US Government Clarifies Tech Authorizations under Iranian Sanctions

In complex sanctions regulations, a couple of words can make all the difference. That’s why, when the U.S. government made a few alterations and inserted additional explanatory language into a personal communications authorization last week, it took important steps to advance freedom of expression in Iran.

On February 7, the Treasury Department’s Office of Foreign Assets Control (OFAC) issued a revised General License D for Iran, clarifying a number of outstanding questions about the original license authorizing the export of hardware, software, and services that enable personal communications. The new General License D-1 replaces the May 2013 General License D, which allows companies to offer laptops, cell phones, anti-virus software, secure chat, and other tools to Iran despite comprehensive U.S. sanctions. OFAC also published answers to Frequently Asked Questions (FAQs) about General License D-1, aimed at further clarifying the types of personal communications products that companies can and cannot legally export to Iran.

The changes are necessary for General License D to maximize its intended effect on free expression and the free flow of information in Iran. It’s been nearly seven months since the publication of the original license, and there have only been a few reports of U.S. companies actually making their products available to Iranians as a result. Last summer, both Google and Apple unblocked their app stores inside the country—a positive sign, although Google limited it to free apps because existing financial sanctions still make payment processing a challenge. And many other companies appear to be even more hesitant to open up the Iranian market, often due to lack of legal clarity or concerns that the risk of violating sanctions outweighs the potential reward.

By revising the license, the U.S. government has made it clear once again that sanctions should not help the Iranian government restrict the free flow of information by preventing communications tools from reaching the Iranian people. But it will also take action from American companies to ensure that this policy change is not merely symbolic. The Treasury and State Departments have previously struggled to entice U.S. companies to take advantage of existing authorizations, despite four attempts to revise and expand them since 2009.

One critical revision impacts the ability of ‘non-U.S. persons’ to export products to Iran that have licensed parts or components produced in the United States. The original license created (probably unintentionally) a bizarre exception where, for example, foreign-made phones and tablets running Google’s Android operating system could be exported to Iran by a U.S.-headquartered company from anywhere in the world or by a non-U.S. company from the United States, but not by a non-U.S. company from outside of the United States. (In plain English, it effectively precluded a company like South Korea-based Samsung, the world’s largest smartphone manufacturer, from selling phones with Google’s Android OS in Iran, while authorizing an identical export by a foreign-owned company from the United States or by an American company.) The new license eliminates the non-U.S. persons distinction, and the FAQs make it doubly explicit that such exports are legal.

Alterations to specific language in the license also clarify several definitions. For example, the new definition for Secure Sockets Layer (SSL) certificates in the license annex is substantially improved. The FAQs provide additional details about using the Farsi language in authorized advertising and software, selling phone and computer accessories, providing software bundles, and exporting fee-based desktop publishing software and cloud computing services to Iran.

Progress in Iran also highlights the growing need to update other comprehensive U.S. sanctions to promote the free flow of information. As we argue in a recent policy paper, streamlining and harmonizing the treatment of communications technology under the Sudanese, Cuban, and Syrian sanctions regimes will not only benefit citizens in each of those countries—it will also make it much easier for companies to comply with existing restrictions across the board, increasing the likelihood that they will make their products available. The recent announcement that Coursera plans to block access to its free online educational materials in Iran, Sudan, and Cuba (but not Syria, thanks to Syrian General License No. 11A) demonstrate yet again the unintended impact that American sanctions have on ordinary individuals, and the confusing inconsistencies created by the patchwork of existing authorizations.

Although there is significant work left to do with respect to both Iran and other countries subject to comprehensive U.S. sanctions, last week’s news shows that the government is serious about making progress. We look forward to seeing continued implementation of General License D-1 as well as steps toward issuing new licenses for Sudan, Syria, and Cuba.