United States: Sanctions Lifted Against Libya, Imposed Against Syria And Enforced Against Bobby Fischer: What’s Going on?

The two primary U.S. agencies charged with administering and enforcing U.S. sanctions and export control policies are the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS). These agencies’ activities can have profound effects on a company’s business policies, practices and reputation. Three recent sanctions developments illustrate how these policies and practices can affect the global business community.

The United States uses an ever-changing international sanctions regime to impose embargoes, in whole or in part, on targeted countries, entities and individuals who the United States determines should not be permitted to engage in transactions with persons subject to U.S. jurisdiction. The United States currently maintains sanctions against countries such as Burma, Cuba, Iran, Sudan and Syria, as well as against specially designated groups and individuals such as terrorists and narcotics traffickers.

On April 29, 2004, the United States effectively lifted sanctions against Libya, pursuant to a general license issued by OFAC. The removal of these sanctions followed commitments by Libyan leader Mu’ammar al-Qadhafi to dismantle Libya’s nuclear weapons development program and resolve outstanding claims for compensation of victims of the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland. For the first time in nearly 20 years, U.S. persons and companies will generally be able to invest in Libya and buy and sell goods and services to and from Libyan entities and individuals. However, Libya remains listed as a "State Sponsor of Terrorism." As a result of this, as well as other U.S. policy determinations, the export of certain types of goods, software and technology to Libya remains restricted. Transactions with Libya remain ineligible to receive U.S. government financial assistance.

The United States imposed sanctions against Syria on May 11, 2004, pursuant to Executive Order No. 13338, which implemented the Syrian Accountability and Lebanese Sovereign Restoration Act of 2003. The Syrian Accountability Act was passed by the U.S. Congress on November 20, 2003, and signed into law by President Bush on December 12, 2003. These sanctions took effect on May 14, 2004, when the BIS published new Syrian export regulations.

The sanctions against Syria do not create a full embargo similar to the sanctions program that existed against Libya. Though the embargo prohibits the exportation of most goods, the export of certain foods, medicine and other goods and technology will be permitted by BIS license. Exportation of services to Syria and the importation of Syrian goods and services are still permitted. The embargo also freezes the assets of Syrian entities and individuals who have contributed, directly or indirectly, to Syria’s military presence in Lebanon, to Syria’s weapons of mass destruction programs or to Syria’s efforts to undermine U.S. reconstruction efforts in Iraq, if those assets are either in the United States or have come into the possession or control of U.S. persons abroad.

So what does eccentric chess master Bobby Fischer have to do with U.S. sanctions policy? In 1992, Fischer traveled to the former Yugoslavia to play a rematch against Soviet world champion Boris Spassky, violating then-existing U.S. sanctions against Yugoslavia. Now after more than 12 years of avoiding U.S. government officials, he is being extradited back to the United States so he can be prosecuted for violating the International Emergency Economic Powers Act (IEEPA) — the statute underpinning most modern-day sanctions programs.

These recent developments demonstrate the increasingly complicated and dynamic world of U.S. sanctions and export controls. The agencies charged with enforcing these laws feel newly empowered to do so, particularly after 9/11, the war on terrorism and the passage of the USA PATRIOT Act. Companies need to educate key personnel and establish and implement policies to comply with applicable federal laws, promote responsible corporate practices and protect their shareholder value and business reputations. International business transactions have become a global chess game; companies must now ensure that OFAC has no reason to come searching for them.

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.