Treasury Objects to Accusations That Sanctions Are Blocking Humanitarian Exports
After current and former lawmakers asked the Treasury Department to clarify its stance on humanitarian exports to sanctioned countries, the agency pushed back on accusations that sanctions are stopping those exports, saying it does not target legitimate exported aid. Some of those accusations are marred by a misunderstanding of Treasury’s general licenses and exemptions, said sanctions lawyer Doug Jacobson: they do allow a broad range of humanitarian exports to countries like Iran.
“I have clients who are still selling U.S.-origin medical products to Iran today, and have been for 20 years,” Jacobson said. “Ironically, [the Treasury’s Office of Foreign Assets Control] has made it easier to export these goods to Iran.”
Despite the broad exemptions, lawmakers have asked the U.S. to loosen sanctions against Iran, saying the regulations are blocking humanitarian exports (see 2004010019). Rep. Dean Phillips, D-Minn., and Sen. Chris Coons, D-Del., said they realize the U.S. is not able to lift all Iran sanctions but urged the administration to provide “clear guidance” to inform industry about which humanitarian items can be exported. “U.S. sanctions on any country and in particular on Iran produce a chilling effect on all international transactions,” the lawmakers said in a “dear colleague” letter being circulated. “We believe articulating the exemptions to U.S. sanctions clearly and often are important to maintaining international support for U.S. sanctions on Iran while at the same time helping the Iranian people and the broader region fight COVID-19.”
In an April 9 notice, Treasury said it already provides broad exemptions for medical exports to Iran, Venezuela, Syria, North Korea and other sanctioned countries. If exports are not already exempt or authorized through existing general and specific licenses, Treasury said it has “long-standing, favorable policies” in several sanctions programs to grant licenses for humanitarian exports. But OFAC may issue guidance to clear up confusion, the agency said. “We remain dedicated to continual dialogue with humanitarian, financial, and governmental stakeholders on these issues and welcome ongoing outreach and questions,” the agency said.
In an April 6 letter, 25 former U.S. and European government officials urged the U.S. to expand the scope of its humanitarian license exceptions for exports to Iran and asked OFAC to increase staffing (see 2004070028). They also suggested OFAC issue “comfort letters” to banks processing these transactions, which would provide written assurance that the banks will not be targeted for sanctions violations. The letter, which calls for broad license exemptions for oxygen generators and full-face mask respirators, shows a “lack of understanding” of OFAC’s sanctions exemptions and general licenses, Jacobson said. Jacobson said the former officials may also be conflating oxygen generators with ventilators, which do not require a specific exemption.
“They're cherry-picking these examples, and they're ignoring the 99% of all other medical supplies that can be exported to Iran tomorrow under the OFAC general license,” he said. Jacobson added that increased OFAC staffing would do little to increase humanitarian exports to Iran because the use of general licenses does not require companies to submit an application to OFAC. “The number of licenses I submitted for clients for medical products dramatically decreased over the last four years, and it has nothing to do with the Trump administration,” Jacobson said. “It has to do with the fact that these items do not require specific licensing.”
In addition, OFAC views comfort letters for items authorized by general licenses as largely unnecessary, Jacobson said. “A comfort letter is basically saying, ‘you can do something that you can legally do already,’” Jacobson said. “OFAC doesn't have the resources to do that” and has “always been wary about issuing a comfort letter because it's just unnecessary work for them, in their opinion.” Companies can instead ask law firms to write “opinion letters” assuring banks that a certain transaction will not be subject to sanctions, Jacobson said, adding that he recently wrote a similar letter to a European bank. “I often write opinion letters saying your risk of secondary sanctions is either negligible or extremely low,” he said. “And in humanitarian transactions, it would be zero.”
Despite requests for more clarification, OFAC provides substantial guidance on humanitarian exemptions, Jacobson said, which are all available in the agency’s frequently asked questions. “I know they get frustrated by this,” he said. “They’re like, ‘what more can we do other than issue this guidance?’”