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Archive for November, 2010

Nov

17

Uh, My Dog Ate, Er, Exported Those Hand Grenades

Posted by Clif Burns at 10:40 pm on November 17, 2010

What, Me Worry? Nigeria has reported that it has intercepted a shipment of weapons from Iran in violation of U.N. Sanctions and plans on reporting the intercepted exports as required by the U.N. resolutions enacting those sanctions. The shipment, which originated from the Iranian port of Bandar Abbas, contained rocket rounds, rifles, grenades and explosives. The boxes, which were intercepted by Nigerian security agents at the Nigerian port of Apapa, were labeled “building materials.”

Iran immediately responded with a version of the dog-ate-my-homework excuse:

“A private company which had sold conventional and defensive weapons to a West African country had transferred the shipment through Nigeria,” Foreign Minister Manouchehr Mottaki told reporters, according to Iran’s state-run Press TV.

This hardly settles the matter as to whether the shipment violates U.N.S.C.R. 1747 which says that:

Iran shall not supply, sell or transfer directly or indirectly from its territory or by its nationals or using its flag vessels or aircraft any arms or related materiel

Taking a cue from Baghdad Bob, Foreign Minister Mottaki further elaborated by saying that the whole business was a “misunderstanding” that had all been cleared up by Nigerian authorities. Nigeria said this was, simply put, a lie:

[A] spokesman of the Foreign Affairs Ministry, Ozo Nwobo[,] explained that nothing has been settled as government was yet to finish its investigations over the arms saga.

Don’t be surprised if the next story floated by Mottaki is that the shipment only contained squirt guns and Tickle-Me-Elmos.

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Nov

16

Released Activist May Ask World To Shave Burma Sanctions

Posted by Clif Burns at 2:03 pm on November 16, 2010

Category: Burma Sanctions

Shwedagon Temple According to this article (subscription required) in today’s Wall Street Journal, recently released Burmese human rights activist and Nobel Peace Prize winner Aung San Suu Kyi may reconsider her position that the international community should continue to impose sanctions on Burma and its current military regime.

Current sanctions imposed by the United States, in addition to an arms embargo, include blocking the assets of the junta and its political allies, a ban on imports from Burma, a prohibition on new investment in Burma, and rules prohibiting the provision of financial services to Burma, including wire transfers to Burma. Some have argued that some of these sanctions, particularly the import and investment bans, have had little impact on the military junta running the country and that the major impact of these sanctions is on ordinary citizens of Burma. Others have argued that if the sanctions were lifted most of the revenue would go into the junta’s pockets and little would trickle down to ordinary Burmese citizens.

Suu Kyi’s statement in interviews after her release did not come down clearly on one side of this debate or the other

In her first interviews and meetings with diplomats since her release on Saturday, Ms. Suu Kyi said she was willing to consider some revision of sanctions, though she stopped short of committing herself to either side. “If people really want sanctions to be lifted, I will consider this,” she told reporters on Sunday. “This is the time Burma needs help.”

Progressively stricter sanctions imposed on Burma by the United States and Western Governments have been in response to the treatment of Suu Kyi by the junta. Until this weekend she had been under house arrest continuously for the past seven years (and had been under house arrest for 15 out of the past 21 years.) If Suu Kyi revises her support for sanctions, this could well prompt the United States to modify its sanctions on Burma, although the arms embargo under section 126.1 of the International Traffic in Arms Regulations and the blocking of the assets of the Burmese junta and its supporters would almost certainly remain in place.

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Nov

10

Oh Goody! Another Export Control Bureaucracy.

Posted by Clif Burns at 10:21 pm on November 10, 2010

Category: Export Reform

Bureaucracy

Because we apparently have too many agencies involved in export control, the answer to this problem is, somewhat surprisingly, yet another export agency. Today the White House issued an order establishing the Export Enforcement Coordination Center within the Department of Homeland Security. The order requires the EECC to “coordinate” among State, Commerce, Treasury, DOJ, Defense, Homeland Security, Energy and the Office of the Director of National Intelligence.

The coordination mandate described by the Order requires the EECC

[to] serve as the primary forum within the Federal Government for executive departments and agencies to coordinate and enhance their export control enforcement efforts and identify and resolve conflicts that have not been otherwise resolved in criminal and administrative investigations and actions involving violations of U.S. export control laws.

Of course, to make sure that no agency gets its nose bent out of shape by the EECC, the order underlines that

[n]othing in this order shall be construed to provide exclusive or primary investigative authority to any agency. Agencies shall continue to investigate criminal and administrative export violations consistent with their existing authorities

In other words, the EECC will hold monthly meetings where, over coffee and bagels, each agency will tell war stories and boast of its enforcement prowess. I’m probably not alone in thinking that this time and money might be better spent in industry education and outreach efforts.

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Nov

9

U.K. Banks Backpedal On Domestic Enforcement of U.S. Cuba Sanctions

Posted by Clif Burns at 7:05 pm on November 9, 2010

Category: Cuba Sanctions • EU • Foreign Countermeasures

Cuban Postage Stamp This blog reported several weeks ago on a complaint brought by a small British company against Lloyds for refusing to cash a check in pounds sterling that the company had received from a Cuban customer. Lloyds had previously agreed to pay $217 million to the U.S. Office of Foreign Assets Control (“OFAC”) in connection with fraudulent activities by the bank in order to process payments from sanctioned countries, including Cuba, through U.S. correspondent banks. However, the check that was declined by Lloyds was not denominated in U.S. dollars, did not involve a U.S. customer, and was being cashed outside the United States, meaning that neither the Lloyd’s settlement agreement with OFAC nor OFAC’s own regulations would prohibit the U.K. bank from processing the payment. More significantly, its refusal to cash the check could be seen as a violation of E.U. Council Regulation No. 2271/96 , which forbids companies in the E.U. from complying with the U.S. sanctions on Cuba.

According to an article on the website of London broadsheet The Daily Telegraph, some U.K. banks may be walking back, at least slightly, from a hard and fast policy of not processing Cuban payments for fear of OFAC reprisal. Interestingly, the article notes that part of the banks’ hesitance arises from “US attempts to extradite British executives it claims have breached sanctions” and “the failure of the British Government to provide protection against extradition.” This is presumably a reference to the pending extradition request against Christopher Tappin for his involvement in an attempted export of batteries from the United States to Iran.

The Telegraph article suggests that British authorities have been in contact with Lloyds and other banks after receiving a number of complaints from customers that could not clear Cuba checks. One case involved a customer whose account was closed by Bank of Scotland when the customer would not provide assurances that it would not receive Cuban payments in its account.

Now, presumably as a result of these official contacts, even Lloyds may be softening its hard line on Cuba transactions. The Telegraph reporter Roland Gribben signals this change in the following fractured sentence that suggests he may not have a very clear grasp of export law himself.

If the Cuban bank does not infringe OFAC regulations or has dealings with Specially Designated Individuals who can be either individuals, entities or banks, then Lloyds may be willing to process a payment from Cuba provided it was in sterling.

Probably what Lloyds was saying before Mr. Gribben garbled their statement was that Lloyds would process checks in pounds provided that parties on OFAC’s List of Specially Designated Nationals and Blocked Persons were not involved in the transaction.

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Nov

8

What’s In The U.S.-India Export Agreement?

Posted by Clif Burns at 9:01 pm on November 8, 2010

Category: BIS • CCL • Entity List

White House Photo A joint statement released today by President Obama and Prime Minister Singh of India announced a new planned cooperation between the United States and India. Long on aspiration and short on details, the statement says that the two countries have agreed to “transform bilateral export control regulations and policies to realize the full potential of the strategic partnership between the two countries.”

The part of the proposal that has attracted the most attention, particularly in the Indian press, is the agreement to remove some or all of the Indian companies and agencies currently on the Entity List maintained by the Bureau of Industry and Security (“BIS”). Currently, the Entity List, which adds special license requirements for most exports to the designated entities, covers Bharat Dynamics Limited, three subordinate agencies in the Defense Research and Development Organization, four subordinate agencies of the Indian Space Research Organization, and two components of the Department of Atomic Energy as well as all nuclear reactors not under International Atomic Energy Agency safeguards.

The language in the joint statement relating to these entities is somewhat ambiguous:

[T]he two leaders decided to take mutual steps to expand U.S. – India cooperation in civil space, defense, and other high-technology sectors. Commensurate with Indiaâ€™s nonproliferation record and commitment to abide by multilateral export control standards, these steps include the United States removing Indian entities from the U.S. Department of Commerceâ€™s â€œEntity Listâ€ and realignment of India in U.S. export control regulations.

Notice the statement does not say that “all” Indian entities will be removed from the Entity List. Because the focus of the statement is on cooperation in “space, defense, and other high-technology sectors,” there is a good possibility that every Indian entity except the two listed Department of Atomic Energy components and the unsafeguarded nuclear reactors will be removed.

It is also not clear what is meant by the “realignment of India in U.S. export control regulations.” Perhaps India might be removed from Country Group D and promoted to a more-favored group. Maybe the Country Chart will be amended to change the reasons for control applicable to India. Or maybe licensing officers at BIS will be directed to think five nice thoughts about India each day.

Finally, the joint statement indicates that the U.S. will support India’s membership in four multilateral export control regimes — Nuclear Suppliers Group, Missile Technology Control Regime, Australia Group, and Wassenaar Arrangement. Of course, India will first have to adopt the controls required for those regimes, something it has so far not done.

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