International Law Advisory - Easing of Libya Sanctions

This is to update you on the status of the U.S. government’s sanctions regime vis-à-vis Libya.  It has been reported in the media that the government this week will lift the embargo against Libya, which has been in effect since 1986.  We have spoken with an official in the Department of Treasury, Office of Foreign Assets Control (OFAC) (the agency responsible for administering the Libya sanctions regulations), who confirmed the substance of the news reports. It is expected that sometime this week, OFAC will issue a general license authorizing import, export, and investment transactions with Libya. (OFAC earlier this year lifted most of the travel-related prohibitions in the Libya sanctions regulations.)  The government also will act to remove the potential sanctions, available under the Iran and Libya Sanctions Act, against persons who investment in the Libyan petroleum sector.

Notably, it is anticipated that Libya will continue to be classified by the Department of State as a “state sponsor of terrorism.”  As such, an export license would be required from the Department of Commerce for export to Libya of items controlled under the Export Administration Regulations (EAR).  It is unclear exactly how the transfer of licensing jurisdiction from OFAC to the Department of Commerce would proceed.  OFAC could retain certain licensing authority for Libya, as it has in connection with export activity vis-à-vis Iraq (Iraqi sanctions were eased in May 2003).  On the other hand, if OFAC issues a general license authorizing all prospective transaction vis-a-vis Libya, the residual export controls under the EAR would be handled by the Commerce Department.

We will advise you of further details once the government issues its regulation. Companies seeking to do business with Libya should await a formal notice from OFAC that sanctions have been lifted before conducting any import, export, or investment-related activity with Libya. In the meantime, if you have any questions please contact Ed Krauland at 202.429.8083 or David Lorello at 202.429.6757.