Today, the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) announced the issuance of two (2) general license authorizations in relation to Iran. The first general license, General License E, authorizes the exportation of services and funds transfers by nongovernmental organizations in support of certain not-for-profit humanitarian activities designed to benefit the people of Iran. This authorization covers activities related to humanitarian projects to meet basic human needs; non-commercial reconstruction projects in response to natural disasters for a period of up to two years; environmental and wildlife conservation projects; and human rights and democracy building projects. The second general license, General License F, authorizes the importation and exportation of certain services in support of professional and amateur sporting activities and exchanges involving the United States and Iran.

The move is a smart one on Treasury’s part. OFAC has come under fire in the past year for not acting fast enough to allow humanitarian aid to reach Iran in response to a recent large scale earthquake there, for being slow in responding to OFAC license applications for non-profit humanitarian organizations in the U.S., and for recently allegedly standing in the way of an Iranian tennis referee’s participation in the U.S. Open (although that referee did receive a license from OFAC shortly thereafter).

In light of these new general licenses it would seem that OFAC is becoming very generous. If you look at the last two (2) years OFAC has generally authorized numerous categories of activities for which specific licenses were previously required. For example, in that time frame OFAC has issued general licenses for the following:

1. Exports of food to Iran;
2. Exports of most medicines to Iran;
3. Exports of some medical devices to Iran;
4. Sales of real property in Iran gained prior to becoming a U.S. person or inherited;
5. Hiring of Iranian faculty and staff by U.S. undergraduate institutions to work in certain educational programs located in third countries;
6. Provision of scholarships to Iranian students by U.S. undergraduate institutions for certain educational programs located in third countries;
7. Recruitment of Iranians to participate in conferences, lectures, workshops, exhibitions,and education courses by U.S. undergraduate institutions for certain educational programs located in third countries;
8. Authorization of U.S. banks and private loan companies to collect student loan payments from persons in Iran;
9. Authorization of U.S. persons living in Iran to pay for personal living expenses while in Iran;
10. Importation of Iranian origin services related to conferences in the U.S. or third countries;
11. Export to Iran of certain services, software, and hardware incident to personal communications;
12. Export to Iran of services and funds transfers by nongovernmental organizations in support of certain not-for-profit humanitarian activities designed to benefit the people of Iran; and
13. Import and export of certain services in support of professional and amateur sporting activities and exchanges involving the United States and Iran.

So its clear that the Iran sanctions program is offering a lot more general licenses these days, but why? Has OFAC merely gone soft? Has the U.S. Government had a change of heart on being tough on Iran? Hardly. All signs point in the opposite direction. If I had to guess, at least part of the strategy here is to free up OFAC resources to tackle the more legitimate problems and questions raised in the enforcement and administration of U.S. sanctions targeting Iran.

The last few years have been taxing on OFAC as they have had to contend with ever changing geopolitical events, increased pressure from Congress to impose stricter sanctions, and government wide budget restrictions and cut backs. In addition, they have had to deal with numerous license applications for fairly innocuous activity which have taken up the resources of the Licensing Division. I should know I was responsible for filing a number of them.

It may be that these circumstances have caused OFAC to prioritize what they focus on in order to make sure the sanctions are administered to maximum effect. This isn’t just a wild hunch on my part. Its been rumored that OFAC may have recently eliminated six (6) positions in their Licensing Division. Furthermore, earlier this year it was noted at a public conference that OFAC sent out approximately 700 administrative subpoenas in 2012. This is down from the approximately 1100 OFAC administrative subpoenas that were sent out in 2010. As such, issuing general licenses to cover activities which are clearly not intended to be impeded by U.S. policy would make sense.

It’s my belief that–aside from attempting to minimize the impact of sanctions on ordinary Iranian people–OFAC’s new general licenses are aimed at clearing off their docket so they can focus on the really important issues; namely designating parties engaged in nefarious activity, enforcing violations by those circumventing sanctions, and saving their licensing resources for those matters that truly warrant deep thought and consideration.

In the Star Wars film series the Jedi and Sith battle it out in a constant struggle to bring balance to the Force (a binding, metaphysical, and ubiquitous power in the universe). Here OFAC seems to be bringing balance (or at least sanity) to the Iran sanctions program; an equally lofty goal as that pursued by the Jedi, and one in which I think the two (2) new general licenses do a great job of achieving.

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@ferrariassociatespc.com.