BREAKING NEWS: U.S. Adds South Sudanese Oil Entities to Department of Commerce Entity List

Press Statement, Heather Nauert, Department Spokesperson, Washington, DC, March 21, 2018;

Today, the United States is taking action against fifteen South Sudanese oil-related entities whose revenues have contributed to the ongoing crisis in South Sudan.

This action reflects the U.S. commitment to doing all it can to protect the innocent people of South Sudan.

By placing these entities on the U.S. Department of Commerce’s Entity List, the United States will impose a license requirement on all exports, re-exports, and transfers of any U.S.-origin items to those entities.

The names of these specific entities will be published in the Federal Register on March 22.

Technical questions regarding the details of today’s action should be addressed to the Department of Commerce.

The listed entities are a source of substantial revenue for the Pres. Salva Kiir’s Government of South Sudan.

Unfortunately, the South Sudanese Government, and corrupt official actors, use this revenue to purchase weapons and fund irregular militias that undermine the peace, security, and stability of South Sudan rather than support the welfare and current emergency food needs of the South Sudanese people.

We call on the region and broader international community to join us in limiting the financial flows that fuel the continuing violence in the country.

The Kiir’s Government of South Sudan can do better.

The United States expects it, as well as the armed opposition, to fulfill their commitments to the Intergovernmental Authority on Development (IGAD) and to their own people to cease hostilities, allow unimpeded humanitarian access, and pursue a negotiated peace in good faith.

As the largest donor of aid to South Sudan, the United States is proud to uphold humanitarian values and deliver vital assistance.

The Government of South Sudan must not squander that generosity and should take concrete steps to provide for the vast needs of the South Sudanese people.

Today’s actions are part of our ongoing effort to hold to account those who foment violence, commit human rights violations, obstruct the peace process, or engage in illicit financial activities against the interest of the South Sudanese people.

We remain prepared to take additional actions, including sanctioning those who threaten the peace and security of South Sudan.

    Why is today’s announcement noteworthy?

The Entity List is a list maintained by the U.S. Department of Commerce for broader export controls. It does not freeze assets but requires U.S. as well as foreign exporters re-exporting U.S.-origin goods and technology to get a license from the Commerce Department. This means that even non-U.S. companies with U.S.-origin parts or technology in their oilfield equipment would need to apply for a license, which is unlikely to be granted because there is a presumption of denial for all applications.

In their due diligence, banks and others in the private sector often include listed entities in the same filters as the U.S. Department of Treasury’s Specially Designated Nationals and Blocked Persons List. There is usually a flag that distinguishes the meaning of the Entity List and indicating that it means a license is needed rather than being a no-go; however, it clearly warns the user that these are high risk companies and ministries.

South Sudan is now the African country with the most number of entities on the Commerce Department’s Entity List, and the only African country with government ministries included.

    Joshua White, Director of Policy and Analysis at The Sentry, said:

“Today’s announcement by the Commerce Department is only the latest action taken by the United States, European Union, Canada, and Australia to hold the Government of South Sudan accountable for its violent kleptocracy, which fuels the conflict in which millions of its people have suffered.
The corrupt elites of South Sudan only have to look to the cases of Iran and North Korea to understand the financial consequences that this strategy of pressure can have on those who commit human rights abuses, their supporters and broader networks.”

    Brad Brooks-Rubin, Managing Director at The Sentry and the Enough Project, said:

“Today’s action by the Commerce Department is an important use of non-sanctions measures to build pressure for peace in South Sudan. With these new requirements, South Sudanese entities will be forced to show that their work will benefit the country rather than provide funding to militias or line the pockets of corrupt leaders.
The private sector, including both the extractives and financial sectors, should follow these measures carefully and ensure that they are not facilitating further conflict and corruption in South Sudan.”

    Brian Adeba, Deputy Director of Policy at the Enough Project, said:

“This move is an important step in the search for peace in South Sudan. As the next round of the South Sudan peace talks approaches, it is important for the United States and its partners to continue to build leverage by increasing these types of pressures to target as wide a network as possible to ensure that the parties to the conflict change their calculations in favor of peace.” END