United States: United States Eases Sanctions on Iraq

On May 7, 2003, the United States acted to ease its comprehensive sanctions regime against Iraq. President Bush directed the Treasury Department to create general licenses to authorize the conduct of certain economic activity with Iraq, while, pursuant to authority granted by Section 1503 of the Emergency Wartime Supplemental Appropriations Act, President Bush suspended parts of the 1990 Iraq Sanctions Act.

Pursuant to "general licenses" issued by the Treasury Department late on May 7, certain activities that were banned under the U.S. Iraqi Sanctions Regulations will now be allowed to take place. The general licenses authorize the following activities:

• United States persons are authorized to transfer funds to any person in Iraq for non-commercial humanitarian purposes, including family remittances, provided that no U.S. person may transfer more than $500 per month to any person in Iraq.
• United States government agencies and their contractors or grantees are authorized to engage in all transactions that are within the scope of their official duties or the relevant U.S. government contracts or grants.
• All transactions that are necessary to provide privately financed humanitarian support, or to plan or prepare for the provision of humanitarian support, to the Iraqi people in Iraq are authorized. The export of goods to Iraq under this license, however, must still meet United Nations requirements.
• The export or reexport of certain "noncontrolled" goods from the United States to Iraq is authorized, provided that all United Nations requirements are fulfilled. Commercial trade and weapons sales to Iraq remain prohibited under the U.S. sanctions regime, and Department of Commerce Export Administration Regulations still apply.

The text of the general licenses is available at http://www.treas.gov/offices/enforcement/ofac/sanctions/t11iraq.pdf.

The suspension of the Iraqi Sanctions Act allows for the export of certain advanced technology equipment and other specified products to Iraq. This is particularly directed at allowing for the export of advanced computers to assist in the dredging of the Umm Qasr port, the principal point of entry into Iraq for humanitarian goods delivered by ship. Exporters wishing to export goods controlled by the Department of Commerce Export Administration Regulations are still required to obtain the necessary export licenses.

The United Nations sanctions regime remains in place, creating some legal ambiguity, particularly for those U.S. companies with international operations. The General Counsel of the Treasury, David Aufhauser, has stated that the U.S. efforts are "wholly consistent with extant international law." To some extent, this position is based on the expectation that the U.N. Security Council will soon suspend the U.N. Iraqi sanctions regime. In reality, however, it is uncertain whether United States companies can undertake the activities now permitted under U.S. law without contravening the U.N. sanctions regime, and if not, what the consequences could be.