On April 29, 2004, the United States effectively lifted the majority of its sanctions against Libya. The United States had maintained a nearly complete embargo against Libya since 1986. The lifting of sanctions follows commitments by Libya’s leader Mu’ammar al-Qadhafi to dismantle Libya’s nuclear weapons development program and to resolve outstanding claims to compensate victims of the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland.
Generally speaking, as a result of the lifting of these sanctions, U.S. persons/companies are now permitted to engage in transactions with Libya and to make new investments in Libya. For the first time in nearly 20 years, U.S. persons/companies will be generally able to buy and sell goods and services to and from Libyan entities, individuals and even the Libyan government. Travel to Libya by U.S. persons is also permitted although U.S. carriers remain prohibited from flying to or from Libya (including code-sharing) and flights to and from the United States by Libyan air carriers remain prohibited.
The U.S. Department of Treasury Office of Foreign Assets Control (OFAC) has issued general licenses (to be codified at 31 C.F.R. §§ 550.574 and 550.575) that became effective April 29 with the publication of export control regulations by the U.S. Department of Commerce Bureau of Industry and Security (BIS, formerly known as the Bureau of Export Administration or BXA). See 69 Fed. Reg. 23626 (Apr. 29, 2004).
President Bush has also issued a Presidential Determination that removes the possibility that the United States will impose sanctions under the Iran-Libya Sanctions Act of 1996 (ILSA) against non-U.S. companies that invest in Libya. ILSA permitted the United States to impose a series of trade and investment sanctions against non-U.S. companies that made certain investments in Libya.
Libya remains listed as a State Sponsor of Terrorism, however. As a consequence of this listing and other U.S. policy determinations, the export of certain types of goods to Libya remains restricted and transactions with Libya will be ineligible to receive U.S. government credits, loans or other assistance. The types of goods, software and technology that continue to be prohibited from exporting to Libya include items controlled for chemical and biological weapons proliferation reasons, military-related items controlled for national security reasons, items that are controlled for anti-terrorism reasons, items that are controlled for missile proliferation reasons, cryptographic, cryptoanalytic and cryptologic items controlled for national security reasons, explosives-related equipment and technology, items destined for the Libyan military, police or intelligence services, certain fertilizers, and aircraft, helicopters, engines and related spare parts. U.S. persons/companies may legally export such items to Libya only after obtaining an appropriate export license from BIS.
Libyan property in the United States that had previously been frozen under the Libyan Sanctions Regulations (31 C.F.R. Part 500) will remain frozen.
Lifting of the Libyan sanctions also does not preclude OFAC from continuing to prosecute companies or individuals who engaged in authorized transactions with Libya prior to the lifting of the sanctions. In fact, enforcement efforts related to prior violations of the former Iraqi sanctions policies have actually significantly increased now that sanctions have been lifted. Enforcement of U.S. sanctions policies have also been significantly stepped up since the 9/11 attacks and the passage of the USA PATRIOT Act.
If you have any questions related to the application of any U.S. sanctions program (e.g., remaining sanctions against countries such as Burma, Cuba, Iran or Sudan, designated entities and individuals such as Specially Designated Nationals of sanctioned countries, terrorists, narcotics traffickers and purveyors of weapons of mass destruction) or would like assistance in setting up or updating a sanctions, anti-money laundering or export compliance program, please contact your regular McDermott lawyer or the authors of this newsletter.