International Law Advisory - Syria Sanctions Issued by Presidential Executive Order

May 12, 2004

Further to our December 2003 and January 2004 advisories, the President yesterday issued an Executive Order imposing sanctions against Syria, in accordance with the Syria Accountability and Lebanese Sovereignty Restoration Act of 2003 (the “SAA).

Broadly speaking, the President’s Executive Order (“EO”) has implemented the SAA by imposing the following sanctions:

Prohibition on the export or reexport to Syria of any items that appear on the United States Munitions List (arms and defense weapons, military electronics, ammunition, etc.) or Department of Commerce Control List (dual-use items). Note that the EO revokes authority to export or reexport to Syria under existing export licenses.[1]
Prohibition on the export or reexport to Syria of products of the United States, other than food and medicine.[2] This would include items classified as “EAR 99” for BIS export control purposes.
Prohibition on aircraft of any air carrier owned or controlled by the Syrian government to take off from or land in the United States.[3]
License exceptions that would otherwise permit certain exports to Syria have also been eliminated or severely restricted. License exception TMP (temporary exports) has been limited to news media transactions; license exception TSU (unrestricted technology) has been limited to “operation” technology and software, “sales” technology, and software updates; license exception GOV (government and international institutions) has been limited to items for the personal or official use of U.S. government personnel; license exception BAG (personal baggage) remain in effect; and license exception AVS (aircraft sojourns) has been limited to the reexport of civil aircraft on temporary sojourn to Syria.

The Commerce Department General Order 2, which implements the export restrictions, contains a “savings clause” which exempts items that are on dock for loading or otherwise en route of shipment from immediate application of the prohibitions contained in the Executive Order. However, items that have not actually been exported or reexported within two weeks of the publication date of the General Order (i.e. May 14th as we understand) will be subject to the new restrictions and export licensing policies.
Apart from the export-related restrictions described above, the President has taken the following actions:

Pursuant to Section 311 of the USA PATRIOT Act, the Commercial Bank of Syria (“CBS”), along with its subsidiaries under the Syrian Lebanese Commercial Bank (which has correspondent accounts with banks in the United States), have been designated as financial institutions of “primary money laundering concern.” This action requires all U.S. financial institutions to immediately sever any corresponding accounts with these Syrian financial institutions.
Pursuant to the International Emergency Economic Powers Act (IEEPA), the President authorized the Secretary of the Treasury, in consultation with the Secretary of State, to designate individuals or entities involved in certain activities[4] so as to freeze their assets if within U.S. jurisdiction and preclude further business activities by U.S. persons with such designated persons or entities.

It is important to note that the President has invoked the waiver authority provided to him by subsection 5(b) of the SAA to suspend, or make certain exceptions to, these sanctions where doing so is determined by the President to be in the “national security interest” of the United States.[5] Such exceptions are outlined in the Commerce Department General Order No. 2. According to the General Order:

Exports or reexport of EAR 99 technology, technical data or source code to Syrian nationals that would be considered “deemed exports” or “deemed reexports” are not restricted and do not otherwise require a license application.
Items determined to be “informational materials” in the form of books and other media, publicly available software and technology, and technology exported in the form of patent applications or amendments are not restricted.
The general policy of denial for export licenses will not be applied to the following types of transactions subject to license application requirements:
- Activities in support of U.S. government functions or dealings with or in Syria;
- Medicine and medical devices on the Commerce Control List;
- Telecommunications equipment and associated computers, software and technology;
- Items in support of United Nations operations in Syria;
- Parts and components necessary to ensure safe operation of commercial passenger (not cargo) aircraft, subject to a $2 million limit over a two year license term.
- Deemed exports and reexports to Syrian nationals of technology or technical data on the Commerce Control List.

As noted above, the Department of the Treasury will be designating individuals and entities for purposes of the asset freeze and restrictions on doing business with such designated persons. Clients should monitor the situation to ensure that any designated persons or entities are screened against existing or potential customers. If you have any questions, please contact Edward Krauland at 202-429-8083 or David Lorello at 202-429-6757.

_________________

[1] These sanctions will be administered by the Bureau of Industry and Security (“BIS”) of the Department of Commerce. For extensive detail on the implementation of these export and reexport regulations, see Commerce’s “General Order Implementing Syria Accountability and Lebanese Sovereignty Act of 2003,” to be officially published in the Federal Register on May 14, 2004.
[2] Id.
[3] These provisions will be implemented by the Department of Transportation.
[4] Those activities are: support for terrorist groups; continued military presence in Lebanon; pursuit of weapons of mass destruction; and actions to undermine U.S. and international efforts with respect to the stabilization and reconstruction of Iraq.
[5] The White House predicated this reservation of waiver authority upon the President’s Constitutional authority to conduct the nation’s foreign affairs and his status as Commander in Chief.