US Excludes Southern Sudan from Sanctions
October 31, 2007 (WASHINGTON) — The US department of Treasury issued a new rule revising the areas of Sudan covered by sanctions and recognizing the government of Southern Sudan (GOSS) as an entity separate from the Government of Sudan.
The Office of Foreign Assets Control of the U.S. Department of the Treasury which issued the rule late Wednesday justified its decision by saying that presidential executive order imposing sanctions had to be reconciled with the Darfur Peace and Accountability of 2006 that called for “support of the regional government of Southern Sudan”.
However the new rule upheld sanctions imposed on all transactions relating to Sudan’s petroleum or petrochemical industries even in Southern Sudan.
The rule exempts “all trade and related transactions and humanitarian assistance in specified areas of Sudan, including Southern Sudan, Southern Kordofan/Nuba Mountains State, Blue Nile State, Abyei, Darfur, and four official camps for internally displaced persons (Mayo, El Salaam, Wad El Bashir, and Soba) from the sanctions imposed on Sudan by Executive Order 13067 of November 3, 1997”.
The amendment exempts financial transactions and all shipments of goods, services, and technology as long as they do not transit non-exempt areas of Sudan or involve institutions owned by the government of Sudan.
However the rule provided for exceptions if imports or exports from South Sudan may transit non-exempt areas if the US Treasury grants prior approval.
The surprise announcement by the US comes amidst power crisis between the Southern ex-rebel group, Sudan People Liberation Movement (SPLM) and the ruling National Congress party (NCP).
The SPLM decided to suspend their participation in the national unity government because of what they describe as the NCP’s failure to fully implement crucial elements of the peace agreement.
The latest move by the SPLM raised concern that the CPA that ended two decades of civil war between the Arab and Muslim-dominated north and the mainly Christian and animist black southerners may unravel.
Late September the Secretary General of the Sudan People’s Liberation Movement (SPLM), Pagan Amum said that Washington decided to exclude southern Sudan from sanctions imposed on Sudan since 1997.
Amum said that this decision was made following talks held by a southern delegation with US Treasury Secretary Henry Paulson.
Last May the US president George Bush ordered stiffened sanctions on Sudan that will bar 31 companies controlled by the government from doing business in the U.S. financial system as well as sanctions on four Sudanese individuals, including two senior Sudanese officials and a rebel leader suspected of involvement in the Darfur violence.
The 2005 peace agreement brokered by the US and other western countries ended two decades of civil war between the Arab and Muslim-dominated north and the mainly Christian and animist black southerners.
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Below is the text of the Final rule on Sudan sanctions
Sudanese Sanctions Regulations - Federal Register Extracts 1,789 words 31 October 2007 Department of the Treasury Documents English Copyright (c) 2007 FIND, Inc.
Foreign Assets Control Office
SUMMARY: The Office of Foreign Assets Control of the U.S. Department of the Treasury is amending the Sudanese Sanctions Regulations, 31 CFR part 538, to include several new provisions implementing Executive Order 13412 of October 13, 2006.
EFFECTIVE DATE: Effective Date: October 31, 2007.
FOR FURTHER INFORMATION CONTACT: Assistant Director for Compliance Outreach & Implementation, tel.: 202/622-2490, Assistant Director for Licensing, tel.: 202/622-2480, Assistant Director for Policy, tel.: 202/622-4855, Office of Foreign Assets Control, or Chief Counsel (Foreign Assets Control), tel.: 202/622-2410, Office of the General Counsel, Department of the Treasury, Washington, DC 20220 (not toll free numbers).
SUPPLEMENTARY INFORMATION: This document and additional information concerning the Office of Foreign Assets Control are available from OFAC’s Web site (http: // www.treas.gov/ofac ) or via facsimile through a 24-hour fax-on demand service, tel.: (202) 622-0077.
Background
The Sudanese Sanctions Regulations, 31 CFR part 538 (the "SSR"), were promulgated to implement Executive Order 13067 of November 3, 1997 ("E.O. 13067"), in which the President declared a national emergency with respect to the policies and actions of the Government of Sudan. To deal with that emergency, E.O. 13067 imposed comprehensive trade sanctions with respect to Sudan and blocked all property and interests in property of the Government of Sudan in the United States or within the possession or control of United States persons.
On October 13, 2006, the President signed into law the Darfur Peace and Accountability Act of 2006 (the "DPAA"), which, among other things, calls for support of the regional government of Southern Sudan, assistance with the peace efforts in Darfur, and provision of economic assistance in specified areas of Sudan. In particular, section 7 of the DPAA requires the continuation of the sanctions currently imposed on the Government of Sudan pursuant to E.O. 13067. However, section 8(e) of the DPAA exempts from the prohibitions of E.O. 13067 activities or related transactions with respect to certain areas in Sudan, including Southern Sudan, Southern Kordofan/Nuba Mountains State, Blue Nile State, Abyei, Darfur, and marginalized areas in and around Khartoum.
To reconcile sections 7 and 8(e) of the DPAA and to maintain in place sanctions on the Government of Sudan, the President issued Executive Order 13412 on October 13, 2006 ("E.O. 13412"). In E.O. 13412, the President determined that the Government of Sudan continues to implement policies and actions that violate human rights, in particular with respect to the conflict in Darfur, and that the Government of Sudan plays a pervasive role in Sudan’s petroleum and petrochemical industries, thus constituting a threat to U.S. national security and foreign policy.
In light of these determinations, and in order to take additional steps with respect to the national emergency declared in E.O. 13067, section 1 of E.O. 13412 continues the blocking of the Government of Sudan’s property and interests in property that are in or come within the United States, or that are in or come within the possession or control of United States persons. Section 2 of E.O. 13412 prohibits transactions by United States persons relating to the petroleum or petrochemical industries in Sudan, including, but not limited to, oilfield services and oil or gas pipelines. Both sections 1 and 2 of E.O. 13412 apply to the entire territory of Sudan.
Section 4 of E.O. 13412, consistent with section 8(e) of the DPAA, provides that the prohibitions contained in section 2 of E.O. 13067 no longer apply to activities or related transactions with respect to Southern Sudan, Southern Kordofan/Nuba Mountains State, Blue Nile State, Abyei, Darfur, or marginalized areas in and around Khartoum, provided that the transactions do not involve any property or interests in property of the Government of Sudan. Section 4(b)(ii) of E.O. 13412 authorizes the Secretary of State, after consultation with the Secretary of the Treasury, to define the geographic areas of Southern Sudan, Southern Kordofan/Nuba Mountains State, Blue Nile State, Abyei, Darfur, and marginalized areas in and around Khartoum for purposes of the order. In addition, section 6(d) of E.O. 13412 defines the term "Government of Sudan" to include its agencies, instrumentalities, and controlled entities, and the Central Bank of Sudan, but to exclude the regional government of Southern Sudan.
In accordance with E.O. 13412, the Office of Foreign Assets Control ("OFAC") today is amending the SSR to add several new provisions implementing the provisions of E.O. 13412 discussed above. First, OFAC is renumbering SUBSEC 538.210 and 538.211 as SUBSEC 538.211 and 538.212, respectively, in order to add a new SEC 538.210. Paragraph (a) of new SEC 538.210 prohibits all transactions by United States persons relating to the petroleum or petrochemical industries in Sudan, including, but not limited to, oilfield services and oil or gas pipelines. Paragraph (b) of SEC 538.210 prohibits the facilitation by a United States person of any transaction relating to Sudan’s petroleum or petrochemical industries.
Second, OFAC is adding an exemption to newly renumbered SEC 538.212. Paragraph (g)(1) of SEC 538.212 provides that, except for the provisions of SUBSEC 538.201-203, 538.210, and 538.211, and except as provided in paragraph (g)(2) of SEC 538.212, the prohibitions contained in the SSR do not apply to activities or related transactions with respect to the Specified Areas of Sudan. This provision means that, subject to the new interpretive sections set forth below, activities and related transactions with respect to the Specified Areas of Sudan are no longer prohibited, unless they involve any property or interests in property of the Government of Sudan or relate to Sudan’s petroleum or petrochemical industries. In addition, paragraph (g)(2) of SEC 538.212 states that the exemption does not apply to the exportation or reexportation of agricultural commodities, medicine, and medical devices. Section 906 of the Trade Sanctions Reform and Export Enhancement Act of 2000 (Pub. L. 106-387) continues to impose licensing requirements on these transactions, regardless of the intended destination in Sudan. These licensing requirements are implemented in SUBSEC 538.523, 538.525, and 538.526.
Third, OFAC is revising the definition of the term Government of Sudan contained in SEC 538.305 to exclude the regional government of Southern Sudan, as set forth in section 6(d) of E.O. 13412.
Fourth, OFAC is adding a new definitional section to identify the areas of Sudan that were exempted in section 4(b) of E.O. 13412 from the prohibitions contained in section 2 of E.O. 13067. New SEC 538.320 defines the term Specified Areas of Sudan to mean Southern Sudan, Southern Kordofan/Nuba Mountains State, Blue Nile State, Abyei, Darfur, and marginalized areas in and around Khartoum. This section also defines the term "marginalized areas in and around Khartoum" to refer to four official camps for internally displaced persons.
Fifth, OFAC is adding interpretive SEC 538.417 to clarify that all of the prohibitions in the SSR apply to shipments of goods, services, and technology that transit areas of Sudan other than the Specified Areas of Sudan. Section 538.417(a) provides that an exportation or reexportation of goods, technology, or services to the Specified Areas of Sudan is exempt under SEC 538.212(g) only if it does not transit or transship through any area of Sudan other than the Specified Areas of Sudan. Section 538.417(b) provides that an importation into the United States of goods or services from, or originating in, the Specified Areas of Sudan is exempt under SEC 538.212(g) only if it does not transit or transship through any area of Sudan other than the Specified Areas of Sudan. Thus, imports and exports to or from the Specified Areas of Sudan that do not transit or transship non-exempt areas of Sudan are not prohibited, provided that the Government of Sudan does not have an interest in the transaction and the transaction does not relate to Sudan’s petroleum or petrochemical industries. However, imports and exports to or from the Specified Areas of Sudan that involve the transiting of, or transshipment through, non-exempt areas of Sudan, e.g., Khartoum and Port Sudan, require authorization from OFAC.
OFAC is also adding interpretive SEC 538.418 to explain the prohibitions on financial transactions in Sudan. Financial transactions are no longer prohibited by the SSR if: (1) The underlying activity is not prohibited by the SSR; (2) the financial transaction involves a third-country depository institution, or a Sudanese depository institution not owned or controlled by the Government of Sudan, that is located in the Specified Areas of Sudan; and (3) the financial transaction is not routed through a depository institution that is located in the non-exempt areas or that is owned or controlled by the Government of Sudan, wherever located. However, any financial transactions that involve, in any manner, depository institutions that are located in the non-exempt areas of Sudan, e.g., Khartoum, remain prohibited and require authorization from OFAC.
For example, if a financial transaction involves a branch of a depository institution in the Specified Areas of Sudan, but that depository institution is headquartered in Khartoum and requires all financial transactions to be routed through the headquarters or another branch located in the non-exempt areas of Sudan, that transaction is prohibited and requires authorization from OFAC.
Finally, OFAC is amending the SSR to add three new general licenses, which are set forth in SUBSEC 538.530, 538.531, and 538.532. Paragraph (a) of SEC 538.530 provides that all general licenses issued pursuant to E.O. 13067 are authorized and remain in effect pursuant to E.O. 13412. Paragraph (b) of SEC 538.530 provides that all specific licenses and all nongovernmental organization registrations issued pursuant to E.O. 13067 or the SSR prior to October 13, 2006, are authorized pursuant to E.O. 13412 and remain in effect until the expiration date specified in the license or registration, or if no expiration date is specified, June 30, 2008. OFAC urges all license and nongovernmental organization registration holders to take note of this potentially new expiration date, which applies to all licenses and registrations that do not otherwise contain an expiration date, regardless of when they were originally issued.
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