U.S. Eases Economic Sanctions on Libya

In August and September 2011, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) issued five new general licenses which now permit most transactions with Libya. This signals a shift from President Obama's Executive Order 13566 of Feb. 25, 2011, and the OFAC Libyan sanctions regulations issued on July 1, 2011, which prohibited all transactions with the government of Libya, certain state-owned oil companies and the Central Bank of Libya. This policy change stems from the U.S. government's recognition of the Transitional National Council of Libya as that country's new, legitimate government.

Pursuant to General Licenses 6, 7A and 8A, the following activities are now permitted:

• All transactions with the government of Libya and its agencies, instrumentalities and controlled entities, except for members of the Qadhafi regime and with respect to certain frozen funds and financial assets;
• All transactions with the Central Bank of Libya and all banks owned or controlled by the Central Bank of Libya or the government of Libya;
• All transactions with the Libyan National Oil Company and its affiliated entities; and
• The resumption of performance of contracts with the government of Libya and the Central Bank of Libya which pre-existed but were blocked by the executive order on Feb. 25, 2011, except for any agreements with members of the Qadhafi regime.

Although these new licenses greatly expand the range of permitted activities in Libya, they are not carte blanche for all transactions. Certain assets of the Qadhafi regime are still frozen under the Feb. 25 executive order, and U.S. persons are prohibited from engaging in transactions regarding those assets or with members of the Qadhafi regime. U.S. persons interested in conducting business in Libya should carefully screen all Libyan parties to ensure that they are not dealing with any members of or entities controlled by the Qadhafi regime or other persons on the Specially Designated Nationals List.