January 31, 2022 | Policy Brief

Biden Administration Backs Levant Energy Deal That Violates Bipartisan Caesar Sanctions

January 31, 2022 | Policy Brief

Biden Administration Backs Levant Energy Deal That Violates Bipartisan Caesar Sanctions

The Lebanese, Jordanian, and Syrian governments signed a deal last week to export surplus Jordanian electricity to Lebanon by routing it through Syria, potentially violating U.S. sanctions on the regime of Bashar al-Assad. The Biden administration strongly supports the agreement but has yet to provide a clear explanation of why such transactions should be exempt from the Caesar Syria Civilian Protection Act of 2019, which mandates sanctions on those who do business with the Assad regime.

Last August, the Biden administration announced its support for the inclusion of Syria in two regional energy accords that would facilitate Lebanese imports of gas and electricity, respectively. This decision reversed the previous U.S. policy of opposing Arab governments’ push for economic engagement with Syria and diplomatic rehabilitation of Assad.

The estimated value of the electricity deal is $250 million, and the Assad regime will receive compensation for letting Jordanian power flow through the Syrian grid en route to Lebanon. The terms of the gas accord, which also includes Egypt, are not yet public. The Caesar Act requires the executive branch to impose sanctions on any party that “knowingly provides significant financial, material, or technological support to, or knowingly engages in a significant transaction” with the government of Syria.

The Biden administration has provided shifting rationales for why the law should not apply to these accords. Initially, a top State Department official visiting Beirut said the agreements were clearly humanitarian measures to mitigate fallout from the implosion of the Lebanese economy. In practice, the humanitarian exemption usually applies to food, medicine, and related items.

The administration could also assert that the electricity deal does not constitute a “significant transaction” for the purposes of the Caesar Act, yet that claim would not be very plausible given the deal’s $250 million value. There is also precedent for sanctioning and prosecuting violators whose transactions were far smaller.

As negotiations progressed, the Lebanese and Egyptian governments indicated a need for additional reassurance. Their fears were not unfounded: A change in control of Congress or the White House could leave them exposed.

Two weeks before the signing of the electricity accord, the U.S. ambassador in Beirut, Dorothy Shea, met with the Lebanese prime minister, Najib Mikati, to convey “an official written communication from the U.S. Department of the Treasury” intended to allay concerns about sanctions. According to a leaked copy of the letter (whose authenticity Washington has not confirmed), the Treasury Department said it expects the two energy deals will be exempt from sanctions, with a final determination resting on the precise terms of the signed agreements.

The letter does not provide a legal rationale for this conclusion. An unnamed Democratic congressional staffer said, “No Caesar Act sanctions are triggered,” since no one has “contemplated direct payments to the Assad regime.” Instead, Damascus would likely receive a share of the gas and electricity traversing its territory. Yet in-kind payment clearly constitutes material support, which the law explicitly prohibits.

The statute does, however, provide the president with broad authority to waive Caesar Act sanctions if doing so “is in the national security interests of the United States.” Yet the administration is loath to admit it is making a major exception to a law that passed with overwhelming bipartisan support. It prefers to bend the law to the breaking point, which sets a troubling precedent wherein the executive branch employs its discretion to defy a plain reading of the statute.

Congress should insist that President Joe Biden implement the law as written. Its meaning is clear. The House and Senate foreign relations committees should call administration officials to testify about the legal rationale for exempting the deal from sanctions. If those rationales do not hold water, Congress should move to block the agreements or force the administration to exercise the Caesar waiver. Bending the law only serves the interests of Assad and others determined to undermine sanctions.

David Adesnik is research director and a senior fellow at the Foundation for Defense of Democracies (FDD), where Matthew Zweig is a senior fellow. They both contribute to FDD’s Center on Economic and Financial Power (CEFP). For more analysis from Matthew, David, and CEFP, please subscribe HERE. Follow the authors on Twitter @MatthewZweig1 and @adesnik. Follow FDD on Twitter @FDD and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.

Issues:

Arab Politics Egypt Jordan Lebanon Sanctions and Illicit Finance Syria