On April 23, 2004, President Bush, basing his action on the government of Libya’s commitment to dismantle its weapons of mass destruction and ballistic missile programs and renounce the sponsorship of terrorism, announced the termination of the application of the Iran-Libya Sanctions Act of 1976 (ILSA) with respect to Libya.  On the same day, the Department of the Treasury issued a general license modifying the restrictions imposed by the International Emergency Economic Powers Act of 1977 (IEEPA) on transactions with Libya.  These actions became effective as of April 29, 2004.

As a result of the general license, most restrictions on Libyan transactions have been lifted and U.S. companies may now:

• enter into contracts with Libyan entities;
• invest in Libyan projects;
• provide financing in connection with Libyan projects; and
• import and export goods and services to and from Libya (subject to certain export controls maintained by the Department of Commerce). 

In addition, the individuals and entities previously included as Libyan entities on the Office of Foreign Assets Control’s list of Specially Designated Nationals and Blocked Persons have been removed from the list.  As a result, transactions with these individuals and entities will no longer be prohibited.

Despite the lifting of restrictions under ILSA and IEEPA, Libya remains on the U.S. Government’s State Sponsors of Terrorism List.  As a result, certain restrictions remain in place.  Among these are the following:

• frozen Libyan assets will remain frozen;
• Libya may not receive U.S. economic assistance, and the U.S. government will remain barred from supporting Libyan loan requests from international lending institutions;
• certain transportation-related transactions, such as flights to and from Libya by U.S. air carriers, code-sharing arrangements involving flights to or from Libya, and flights to or from the U.S. by Libyan air carriers remain prohibited; and
• a license from the Department of Commerce’s Bureau of Industry and Security (BIS) will be required for the export or re-export of most items on the Commerce Control List; including all items on multilateral export control regime lists, and a general policy of denial will apply to applications for the export or re-export of most military or “dual-use” items.

Despite the fact that certain restrictions remain in place, U.S. companies should now be able to compete for investment and trade opportunities in Libya on the same basis as their competitors from Europe, Asia and elsewhere.  As the Libyan government now appears to be committed to attracting foreign investment and re-joining the international political and economic community, the recent lifting of restrictions on U.S. companies' activities in Libya could result in substantial opportunities in the months and years ahead.

James L. Cuclis, Houston, +1 713 758 3415; e-mail: jcuclis@velaw.com

Jeffrey E. Eldredge, London, +44 20 7065 6013; e-mail: jeldredge@velaw.com

Kathleen C. Little, Washington D.C., +1 202 639 6663; e-mail: klittle@velaw.com

Christopher B. Strong, Dubai, +971 4 403 6219; e-mail: cstrong@velaw.com

Rindala Beydoun, Dubai, +971 4 403 6210; e-mail: rbeydoun@velaw.com

Energy Currents is an online publication of the law firm of Vinson & Elkins L.L.P.  It is intended to afford notice to our clients and friends of certain developments. It is not intended, nor should it be used, as a substitute for specific legal advice regarding particular factual situations.