Much ado was made last month when the United States Department of the Treasury Office of Foreign Assets Control (“OFAC”) designated Iran Air as a Specially Designated National (“SDN”) under the Weapons of Mass Destruction Proliferators sanctions program. At first, many people were concerned that OFAC’s designation of Iran Air would prevent U.S. persons from being able to fly into and within Iran on the carrier, however, a number of sources quickly raised the fact that the travel exemption contained in the International Emergency Economic Powers Act (“IEEPA”) allowed for U.S. persons to engage in travel related transactions with Iran Air. So everything is ok with flying Iran Air right? Not necessarily.
As Clif Burns from Export Law Blog wrote last week, a U.S. Department of State official revealed some concerns that may make one think twice before stepping on to an Iran Air flight. During the Q&A session of last week’s 2011 Update conference held by the U.S. Department of Commerce Bureau of Industry and Security (“BIS”) panel member John-Marshall Klein from the Office of Terrorism Finance and Economics Sanctions Policy, noted that while Iran Air’s designation did not preclude travel on the carrier, he wouldn’t advise Americans to travel on Iran Air because the sanctions would prevent Iran Air from getting spare parts.
What Mr. Klein was hinting at was that due to Iran Air’s designation under the Weapons of Mass Destruction Proliferators Regulations, the general license at 31 C.F.R. 560.528 which permits OFAC to license on a case-by-case basis spare parts necessary for the safety of civil aviation would not be applicable.
As Mr. Burns also pointed out in his blog there are treaty obligations which would bar the United States from engaging in activities which would endanger civil aviation. Nonetheless, it does seem from Mr. Klein’s comments that OFAC may not be open to authorizing transactions allowing aircraft parts needed for the safety of civil aviation to Iran Air.
Keep in mind that Mr. Klein is an official from the U.S. Department of State, and while the Department of State does play a consultative role, OFAC is ultimately responsible for issuing specific licenses for the export to Iran of parts needed for the safety of civil aviation. So the question remains: do Mr. Klein’s comments portend the denial of license applications to export parts needed for the safety of civil aviation to Iran Air, thereby rendering the move by the United States and OFAC a direct attempt to threaten the lives of innocent persons flying Iran Air? Or were Mr. Klein’s comments just made in an off hand manner without a thorough consideration of how the export of such parts to Iran Air could be authorized?
I have to believe it was the latter. I just have a very hard time believing the U.S. government would intentionally seek to endanger the lives of so many innocent parties, particularly when a number of those parties are Iranian Americans who quite often use Iran Air to travel to or within Iran. Moreover, even if the United States did have such nefarious intentions–which again I doubt–it would be highly unlikely for them to openly admit them. At the end of the day, I believe that both the legal and policy arguments for licensing the export of parts for the safety of civil aviation to Iran Air are so compelling that OFAC would have an extremely hard time justifying the denial of such a license. I will be interested to see what determinations they render for such license applications and would encourage anyway who had the patience and the money to file either a license application or a request for interpretative guidance to see what OFAC actually takes on the issue.
The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
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