WASHINGTON: As Congress considers a controversial nuclear deal with Iran, the US Treasury agency charged with implementing related financial sanctions is at risk of being overwhelmed by its expanding mission, former employees and lawyers who deal with the office say.
The agency, the Office of Foreign Assets Control, is responsible for enforcing a broad array of sanctions and for licensing American companies wishing to do business with sanctioned countries. Both roles will be especially critical if some restrictions are relaxed under the proposed nuclear agreement with Iran.
But a growing reliance on sanctions to address situations as varied as Russia’s incursions into Ukraine, cyberttacks on US businesses, and jihadist financing has increased pressure on the agency, which is being asked to police a bigger beat while staffing and budgets have not kept up.
Dozens of OFAC officials have left the agency in the past four years for better-paying jobs at law offices, consulting firms and banks, which have aggressively built up their compliance departments in response to big fines for sanctions violations.
“OFAC is left in a position where they can only deal with what’s five inches in front of their faces,” said Erich Ferrari, a Washington-based sanctions lawyer.
The agency has prided itself on the firepower of its small and highly specialized staff of about 200, who collectively oversee more than 35 sanctions programs. But the size of the agency has also meant that each departure has an outsized impact, former officials say.
“OFAC is a small organization that is among the leanest, most productive I’ve seen anywhere in government,” said Elizabeth Rosenberg, a former senior adviser at the Treasury Department who left in 2013. “There’s little redundancy.”
The most high-profile recent departures have included Lorraine Lawlor, OFAC’S former chief of compliance programs who left in 2012 for Wells Fargo ; Sean Thornton, former chief counsel who joined French bank BNP Paribas in 2014; Eytan Fisch, former assistant director for policy who left this year for law firm Skadden; and Adam Smith, former senior adviser to the director who left in July for law firm Gibson Dunn.
At least 25 other sanctions compliance officers, lawyers, and others have left OFAC since 2011 for companies including HSBC, Bank of America, Western Union, PayPal, and Credit Suisse, according to a review of LinkedIn profiles.
To be sure, the recruitment of regulators by business is a constant in Washington, and there is no indication that the rate of departures at OFAC is greater than at other agencies. But the impact is particularly acute given that the agency’s staff and budget has grown little in recent years, while its workload has increased.
At one point, OFAC staff were holding up to five happy hours each month for departing colleagues, said David Brummond, a former sanctions adviser who left OFAC in 2014 and is now with law firm DLA Piper.
“It just became funny,” Brummond said. “You had to schedule it into your social calendar.”
Treasury did not provide details on the agency’s staffing levels or comment on whether the agency is short-staffed for the work it does.
“OFAC is comprised of a staff of talented individuals, and our sanctions have become an increasingly effective national security and foreign policy instrument thanks in large measure to the careful work of our staff,” the Treasury said in a statement. BIGGER PAYDAY In some ways the problems faced by OFAC are born of the US government’s success, in winning high-profile penalties against banks for prohibited transactions with Iran, Sudan and other sanctioned countries.
Banks have responded by beefing up compliance departments and tapping senior OFAC officials to lead them. For example, shortly after BNP Paribas agreed to pay US authorities $8.9 billion in 2014 to resolve claims it violated sanctions, it hired Thornton.
Some of the departed officials had served for decades and took with them considerable institutional knowledge of how sanctions have evolved.
OFAC employees, whose salaries top out at around $160,000 per year, can easily double or triple their pay in the private sector. Senior OFAC officials can command up to $1.2 million per year, said a senior compliance official at a large US bank.
Since 2011, the United States has implemented 29 sanctions-related executive orders, according to a Reuters tally, almost double the number from 2006 to 2010 when there were 16 such orders.
OFAC staff have numbered about 170 to 200 for at least the last five years, former officials say. In fiscal 2013, the last year for which information is public, OFAC had a budget of about $31 million, compared to $29 million in 2009, documents show.
Sanctions have also become increasingly complex. The measures imposed on Russia in 2014, sanctions experts say, are especially intricate and target specific activities rather than broad categories of business. And while sanctions ban most US trade with Iran, they include exceptions that allow humanitarian, medical and other business dealings. Such business often relies on the granting of licenses, which lawyers said can take up to a year or more to acquire.
Ferrari said a license he requested for an Iranian animal shelter to raise funds in the United States took 18 months and three separate applications before being granted.
Businesses sometimes give up in frustration after long waits for OFAC’s go-ahead or guidance, lawyers say.
That could present a risk for implementation of the Iran deal, experts say. Without clear and quick guidance, businesses and banks will likely pull back from trade with Iran, even in areas permitted if sanctions are eased. In turn, if Iran did not get the relief it expected from eased sanctions, it would have less incentive to abide by the terms of the deal.
Brummond said it is already a challenge to get agency staff on the phone to give guidance on new sanctions language and what direction regulations might take.
“Clients want the answer whether or not OFAC answers the phone. I try to explain to the client that I’ve left my fourth voice mail,” Brummond said. “I know who I’m calling on the other side, and I know how buried they are.”
US agency overseeing sanctions faces brain drain, added work
US agency overseeing sanctions faces brain drain, added work
UK delaying reversal on Israeli arms export ban: Report
- British PM expects ‘sustained’ aid deliveries to Gaza before reversing partial weapons freeze
- Israeli counterpart raised the matter during phone call on Tuesday
LONDON: The UK is delaying lifting its partial ban on arms exports to Israel until “sustained” humanitarian aid shipments arrive in Gaza, The Times reported.
Prime Minister Keir Starmer, who spoke to his Israeli counterpart Benjamin Netanyahu by telephone on Tuesday, is believed to be resisting pressure from Tel Aviv on the matter.
Starmer is expected to wait for formal legal advice that Israel’s policy on aid deliveries has improved before reversing the ban.
A source told The Times: “There are signs that the trucks are getting through. But we have told the Israelis we need that to be sustained and to see numbers increased.”
Last September, UK Foreign Secretary David Lammy suspended 30 of 350 export licenses to Israel due to fears that the weapons could be used to commit violations of international law, implicating Britain in the process. Licenses are reviewed every six weeks as per government policy.
The government’s existing legal position on the banned export licenses cites credible claims of Israeli mistreatment of Palestinian prisoners of war, as well as insufficient aid deliveries to Gaza. Israel could “reasonably do more to facilitate humanitarian access and distribution,” it says.
During Tuesday’s phone call, Netanyahu “raised the issue of the weapons export licenses to Israel that have been frozen in the UK,” according to an Israeli government report.
There are concerns that an Israeli law set to take effect next week designating the UN Relief and Works Agency for Palestine Refugees as a terrorist group could prevent it from helping with urgent aid deliveries.
UNRWA is the largest aid organization in Gaza, with about 13,000 staff in the Palestinian enclave.
Daesh claims responsibility for killing Chinese national in Afghanistan
- Daesh said it had targeted a vehicle carrying the Chinese citizen, which led to his death and damage to his vehicle
- China said it was “deeply shocked” by the attack and demanded the Afghan side thoroughly investigate the incident
KABUL: Daesh (Islamic State) has claimed responsibility for the killing of a Chinese national in Afghanistan’s northern Takhar province, it said in a post on its Telegram channel late on Wednesday.
Afghan police in the province had said on Wednesday that a Chinese citizen was murdered and a preliminary investigation had been launched, but it was not clear who was behind the attack.
Daesh said it had targeted a vehicle carrying the Chinese citizen, which led to his death and damage to his vehicle.
China’s foreign ministry said on Thursday it was “deeply shocked” by the attack and had demanded that the Afghan side thoroughly investigate the incident and severely punish the perpetrators.
“We urge the Afghan interim government to take resolute and effective measures to ensure the security of Chinese civil institutions and projects in Afghanistan,” ministry spokesperson Mao Ning said at a regular press briefing.
China was the first country to appoint an ambassador to Afghanistan under the Taliban and has said it wants to boost trade and investment ties.
The Taliban took over in 2021, vowing to restore security to the war-torn nation.
Attacks have continued, including an assault in 2022 on a Kabul hotel popular with Chinese investors. Daesh has claimed responsibility for many of them.
NATO allies must pay ‘fair share’ before adding members: US envoy
- NATO allies must pay their “fair share” on defense before considering enlarging the alliance, a US presidential envoy said Thursday, as NATO’s chief said members will need to ramp up defense spending
DAVOS: NATO allies must pay their “fair share” on defense before considering enlarging the alliance, a US presidential envoy said Thursday, as NATO’s chief said members will need to ramp up defense spending.
“You cannot ask the American people to expand the umbrella of NATO when the current members aren’t paying their fair share, and that includes the Dutch who need to step up,” US envoy Richard Grenell said by video link at an event on the sidelines of the World Economic Forum in response to NATO chief Mark Rutte, the former Dutch prime minister.
“We have collectively to move up and we will decide on the exact number later this year, but it will be considerably more than two (percent),” Rutte said, referring to the alliance’s target of defense spending of two percent of GDP.
Balkan air pollution crisis threatens public health, EU membership goals
- Old coal plants, cars keep Balkan pollution high
- Economic hardship hinders progress toward reducing emissions
OBILIC: For 30 years, Shemsi Gara operated a giant digger in a Kosovo coal mine, churning up toxic dust that covered his face and got into his airways. Home life wasn’t much better: the power plants that the mine supplies constantly spew fumes over his village.
Gara died on Sunday aged 55 after three years of treatment failed to contain his lung cancer. In his final days, unable to walk, he lay on a couch at home, gaunt and in pain, as a machine pumped oxygen into his dying body.
“I kept telling him I wanted to help, but I couldn’t,” said his wife Xhejlane, who mourned in her living room with friends on Wednesday. “He would say ‘Only God knows the pain I have’.”
As much of the world moves to reduce the use of fossil fuels, pollution in Western Balkan countries remains stubbornly high due to household heating, outdated coal plants, old cars, and a lack of money to tackle the problem.
Relatively small cities such as Serbia’s capital Belgrade and Bosnia’s capital Sarajevo have frequently topped daily global pollution charts, according to websites that track air quality worldwide.
This has costly health impacts, and could also jeopardize such countries’ prospects of joining the European Union, which has stricter emissions standards.
“There are no resources in the region for the reduction of air pollution,” said Mirko Popovic, a director with the Renewables and Environmental Regulatory Institute think-tank in Belgrade.
In the EU, net greenhouse gas emissions have dropped by about 40 percent since 1990, driven by the embrace of renewable energy, a European Commission report said in November.
Western Balkan nations have pledged to reduce carbon emissions but economic hardship has slowed progress.
Kosovo, one of Europe’s poorest countries, generates more than 90 percent of its power from coal. The World Bank estimates that a transition to a coal-free economy will cost 4.5 billion euros.
SMOG
The impact of pollution is clear across the region, especially in winter.
Smog has cloaked Belgrade this week, while Sarajevo sits in a valley that acts as a pollution trap. The Bosnian capital’s air quality was classed as “hazardous” on Tuesday, the worst in the world, according to IQAir, which tracks pollution levels.
In North Macedonia’s capital Skopje, mask-wearing locals often lose sight of nearby snow-capped mountains for days.
The rate of deaths attributable to ambient pollution is relatively high — 114 per 100,000 people in Bosnia and around 100 in Serbia and Montenegro, World Health Organization data show, compared with just 45 in Germany and 29 in France.
Gara was buried on Monday in a cemetery in Obilic, outside Kosovo’s capital Pristina. From the graveside, mourners could hear the chug of a nearby conveyor belt transporting coal from the mine to the power plants.
Gara’s doctor, Haki Jashari, blamed Gara’s cancer on his years at the coal mine, and on the polluting power plants.
Cancer rates more than doubled in Obilic over the last two years, Jashari said — the result, he added, of a generation of exposure to pollutants. He expects it will get worse.
Kosovo’s energy ministry told Reuters it was committed to reducing emissions and was investing in renewable energy projects and upgrading existing plants.
Jashari only wishes more could have been done sooner.
“They would have shut the plants down if we were part of the EU. It is unacceptable.”
India says 'open' to return of undocumented immigrants in US
- India was working with the Trump administration on the deportation of around 18,000 Indians
Washington: India is prepared to take back its citizens residing illegally in the United States, foreign minister Subrahmanyam Jaishankar has said after meeting the top diplomat of President Donald Trump’s new administration.
Jaishankar’s remarks came after a meeting with US Secretary of State Marco Rubio in Washington on Tuesday a day after Trump’s inauguration.
Trump issued a raft of executive orders this week that aim to clamp down on illegal immigration and expedite his goal of deporting millions of immigrants.
Jaishankar said New Delhi was open to taking back undocumented Indians and was in the process of verifying those in the United States who could be deported to India.
“We want Indian talent and Indian skills to have the maximum opportunity at the global level. At the same time, we are also very firmly opposed to illegal mobility and illegal migration,” Jaishankar told a group of Indian reporters in Washington on Wednesday.
“So, with every country, and the US is no exception, we have always taken the view that if any of our citizens are here illegally, and if we are sure that they are our citizens, we have always been open to their legitimate return to India.”
Jaishankar was responding to a query on news reports that India was working with the Trump administration on the deportation of around 18,000 Indians who are either undocumented, or have overstayed their visas.
Rubio had “emphasized the Trump administration’s desire to work with India to advance economic ties and address concerns related to irregular migration,” State Department spokesperson Tammy Bruce said in a readout after Tuesday’s meeting.
India is the world’s fifth-largest economy and enjoys world-beating GDP growth, but hundreds of thousands of its citizens still leave the country each year seeking better opportunities abroad.
While its diaspora spans the globe, the United States remains the destination of choice.
The most recent US census showed its Indian-origin population had grown by 50 percent to 4.8 million in the decade to 2020, while more than a third of the nearly 1.3 million Indian students studying abroad in 2022 were in the United States.
