On July 20th, 2020 Eptalex organized a panel discussion on the Caesar Act, in coordination with Berliner Cororan & Rowe LLP, which was attended by more than 80 individuals from diverse fields, diplomats, politicians, bankers, retailers, construction companies and professional service firms.
The webinar panelists were Babak Hoghoughi, partner at Berliner Corcoran & Rowe LLP and U.S. sanctions expert attorney, Ramy Torbey, Lebanese Lawyer and Managing partner at Eptalex – Aziz Torbey Law Firm, and, Lorenzo Mulazzi, Head of the sanctions and compliance department at Eptalex – Garzia Gasperi & Partners. The webinar was moderated by Baki Maneche, foreign partner at Eptalex - Aziz Torbey Law Firm.
Speaking during the webinar, Babak focused on the Act from a U.S. Law perspective. With over 25 years of legal experience, he represented one of the oldest law firms in Washington DC and explained how sanctions are an increasingly used tool of U.S. foreign policy. Babak differentiated between three types of U.S. sanctions: primary, secondary and targeted sanctions and expounded on the prohibited and permissible activities under the Act’s provisions. Additionally, he emphasized on the penalties applied in case of violation of the U.S. sanctions, whether criminal or civil and highlighted the basis upon which sanctions are targeted at named individuals or entities (SDN), the SDN designation process and its effects.
Lorenzo Mulazzi, in his address, portrayed the European business community’s perception on the Caesar Act. In this context, he was of opinion that a possible modification of the European discipline of economic sanctions imposed on Syria still seems far from being defined. The system of European economic sanctions has been provided by the Regulation of European Union (EU) no. 36 as of 2012 which was extended by the EU in 2020 for another year. Furthermore, Lorenzo explained the Act’s implications from a global perspective, he indicated the United Nations’ rejection and criticism with regards to the Act. In his discussion, he stated that the only international legal structure that can impose political and economic sanctions on countries is the Security Council of the UN. As for European businesses, he advised that there is a strong need for highly specialized professionals to help investors carry out business operations in complex areas, such as Syria, and proposed the adoption of effective compliance programs, risk assessments, record keeping, the appointment of export control managers, and requesting the European certificate of conformity issued by the European Institute for Export Compliance (EIFEC).
From a regional outlook, the Caesar Act will have direct and indirect repercussions on Lebanon since the Lebanese and Syrian economies are interconnected. Ramy Torbey directed the attention during his talk to the economic, political and military influence of the Act on Lebanon and conveyed its effect on the country’s diverse industries mainly the banking sector, trade, energy and construction. Ramy stated that the Act will leave impacts on the value of the Lebanese pound due to the smuggling of US dollars from Lebanon into Syria, on the negotiations with the “International Monetary Fund”, and on the promises granted by the Cedar (CEDRE) conference, while Lebanon urgently needs funding from abroad. He added that some Lebanese politicians may be facing threats of being included on the U.S. sanctions list and that the American administration may stop the US aid to the Lebanese army if Lebanon does not adhere to the provisions of the Caesar Act.
Many Syrian citizens have incorporated bank accounts in Lebanon. In this case, if there is proof that a Syrian account holder is providing any support to the Syrian regime, the Lebanese bank will be subject to sanctions. The contributions of Lebanese banks in Syrian banks may also be affected by the Caesar Act, as these banks deal directly with the Syrian Central Bank, and branches of Lebanese banks in Syria will eventually have to close and exit from Syria. Ramy emphasized that Lebanese banks have started implementing policies to abide by the Caesar Act and have enhanced their due diligence procedures.
In terms of trade, it is unclear whether Lebanese transit of goods through Syria to Arab countries, for which tariffs have to be paid, will be considered “aid” to the Syrian regime.
However, Lebanon is put in a bad position with regards to energy since Syria is a usual supplier of electricity for Lebanon, and breaking the link will no longer satisfy the local electricity demand. Requests for waivers to be introduced which would allow Lebanon to import electricity from Syria have been recently refused by US representatives.
Post-war, Lebanon had hoped to benefit from reconstruction in Syria but today, Ramy advised the Lebanese business people to revise their plans as the sanctions will apply to reconstruction activities. He also indicated that avoiding the Act’s repercussions depends on Lebanon implementing reforms as requested by the international community.
The panel discussion was followed by a lively a Q&A session wherein a number of queries were raised by the participants to better understand the Caesar Act’s implications from the experts.