scrutiny on exports to Dubai have increased, Webb claims that Iran has begun to shift its transhipment operations from Dubai to Ras Al-Khaimah

Webb’s claim of Iranian influence in Ras Al-Khaimah is apparently supported by this report on the Israeli news website Ynetnews.com.

This is a particularly sensitive report that UAE officials, who are very concerned about Iran, would prefer not be published. According to sources linked to the case, the Iranians have real foothold in the UAE, particularly in Ras al-Khaimah. Iran has cultivated close business relations with [Ras Al-Khaimah’s] Crown Prince Saud bin Saqr al-Qasimi and his close associate, Lebanese Shiite businessman, Massad Khater.

According to these sources, this is not merely an innocent business relationship. Khater is a partner in a ceramics factory called Ras al-Khaimah Ceramics. This factory, the sources claim, directly aids Iran’s weapons and missiles industry. The factory even has a branch in the Iranian city of Natanz, where parts for Iranian warheads are produced.

U.S. exporters should take this new information into account and take special care with any shipments headed to Ras al-Khaimah. And yes, a red flag does fly over the emirate, both literally and, now, figuratively.

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Oct

1

Can Locke Unlock the Grip of U.S. Export Controls?

Posted by Clif Burns at 8:33 pm on October 1, 2009

Category: BIS • Wassenaar

At today’s Update Conference in Washington, D.C., Commerce Secretary Gary Locke announced a sweeping vision for reform of U.S. export laws:

First, we should consider eliminating certain dual-use export license requirements for allies and partner nations — consistent with statutory and international obligations.

Of course, the rub here is what is meant by “consistent with . . . international obligations”? Obviously, this is a reference to the Wassenaar Arrangement, under which the United States has agreed to impose export controls on items on the “Lists of Dual-Use Goods and Technologies” made a part of that arrangement. But, as made clear in the 2006 “Best Practices Guidelines for the Licensing of Items on the Basic List and Sensitive List of Dual-Use Goods and Technologies,” members of the Arrangement are free to establish general licenses or license exceptions which permit the unlimited export of specified goods on the lists to specified destinations. The Guidelines, however, state that the member state should still require companies exporting under those general licenses or license exceptions to keep sufficient records of these exports to permit verification that any terms and conditions of the general licenses or license exceptions have been complied with.

Second, I’ve asked BIS to explore implementing a fast-track process for the review of dual-use export licenses for other key countries that do not pose a significant threat and have a strong history of export control compliance.

This is a laudable goal in theory that may be difficult to achieve in practice. Often the imposition of tighter deadlines for licensing decisions results in more applications being returned without action for minor errors — errors that would previously have been ignored — just so that the licensing officer can stay within the required time frame. That certainly seems to have been the result of the shortened processing guidelines for commodity jurisdiction requests filed with the Directorate of Defense Trade Controls.

And, of course we will continue to scour the Export Administration Regulations and de-list those items and technologies that no longer pose a threat to national security.

Here the Wassenaar Arrangement may prove to be somewhat more of an obstacle. Under the Arrangement, the United States is obligated to control the export of items on the Wassenaar Lists and the overwhelming number of commodities on the Commerce Control List (“CCL”) are also on the Wassenaar Lists. The United States can only really remove those common items from the CCL if it convinces other Wassenaar members to remove the same items from the Wassenaar lists at one of the plenary sessions held under the Arrangement.

Of course, there are all those items in Category 0 of the CCL that aren’t on the Wassenaar Lists, so we can look forward, perhaps, to the immediate removal of “horses by sea” (ECCN 0A980) and “plastic handcuffs” (ECCN 0A982), otherwise known as plastic cable ties, from the CCL.

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