Effective January 17, 2017, a new general license authorizes a broad range of activities previously prohibited under the Sudanese Sanctions Regulations (SSR), including most transactions with individuals and entities in Sudan and the unfreezing of all property of the Government of Sudan subject to U.S. jurisdiction. This is a dramatic change to a longstanding and comprehensive U.S. sanctions regime, with relevance to banks, the energy sector and a range of companies and investors with interests in the Middle East and Northern Africa (MENA).
The general license furthers the policy implemented by an Executive Order signed by President Obama on January 13 recognizing positive actions by the Government of Sudan. This follows six months of meetings between the United States and Sudan during which the Sudanese government has reportedly reduced military hostilities in South Sudan, improved humanitarian access and addressed regional terrorism issues.
While the general license permits many transactions as of today, the Executive Order will entirely revoke the Sudan sanctions effective July 12, 2017 provided the Secretary of State reports that the Government of Sudan has sustained the positive actions that gave rise to the order. Sudanese sanctions have been in place since 1997.
Transactions Now Authorized for Sudan
The new general license implemented by the Office of Foreign Assets Control (OFAC) authorizes all transactions prohibited by the SSR and by Executive Orders 13067 and 13412. Moreover, all property and interests in property blocked pursuant to the SSR will be unblocked.
Some of the transactions now permitted where authorized by the general license include:
- Importation into the United States of goods or services of Sudanese origin.
- Exportation or reexportation to Sudan of goods, technology, or services from the United States or by a United States person, where permitted or authorized under the U.S. Export Administration Regulations.
- Transactions by U.S. persons relating to the petroleum or petrochemical industries in Sudan, including oilfield services and oil and gas pipelines.
- Facilitation by a United States person of transactions between Sudan and a third country.
- Performance by a United States person of any contract, including a financing contract, in support of an industrial, commercial, public utility, or governmental project in Sudan.
- The grant or extension of credits or loans by any United States person to the Government of Sudan.
Some Transactions Still Prohibited
There are certain limitations to the general license and the prohibitions of other OFAC sanctions programs remain in place. Transactions are not authorized for individuals and entities in or relating to Sudan that remain Specially Designated Nationals (SDNs). Additionally, pursuant to Section 906 of the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), companies are still required to obtain one-year licenses to export certain agricultural commodities, medicine, and medical devices to Sudan.
Revisions to BIS Licensing Policy
U.S. export controls administered by the Bureau of Industry and Security (BIS) also continue to apply for Sudan and most exports or reexports of items subject to the EAR remain prohibited unless authorized. Exports of goods, software and technology minimally controlled as EAR99 generally do not require BIS authorization and are permitted under the OFAC general license for U.S. persons, as long as they do not involve a prohibited end user or end use. Sudan continues to be controlled for anti-terrorism (AT) reasons and thus ECCNs that are subject to AT control require a license. BIS has a license policy of denial for most items.
However, in coordination with OFAC’s announcement, BIS has revised its policy of review for license applications to export or reexport to Sudan certain items intended to ensure the safety of civil aviation or the safe operation of fixed-wing, commercial passenger aircraft. BIS will now generally approve license applications to export aircraft-related items to Sudan for such purposes, provided they are solely controlled for anti-terrorism (AT) reasons – for example, items classified under ECCN 9A991. This policy of approval will only apply to non-sensitive end-users; sensitive end-users such as Sudan’s military, police, and/or intelligence services and persons owned by or controlled by those end-users are ineligible. Applications to export aircraft-related items which are controlled both for anti-terrorism and an additional reason for control will be reviewed under a general policy of denial for all end users.
Continue to Monitor Developments
It is important to emphasize that the new OFAC general license is not necessarily permanent. The general license is contingent on continued cooperation by the Sudanese government. The incoming Trump administration may continue on the same path or revoke the general license and BIS licensing policy changes depending on the actions of the Sudanese regime. Assuming continued Sudanese government cooperation and Trump Administration approval, however, the Executive Order provides for the sanctions to be lifted on July 12, 2017.