OFAC to Exempt "Seceded" State from Sudan Sanctions, but Not U.S. Persons
The Office of Foreign Assets Control has issued guidance on its exemption from the Sudanese Sanctions Regulations of the new southern Sudan state that is expected to form on July 9, 2011. The population of the new state voted to secede from Sudan1 in January.
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(Executive Orders 13067 (1997) and 13412 (2006) have imposed economic sanctions against Sudan and the Government of Sudan, and generally prohibit the exportation or reexportation of goods, technology, or services “to Sudan,” the importation of “goods or services of Sudanese origin,” and the dealing in “property and interests in property of the Government of Sudan.” They also prohibit transactions “relating to the petroleum or petrochemical industries in Sudan.” OFAC implements these EOs through the Sudanese Sanctions Regulations (SSR, 31 CFR Part 538), which track the scope of the orders.)
New State and Government Will Not be Subject to Sanctions
OFAC states that when the new state is formed, it will not be included in the territorial boundaries of Sudan nor be governed by the Government of Sudan. Following interagency consultations, OFAC has concluded that the SSR will continue to apply only to Sudan and the Government of Sudan, and that the new state and its government will not be subject to them.
However, U.S. Persons Still Subject to Sanctions Unless Authorized by License
While the new state will no longer be directly subject to OFAC’s Sudan sanctions, certain activities by U.S. persons in the new state will continue to be prohibited by the SSR absent OFAC authorization, given the interdependence between some sectors of its economy and infrastructure and those of the rest of present-day Sudan.
The SSR will continue to prohibit U.S. persons from dealing in property and interests in property of the Government of Sudan, from performing services that benefit Sudan or the Government of Sudan, from engaging in transactions relating to the petroleum or petrochemical industry in Sudan, and from participating in exports to or imports from the new state that transit through Sudan.
For example, the SSR will prohibit a U.S. company, unless authorized by OFAC, from providing services to the petroleum industry in the new state if those services would benefit the Government of Sudan or relate to the petroleum industry in Sudan, or from transporting exports of petroleum or petrochemical products through Sudan.
Further, should a revenue-sharing arrangement between Sudan and the new state result in a situation where the government of the new state makes payments to the Government of Sudan from the sale of its petroleum, U.S. persons generally could not engage in transactions involving the oil industry in the new state unless authorized by OFAC.
(OFAC states that Information on applying for a license is set forth in 31 CFR 501.801 of the Reporting, Procedures and Penalties Regulations.)
1The Republic of Sudan
UN information on the vote is available here.
(OFAC guidance dated 04/12/11)