Overview
On July 11, 2017, President Trump issued an executive order (“new executive order”) delaying the Trump Administration’s decision on whether to make permanent broad Sudan sanctions relief instituted in the waning days of the Obama Administration.
On January 13, 2017, President Obama issued Executive Order (“EO”) 13761, which waived a number of statutory provisions mandating sanctions on Sudan and established a framework for the potential permanent revocation of key Sudan sanctions programs. On January 17, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued a broad general license to allow all transactions that had previously been prohibited under the Sudanese Sanctions Regulations (“SSR”). (See our previous advisory here). The US Commerce Department’s Bureau of Industry and Security (“BIS”) also amended the Export Administration Regulations (“EAR”) to set out a favorable licensing policy for exports and reexports to Sudan of certain items related to civil or commercial aviation and railroads. These developments opened significant new business opportunities in Sudan and essentially lifted, on a temporary basis, the United States’ longstanding comprehensive sanctions on Sudan (although the Darfur and South Sudan sanctions programs remain intact).
EO 13761 would have made this sanctions relief permanent as of July 12, had the Secretary of State published a notice in the Federal Register indicating that Sudan had “sustained [the] positive actions that gave rise to this order.” President Trump’s new executive order pushed the date back to October 12, 2017, giving the Trump Administration more time to conduct its review of Sudan’s behavior. Depending on the outcome of that assessment the sanctions against Sudan could be terminated in full.
Importantly, the new executive order did not revoke or alter the previously provided sanctions relief. Instead, the waivers previously issued by President Obama in EO 13761 and the license and policies previously issued by OFAC and BIS remain in place.
EO 13761 also contained a requirement for Sudan sanctions relief to be reviewed annually by the Secretary of State, including through the provision of a public report. However, President Trump’s new executive order strikes that annual review requirement.
Under the terms of the new executive order and the State Department’s press release, the administration’s review of Sudan’s behavior will focus on whether the Government of Sudan has sustained “the positive actions that gave rise to E.O. 13761.” Those positive actions have become known as the “five tracks” and include ending support for rebel factions in South Sudan; improving access for humanitarian groups in conflict zones; ending armed conflict in multiple provinces including Blue Nile, South Kordofan, and Darfur; continuing counter-terrorism cooperation with the US; and ceasing support to the Lord’s Resistance Army in neighboring countries.
As recently as late June, Steven Koutsis, the US Charge D’affaires in Sudan, stated that “advances on the five tracks have been positive” with a “few exceptions.” However, it is unclear how widely that view is shared within the administration, and recent reporting suggests that administration officials are split on the best approach to take with regard to Sudan policy. Earlier this month, a letter from 53 members of Congress urged President Trump to delay making any decision on Sudan sanctions for another year. The letter notes that the administration has not yet staffed key positions at the Department of State and National Security Council. It also expresses concern with regard to Sudan’s progress on three of the five tracks: cessation of hostilities within Sudan, humanitarian access to conflict zones, and cooperation on counterterrorism. Despite these concerns from members of Congress, there is not currently any pending legislation aimed at restricting trade relations with Sudan or prohibiting the lifting of Sudan-related sanctions.
In addition to the “five tracks,” the State Department’s press release indicated that “the Administration is also committed to intensifying engagement with the [Government of Sudan] on a broader range of vital issues, including our ongoing dialogue on improving Sudan’s human rights and religious freedom practices, and ensuring that Sudan is committed to the full implementation of UN Security Council resolutions on North Korea.” According to a background statement from senior administration officials, these are “vital issues outside the five-track arrangement” but they have not been added to the five track discussions.
Looking forward, US persons will be able to continue to engage in transactions related to Sudan under the OFAC general license until October 12. (The background statement from senior administration officials clarified that “throughout the course of the extended review period, the OFAC license that was issued in January will remain in effect.”) However, individuals and companies engaged in business in Sudan should keep that date in mind. Entities with commercial commitments that might extend beyond that date should ensure they have a viable exit strategy if needed, such as a force majeure clause covering sanctions restrictions.
