International Law Advisory - Belarusian Sanctions Expected; Iran and Sudan Sanctions Legislation Moves Forward In US House

A number of administrative and legislative sanctions initiatives have gained momentum in recent days.  First, the Bush administration announced on Friday that the United States Government intends to impose sanctions against certain officials from Belarus.  In addition, committees of the US House of Representatives recently approved two bills that would strengthen sanctions against Iran and Sudan.  A summary of each initiative is below.

Belarus Sanctions
The Bush administration indicated on Friday, March 24, 2006, that it intends to impose targeted sanctions on Belarusian leaders in response to the Belarusian Government’s recent crackdown on citizens who were protesting against alleged election fraud in the country’s recent presidential elections.  The election results – which were denounced as fraudulent by the opposition candidate, independent observers, and much of the international community – showed Belarusian president Aleksandr Lukashenko winning by a large margin.  According to a press release issued by the State Department, the United States will impose travel restrictions and targeted financial sanctions against the “individuals responsible for the recent electoral fraud and human rights abuses in Belarus, including Aleksandr Lukashenko.”  The European Union has committed to imposing similar sanctions.  The White House did not indicate when the sanctions would be finalized.  

Iran Sanctions
On March 15, 2006, the International Relations Committee approved by a vote of 37 to three HR 282, the “Iran Freedom Support Act,” and a subsequent amendment to the bill.  If enacted into law the bill would replace the Iran and Libya Sanctions Act of 1996 (50 USC. 1701 note) (“ILSA”).  ILSA provides for a variety of possible sanctions against companies for investments of $20 million or more in any twelve-month period that contribute to the enhancement of Iran’s ability to develop its petroleum resources, and allows the President broad latitude to waive imposition of sanctions.  The bill that was passed would make the following changes:

• Impose timelines of no more than 360 days from the receipt of credible information of an entity’s prohibited investment in Iran’s petroleum sector - including petroleum byproducts - for the president to initiate and complete an investigation into the entity’s activities and to make a determination regarding whether to impose sanctions.  For any investigations that are already underway, the bill would allow 90 days for the investigation to be concluded.  
  
• Limit the President’s ability to waive imposition of sanctions by: (1) allowing waivers only to individual companies, rather than to entire countries; (2) limiting waivers to a (renewable) period of 6 months; and (3) requiring the President to certify that a waiver is vital to US national security, and that the home country of the foreign company involved has undertaken substantial measures to prevent the acquisition and development of weapons of mass destruction by the Government of Iran.  
• Prohibit certain US foreign assistance to countries if entities in those countries invest more than $20 million in Iran’s energy sector.
• Impose mandatory sanctions on entities that knowingly provide goods, services, technology, or other items to Iran knowing that such provision would contribute to Iran’s acquisition or development of weapons of mass destruction or advanced conventional weapons.  
  
• Extend sanctions to lenders, insurers, underwriters, re-insurers and guarantors that have engaged in investments prohibited by the Act.
  
• Impose liability on US parent companies for the activities of their foreign subsidiaries that were created for the purpose of engaging in business with Iran if the subsidiaries’ activities would be prohibited if engaged in by the US parent.  This liability applies to activities that would violate ILSA or other restrictions relating to Iran imposed under the International Emergency Economic Powers Act (“IEEPA”).
• Require the publication of a list of all entities that have invested more than $20 million in Iran’s energy sector since 1996, and detailed information regarding the nature of the investments.  Pension plan and mutual fund managers must thereafter inform their investors if they invest in listed entities.   

The bill was introduced by Representative Ileana Ros-Lehtinen in January 2005 and has 353 cosponsors.  The bill is expected to be voted on by the full House of Representatives in April or May.  At least one member of the House of Representatives - Rep. Brad Sherman - has indicated that he will seek to further amend the bill by, among other things, inserting a provision that would ban companies in violation of the law from access to US capital markets.  A companion bill, S. 333, introduced by Senator Rick Santorum in February, 2005, currently has 49 cosponsors, but has not yet been scheduled for a hearing by the Senate Foreign Relations Committee.  Reports indicate that the Bush administration opposes passage of the bill because it may anger US allies involved in diplomacy with Iran.

Sudan Sanctions
On March 15, 2006, the House Judiciary Committee approved H.R. 3127 (the “Darfur Peace and Accountability Act of 2006”).  If adopted the bill will, among other things, amend the Comprehensive Peace in Sudan Act of 2004 (P.L. 108-497) and the Sudan Peace Act of 2002 (P.L. 107-245) to strengthen trade- and travel-related sanctions against Sudan in two principal respects.  First, the bill directs the President to block the assets of persons inside or outside of Sudan who are found to be complicit in or responsible, “either by commission or omission,” for acts that have contributed to genocide, war crimes or crimes against humanity in Darfur, and to deny those persons visas and entry into the United States.  This is an expansion over the asset-blocking mechanisms in prior legislation, which was limited in scope to members of the Sudanese Government.

Second, the bill also contains a provision requiring the President to “prohibit[] the entry at United States ports to cargo ships or oil tankers engaged in business or trade activities in the oil sector of Sudan or involved in the shipment of goods for use by the armed forces of Sudan,” if it is determined that the Sudanese Government is continuing to fail to cooperate in the Darfur peace effort.  Although the President likely would construe that provision as authorizing, rather than requiring, executive action, the provision could be of concern to shipping companies who do business in the United States, or customers and affiliates thereof.

The bill also contains a number of other provisions intended to strengthen the Darfur peace effort, including support for African Union peacekeeping forces and the denial of US Government assistance to governments that violate of the current U.N. arms embargo against Sudan.  In contrast to another bill currently pending in the House, the Darfur Peace and Accountability Act (H.R. 1424), H.R. 3127 does not contain provisions authorizing the President to use force against Sudan, or to impose broader oil sanctions or a no-fly zone.

H.R. 3127 was introduced in June 2005 and has 158 cosponsors.  The House International Relations Committee approved the bill on March 14, 2006.  Parallel legislation was passed last November by the Senate (S. 1462).   HR. 3127 must be voted on by the full House of Representatives.  If passed, it could be accepted by the Senate or sent to a conference committee.

We will continue to keep you apprised of any developments related to sanctions against Iran and Sudan.  If you have any questions in the meantime, please contact Ed Krauland at 202-429-8083, David Lorello at 202-429-6757, or Meredith Rathbone at 202-429-6437.