OFAC Implements New Ethiopia Sanctions Program

On November 12, 2021, the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), pursuant to Executive Order 14046, Imposing Sanctions on Certain Persons With Respect to the Humanitarian and Human Rights Crisis in Ethiopia, issued sanctions against four entities and two individuals as part of a new sanctions program in Ethiopia. OFAC issued the  sanctions is in response to humanitarian and human rights crisis arising from the military conflict in Ethiopia. OFAC’s action was the first step in implementing sanctions in Ethiopia.

In addition to the initial designations, OFAC issued General License No. 4, Authorizing the Wind Down of Transactions Involving Hidri Trust or Red Sea Trading Corporation, which authorized the winding down of transactions with Hidri Trust and the Red Sea Trading Corporation through December 14, 2021. OFAC also designated Eritrea’s only political party and the country’s military.

On September 17, 2021, OFAC issued three other general licenses, including:

General License No. 1: Official Activities of Certain International Organizations and Other International Entities (September 17, 2021)

General License No. 2: Certain Transactions in Support of Nongovernmental Organizations’ Activities (September 17, 2021)

General License No. 3: Transactions Related to the Exportation or Reexportation of Agricultural Commodities, Medicine, Medical Devices, Replacement Parts and Components, or Software Updates (September 17, 2021)

OFAC also issued new Frequently Asked Questions (“FAQs”) 935 and 936. The FAQs clarify that the sanctions do not implicate the ability of interested parties to engage in humanitarian-related transactions or activity in Eritrea or Ethiopia.  In addition, the FAQs confirm that OFAC’s 50% Rule does not apply to the Ethiopia Sanctions Program. Instead, the Ethiopian Sanctions Program apply only to the specific parties designated under the OFAC regulations.

The U.S. Secretary of State, Anthony Blinken, issued a statement announcing the sanctions.  As explained, the sanctions are intended to press the parties to move toward a peaceful resolution to the conflict. The statement also noted that further sanctions could be imposed in the future if the parties fail to reduce conflict in the region and urges the Eritrean forces to withdraw from Ethiopia.

Executive Order 14046 establishes OFAC’s authority to issue regulations and designations against a variety of parties that are involved in actions or policies that threaten the peace, security or stability of Ethiopia; corruption or human rights abuses in northern Ethiopia; obstruction of delivery of humanitarian assistance; targeting of northern Ethiopian individuals; actions or policies that threaten the democratic process or territorial integrity of Ethiopia; or activities that have obstructed the ceasefire in northern Ethiopia.

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