On 27 February 2012, the Council of the European Union (Council) adopted Council Regulation (EU) No 168/2012 (amending Regulation (EU) No 36/2012 of 18 January 2012) and Council Decision 2012/122/CFSP (amending Decision 2011/782/CFSP of 1 December 2011). These measures are the latest in a series of Regulations and Decisions, beginning on 9 May 2011, which have increased the scope of sanctions against designated government officials and agencies of Syria, in response to the current political and humanitarian situation arising from repression in that country. The key new developments involve restrictive measures against the Central Bank of Syria, a prohibition on the sale, purchase, transportation or brokering of gold, precious metals and diamonds, and additions to the list of persons and entities targeted by prior restrictive measures. These regulations from the Council follow an Executive Order, discussed in a prior advisory, from President Barack Obama expanding US economic sanctions on Syria.
This Advisory provides an overview of the current EU restrictions against Syria, rather than a discussion of each measure that has been adopted over the last year. The EU regulations implementing the restrictive measures contain details, including definitions, reference lists set out in Annexes, conditions, and exceptions not set out in this summary.
Summary of Current EU Sanctions
The EU sanctions freeze the funds and economic resources of certain persons and entities, including the Central Bank of Syria and other state owned companies; impose restrictions on exports to Syria of specified goods, equipment, technology, and technical assistance; prohibit imports into EU Member States of crude oil, certain petroleum products, and precious metals from Syria; restrict furnishing financing and financial services related to certain trade transactions with Syria and the Government of Syria (GOS); prohibit participating in certain Syria energy projects; and restrict certain individuals from entering any Member State, as well as Syrian air cargo flights landing at airports of a Member State.
The restrictive measures apply to any (1) legal person, entity, or body organized under the law of an EU Member State; (2) individual national of a Member State, wherever located; (3) activity occurring within the territory of the EU; and (4) aircraft or vessel under a Member State's jurisdiction (Covered Persons). The sanctions are administered and enforced by the competent authority of each Member State.
A. Freezing of Funds and Economic Resources
As listed in Annexes II and IIa to Regulation (EU) No 36/2012 of 18 January 2012, as amended by the 27 February 2012, Regulation, the EU sanctions freeze funds and economic resources of approximately 100 persons, entities, or bodies of the GOS identified as responsible for, or associated with persons responsible for, violent repression against the civilian population in Syria. In addition, Member States must prohibit Covered Persons from making funds or economic resources available to these blocked persons. Covered Persons also cannot knowingly and intentionally engage in activities that have the purpose of circumventing these restrictions. Under certain limited conditions, a Member State competent authority may authorize the release of frozen funds or economic resources for humanitarian purposes, critical energy needs, the payment of certain fees and services, liens or judgments related to judicial, administrative, or arbitral proceedings or business concluded before the person's date of designation, among other reasons.
These prohibitions extend to the Central Bank of Syria, which is now a designated person. Subject to approval by the competent authority of a Member State, the restrictions do not apply to transfers by or through the Central Bank of Syria of funds or economic resources: (a) received and frozen after the date of designation and due in connection with an existing specific trade contract; or (b) providing financing institutions within the Member States with liquidity for the financing of trade. The Member State may authorize the transfer if it determines, on a case-by-case basis, that the payment being made by or through the Central Bank of Syria is not being received by and does not involve another restricted individual or entity listed on Annex II or IIa.
B. Export and Import Restrictions
The restrictive measures prohibit the sale, supply, transfer, or export, directly or indirectly, of the following items to any person entity, or body in Syria, or for use in Syria or by the GOS. The GOS includes public bodies, corporations, and agencies, any person, entity or body acting on their behalf or at their direction, or any entity or body owned or controlled by them.
- Arms and related material, including any equipment that may be used for internal repression as listed in Annex I, as well as arms, goods, and technology listed on the Common Military List of the European Union (Common Military List). This includes the provision of technical assistance, brokering services, financing, or financial assistance (e.g., grants, loans, and export credit insurance) related to sale, export, provision, and manufacture of such items. This prohibition does not apply to the provision of such items and services intended to protect humanitarian or development workers of certain international public organizations, when approved by the competent authority of a Member State.
- Internet and telephone monitoring/interception equipment, technology and software listed in Annex V. Such items are restricted if they are intended primarily for the GOS' monitoring or interception of internet and telephone communications. The regulations also prohibit Covered Persons from providing technical assistance or brokering services to install, operate, or update such items provided to Syria.
- Oil and natural gas equipment and technology listed in Annex VI. These restrictions target the oil and gas sector in Syria and cover equipment and technology related to the exploration or production of crude oil or natural gas, refining, or liquefaction of natural gas. The regulations also prohibit Covered Persons from providing technical assistance, brokering services, financing, or financial services related to such items for provision to or use in Syria. The prohibitions do not apply to the performance of an obligation required by a contract which was "awarded" or concluded before 19 January 2012, provided that a Member State's competent authority has been notified at least 21 calendar days in advance of the trade transaction.
- Electric power plant construction/installation equipment and technology listed in Annex VII. Such equipment is restricted if it is to be used in the construction or installation in Syria of new power plants for electricity production. The regulations also prohibit Covered Persons from providing financial or technical assistance related to the construction or installation of new power plants in Syria. As above, the prohibitions do not apply to the performance of an obligation due to an existing power plant in Syria, required by a contract which was concluded before 19 January 2012, provided that a Member State's competent authority has been notified at least 21 calendar days in advance.
- Precious metals and diamonds as listed in Annex VIII, as well as the technical assistance and brokering of gold, precious metals, and diamonds to the Government of Syria.
- Money, including the delivery of Syrian denominated banknotes and coins, minted in the EU, to the Central Bank of Syria.
The import into the EU, or purchase or transport by Covered Persons, of the following items is prohibited:
- Crude oil or petroleum products that have originated in, are located in, or have been exported from Syria. Covered Persons are also prohibited from providing financing or financial assistance, including financial derivatives, insurance, or re-insurance, for the import, purchase, or transport of such crude oil or petroleum products. The prohibitions do not apply (1) to the execution, on or prior to 15 November 2011, of any obligation arising from a contract concluded before 2 September 2011, where the Member State competent authority was notified at least seven days in advance, (2) to the purchase of such items exported from Syria before 2 September 2011, or (3) to the purchase of such items exported from Syria before 15 November 2011 and where delivery was pursuant to a contract concluded before 2 September 2011.
- Precious metals, gold, and diamonds as listed in Annex VIII, regardless of whether the item originates in Syria, from the GOS.
Finally, all the export and import sanctions described above prohibit knowingly and intentionally participating in activities whose object or effect is, directly or indirectly, to circumvent the restrictive measures.
C. Restrictions on Financial Services
Credit and financial institutions under the jurisdiction of the Member States are prohibited from:
- Establishing new bank accounts, correspondent banking relationships, or joint ventures with any Syrian credit or financial institution
- Authorizing, or concluding agreements for the opening of a representative office of any Syrian credit or financial institution
- Providing insurance or re-insurance to the GOS
This prohibition covers the extension or renewal of insurance and re-insurance agreements concluded before 19 January 2012, except where there is a prior contractual obligation by the insurer or re-insurer to accept an extension or renewal of a policy, but does not prohibit compliance with insurance and re-insurance agreements concluded before that date. This prohibition does not extend to compulsory or third party insurance to Syrian persons involved in diplomatic or consular missions, insurance or re-insurance for persons acting in an individual capacity, including health or travel, or insurance or re-insurance of a vessel, aircraft, or vehicle chartered by a Syrian person not listed in Annex II or IIa.
D. Restrictions on Financing Certain Enterprises
Where any Syrian person or entity is engaged in the exploration, production, or refining of crude oil or the construction or installation of new power plants for electricity production, a Covered Person may not participate in:
- Granting a financial loan or credit to a Syrian person or entity
- Acquisition or extension of participation in enterprises in Syria
- Creation of any joint venture with certain enterprises in Syria
The same anti-circumvention provision described above applies. Notably, the text of the regulations does not appear to apply these restrictions to projects related to the liquefaction of gas. Moreover, there is a grand-father component to these restrictions, in that any agreement, contract or extension of a participation that occurred before September 23, 2011 (for crude oil projects) or 19 January 2012 (for electricity power plant projects) is exempt from the restrictions noted above.
E. Restrictions on Admission
Member States must take the necessary measures to prevent the entry into, or transit through, their territories of persons identified in Annex I to Council Decision 2012/122/CFSP. This restriction is without prejudice to cases where a Member State is bound by an obligation of international law, or travel is justified in granting access to its territory on the grounds of urgent humanitarian need or intergovernmental meetings. However, in such a case, the Member State is required to inform the Council. Member States also are obligated to prevent access to the airports under their jurisdiction of all cargo flights, with the exception of mixed passenger and cargo flights, operated by Syrian carriers.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.