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Published on May 31st, 2013 | by Guest

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Effect of Eased Iran Restrictions May Take Time

by Erich C. Ferrari and Samuel Cutler

In a move alluded to earlier this week by Undersecretary of State for Political Affairs Wendy Sherman, the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) has released General License D, authorizing the exportation and re-exportation by US persons to Iran of services, software and hardware incident to the exchange of personal communications.

According to the Treasury’s press release, the new general license “aims to empower the Iranian people as their government intensifies its efforts to stifle their access to information.” Prior to today’s action, only those items covered by 31 CFR § 560.540 could be exported to Iran and were limited almost exclusively to free-of-charge online communication services such as Gmail, LinkedIn and Facebook. The relatively limited nature of the exemption generated a great deal of criticism from certain groups that the Obama administration was aiding the Iranian government’s crackdown on dissent by preventing Iranians from accessing technology that could be used to access the internet, circumvent government filters and communicate freely with each other and the rest of the world. Such criticisms were at a fever pitch during the weeks and months following Iran’s June 2009 Presidential Election, where widespread protests gripped the country.

With Iran’s next Presidential Election only two weeks away, the Administration has sought to evade such criticisms this time around through an expansion of authorized exports, the likes of which have not been seen since the passage of the Trade Sanctions Reform and Export Enhancement Act of 2000. Under the new general license, US persons can legally export electronic and communications equipment including cell phones, modems, laptops, tablets, antivirus software, anti-censorship tools, and Virtual Private Networks. Helpfully, OFAC also included Bureau of Industry and Security ECCN classification codes for these products, in order to limit any confusion over what exports are allowed.

Unfortunately, exporters will continue to face numerous hurdles in selling goods to Iran and the effects of the general license will likely not materialize for some time. While payment for newly authorized goods is covered, conducting any financial transactions with Iran remains extremely difficult. If third country banks are reluctant to facilitate payments for the export of medicine and medical devices to Iran, it is unclear whether they will be any more likely to do so for laptops and smartphones. In addition, transactions with individuals and entities who are designated under 31 CFR Chapter V, which can implicate a significant percentage of Iranian companies, are also forbidden and are likely to scare off exporters who may deem such transactions as too risky despite the authorizations contained in General License D. As such, even in a best-case scenario, it doubtful that much will change before Iran’s June 14 election.

That said, there is one aspect of the license that could have an immediate impact. The inclusion of Virtual Private Networks and other software designed to combat censorship may come into play if the same type of unrest occurs after this election as occurred in June 2009. VPNs help evade local internet restrictions by replacing user IP addresses with that of the VPN. Because these tools are usually available for download online, Iranians, especially those with foreign bank accounts, will be able to pay for and access this software almost immediately.

Ultimately the General License D is a positive development and the Obama administration should be applauded for it. There are still concerns that despite the authorizations, the hardware necessary for the conducting of personal communications may still have a difficult time reaching Iran. However, given the way Iranians have been able to get their hands on iPhones, iPads, and iPods over the last few years, maybe it won’t be as difficult as some think.

– Samuel Cutler is a policy adviser at Ferrari & Associates, P.C. and Erich Ferrari is the principal of Ferrari & Associates, P.C., a Washington, DC boutique law firm specializing in US economic sanctions matters.

Photo Credit: Farzad Hamidimanesh

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2 Responses to Effect of Eased Iran Restrictions May Take Time

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  1. avatar BiBiJon says:

    The real VPN advantage: a revolution by the expats for the expats.

    Before one of the major Iranian protests of the past year[2009], a journalist in Germany showed me a list of three prominent Twitter accounts that were commenting on the events in Tehran and asked me if I knew the identities of the contributors. I told her I did, but she seemed disappointed when I told her that one of them was in the United States, one was in Turkey, and the third — who specialized in urging people to “take to the streets” — was based in Switzerland.

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