Revisiting Export Controls in the COVID Era

“They haven’t even asked us to do that” was President Donald Trump’s response when Al Jazeera’s White House Correspondent recently asked whether he would consider easing sanctions on Iran to allow in medical supplies as the country continues to confront the global COVID-19 pandemic. The question came following bipartisan pressure on the administration, including a push from a group of senior U.S. and European diplomats, to relax sanctions during the crisis to save the lives of ordinary Iranian citizens. The White House had so far publicly refused to budge. So, it was unexpected when, just days later, the U.S. Treasury signaled efforts to implement some of the very easing measures that had been advocated.

Bipartisan Calls for Sanctions Relief

On April 6, 24 senior officials from the Bush, Clinton, and Obama administrations, as well as several senior European diplomats – including former Secretary of State Madeleine Albright, two former defense secretaries, a former director of the International Atomic Energy Agency, a former Treasury secretary, the diplomat who led on the Iran deal, and a former NATO secretary general – urged the administration to ease sanctions reimposed by the Trump administration in May 2018 after pulling out of the Iran nuclear deal. The group insisted that such steps “could potentially save the lives of hundreds of thousands of ordinary Iranians and, by helping to curb the virus’s rapid spread across borders, the lives of its neighbours, Europeans, Americans and others.” Their statement read:

Though never intended to kill, U.S. maximum pressure’ through sanctions on Iran are compromising the performance of the Iranian healthcare system as Iran’s outbreak moves into its second month. Despite humanitarian exemptions provided under U.S. and international law, these sanctions make the importation of medicine, medical equipment and raw materials needed to produce these goods domestically slower, more expensive, and complicated.

As the transatlantic coalition of diplomats explained, existing impediments make the import of medical equipment a de facto impossibility: “Despite humanitarian exemptions provided under U.S. and international law, these sanctions make the importation of medicine, medical equipment and raw materials needed to produce these goods domestically slower, more expensive, and complicated – when even possible – by deterring potential suppliers out of fear of overstepping sanctions’ limits.”

The signatories advocated for a number of immediate measures:

  • Expand the scope of humanitarian exemptions under U.S. sanctions to directly include devices and equipment necessary to effectively combat COVID-19;
  • Add staffing and other resources at Treasury to speed-up the sanctions exemption process;
  • Issue comfort letters to European and other non-U.S. banks, as well as for as many entities in the value chain as possible – such as manufacturers, shippers, and insurers – that already are conducting enhanced due diligence;
  • Offer regular updates on the operationalization of the U.S.-sponsored Swiss Humanitarian Trade Arrangement; and
  • Express support for humanitarian trade as facilitated through the Instrument in Support of Trade Exchanges (created in 2019 to allow EU countries to trade with Iran despite U.S. sanctions).

In addition, the group proposed some long-term measures:

  • Make clear to countries holding Iranian oil sales proceeds in escrow that those funds can be used to pay for humanitarian exports;
  • Provide funding to the World Health Organization; and
  • Permit the International Monetary Fund (IMF) to provide Iran with the requested $5 billion emergency financing.

Their letter followed a March 31 letter to Secretary of State Mike Pompeo from 34 progressive members of Congress, among them Sen. Bernie Sanders (I-Vt.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.), calling for the same. Former Vice President and presidential candidate Joe Biden has also joined in:

While the Iranian government has failed to respond effectively to this crisis, including lying and concealing the truth from its own people, and it continues to act provocatively in the region, the Iranian people are hurting desperately.

Biden echoed the concerns of the diplomats: “There are already humanitarian exceptions in place for sanctions, but in practice, most governments and organizations are too concerned about running afoul of U.S. sanctions to offer assistance.”

However, not everyone agrees. A different group of former officials, including Newt Gingrich, issued a rival statement claiming that “the Islamic Republic is waging a global influence campaign to use the spread of COVID-19 as a pretext for obtaining sanctions relief – money the regime wants to help subsidize its malign activities.”

Further complicating things, Iran’s leadership has publicly denied the need for foreign aid. In early April, Abbas Mousavi, spokesman for Iran’s Ministry of Foreign Affairs, said “Iran has never asked and will not ask America to help Tehran in its fight against the outbreak.” However, echoing prior appeals by the Iranian leadership, Mousavi added “America should lift all its illegal, unilateral sanctions on Iran.” Then, on May 8, Iran’s foreign minister penned a letter to the United Nations attacking the Trump administration for “the unlawful imposition of its unilateral sanctions against” Iran.

Response from the Trump Administration

Despite these efforts, the Trump administration refused to budge on sanctions. To the contrary, on March 18, the U.S. imposed a new round of sanctions on Iran. On April 2, Trump sarcastically told the press:

I think the Iranian [people] love America. I think they’d love to be free…They love what we stand for…if they need help with respect to the virus, we have the greatest medical professionals in the world. We’d love to send them over.

Then, a few days later, the State Department issued a fact sheet entitled “Iran’s Sanctions Relief Scam,” which claimed Iran’s sanctions relief efforts are “not intended for the relief or health of the Iranian people but to raise funds for its terror operations.” The administration has also opposed Iran’s application for an IMF loan, about which the EU foreign policy chief said: “I regret that … the United States are opposing the International Monetary Fund to take this decision. From the humanitarian point of view, this decision, this request should have been accepted.”

Nonetheless, on April 16, the U.S. Treasury’s Office of Foreign Assets Control (OFAC), which administers and enforces economic and trade sanctions, published a fact sheet entitled “Provision of Humanitarian Assistance and Trade to Combat COVID-19” that summarizes the scope and impact of sanctions programs on COVID-related assistance.​ OFAC urged those providing assistance to avail themselves of existing exemptions and emphasized that “[t]he United States is committed to ensuring that humanitarian assistance continues to reach at risk populations through legitimate and transparent channels as countries across the globe fight [COVID-19].” Crucially, for other kinds of assistance that must be licensed on a case-by-case basis, OFAC vows to prioritize and expedite the review of those applications that relate to the provision of humanitarian assistance.

Below is a summary of OFAC’s guidance for each country subject to U.S. sanctions. In each case, OFAC outlines various so-called “general licenses” that exempt humanitarian aid under which most COVID-19 assistance would fall. Critically, OFAC reiterates throughout that it prioritizes the review of applications for specific licenses related to humanitarian aid, and specifically COVID-19. OFAC flags, however, that this guidance in no way supersedes the Temporary Final Rule issued by the administration on April 10 pursuant to the Defense Production Act, which prohibits the export of certain personal protective equipment (PPE) without prior FEMA approval through August 2020.

Iran

Most medicine, medical equipment, and certain PPE and ventilators already qualify for export to Iran. For instance, § 560.210 of the Iranian Transactions and Sanctions Regulations (ITSR) exempts donations of food and medicine to the Iranian people intended to be used to ease human suffering, and General License E, issued pursuant to the ITSR, already authorizes NGOs to export in support of activities directly beneficial to the Iranian people. 

Venezuela 

While there is no blanket ban on exports to Venezuela, pursuant to Executive Order 13884, since August 2019, U.S. persons have been prohibited from transacting with the government of Nicolás Maduro, whose legitimacy is not recognized by the U.S. government, as well as other individuals on the list of Specially Designated Nationals and Blocked Persons maintained by OFAC. Even for transactions that do have a nexus to the Venezuelan government, there are broad exemptions for humanitarian assistance, agricultural goods, food, and medicine, as summarized in the related guidance available here.

North Korea

U.S. sanctions against North Korea seek to stunt the country’s weapons of mass destruction program by cutting off access to international financing and supply chains. NGOs are licensed by OFAC to provide certain humanitarian assistance. OFAC permits reasonable payments of taxes and import duties. However, any long-term agreements between NGOs and Pyongyang require a specific license. Unlike most other programs, North Korean sanctions do not contain general licenses for humanitarian aid.

Syria

U.S. sanctions against Syria similarly target the access of Bashar al-Assad’s government to international financing and supply chains. Other bad actors in Syria are also likely to be subject to sanctions against other regimes (e.g. Iran and Russia).

Cuba

The Cuban embargo, which has targeted the country’s communist regime for decades, blocks most transactions between U.S. persons and the island nation. In 2017, the Trump administration reimposed some of the sanctions on Cuba that had been relaxed under President Obama and created a new “Cuba Restricted List” that the administration considers to be “under the control of, or act for or on behalf of, the Cuban military, intelligence, or security services personnel.” Several general licenses are designed to allow humanitarian aid to the Cuban people. Notably, the Support for the Cuban People License Exception authorizes “the export and reexport of certain items to Cuba that are intended to improve the living conditions, support independent economic activity, strengthen civil society, improve the free flow of information, and facilitate travel. 

Ukraine/Russia-Related

Pursuant to EO 13685, transactions involving Russia or Ukraine are not prohibited as long as they do not involve Crimea, blocked persons, or proscribed conduct. Several general licenses already allow humanitarian aid to the Ukrainian people.

Conclusion

On its face, this fact sheet is rather innocuous. Short of making new policy, it reads as a technocratic catalogue of existing exemptions and practices. In practice, however, OFAC could be seen as rebuffing the White House and State Department’s staunch opposition to lifting sanctions by pointing interested parties to available resources and reiterating its commitment to expediting COVID-related applications. In an area of law where many are reluctant to transact fear of overstepping the limits of U.S. sanctions, the very act of issuing these guidelines may just be the assurance some need to provide the aid the Iranian people (and others) desperately need. 

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The views expressed in this post are the author’s own and do not reflect the views of her employer.

Image A female cashier wearing a mask to avoid coronavirus sits behind the till receiving payments on February 20, 2020 in Tehran, Iran. Photo by Kaveh Kazemi/Getty Images

 

About the Author(s)

Jeanne-Paloma Zelmati

Attorney in Washington, DC; previously a research associate for the President Emeritus of the Council on Foreign Relations. - Follow her on Twitter (@JPZelmati).