Today President Obama issued a new Executive Order designating President of Syria Bashar Al-Assad and six other top Syrian officials as Specially Designated Nationals & Blocked Persons (SDNs). These designations effectively prohibit US persons from engaging in financial or trade transactions involving these SDNs, and requires US persons to block (freeze) all property and interests in property of such persons within their possession or control. The new Executive Order is the White House’s response to the escalating violence against peaceful protestors by the Syrian government.

Specifically, the Executive Order designates the following persons as SDNs:

1. Bashar Al-Assad (President of the Syrian Arab Republic);
2. Farouk Al-Shara (Vice President);
3. Adel Safar (Prime Minister);
4. Mohammad Ibrahim Al-Shaar (Minister of the Interior);
5. Ali Habib Mahmoud (Minister of Defense);
6. Abdul Fatah Qudsiya (Head of Syrian Military Intelligence);
7. Mohammed Dib Zaitoun (Director of Political Security Directorate).

These designations are in addition to the blocking of three other top Syrian officials. See Arent Fox Legal Alert dated May 2, 2011.

Today’s Executive Order moves closer but stops short of prohibiting transactions with all senior officials of the Syrian government and public institutions. Specifically, the Executive Order blocks the property of “any person determined by the Secretary of the Treasury in consultation with the Secretary of State (i) to be a senior official of the Government of Syria, or (ii) to be an agency or instrumentality of the Government of Syria, or owned or controlled, directly or indirectly, by the Government of Syria or by an official or officials of the Government of Syria.” Thus, it does not automatically block all the senior officials and agencies or instrumentalities of the Government of Syria. Rather, it allows the Office of Foreign Assets Control (OFAC) to use membership in these categories as criteria for future designations.

Significantly, although certain key Syrian government officials are designated, the Government of Syria is not itself subject to blocking unless the Secretary of Treasury designates it as an SDN, unlike the recent sanctions against Libya. See Arent Fox Legal Alert dated February 28, 2011. That being said, the US sanctions are being ratcheted toward an actual embargo, particularly given General Order No. 2 of the US Export Administration Regulations’ (EAR) prohibition on exports and reexports to Syria of nearly all items subject to the EAR (with narrow exceptions).

You might ask yourself, “What remains to be prohibited”? In a nutshell: Assuming no SDN interests, the export of services to Syria (using items not subject to the EAR), imports from Syria, and related transactions by US persons even if they involve agencies and state-owned enterprises of Syria. In a word, “petroleum.” Nonetheless, companies considering business involving Syria would be well advised to conduct thorough due diligence, monitor the rapidly evolving US and multilateral sanctions, and evaluate the risks before proceeding. With this latest Executive Order in place, all it would take is OFAC’s addition of the Government of Syria to the SDN list to block substantially all US trade with Syria.

Should you have any questions, please contact Michael Burton, Kay Georgi, Valentin Povarchuk, or a member of Arent Fox's International Trade Group or White Collar and Government Investigations Group or the Arent Fox attorney who handles your matters.