US Announces New Sanctions on Ethiopia

A bill containing extensive sanctions on persons and entities in Ethiopia has been advanced by Congress, in a bipartisan move to try and end atrocities in the region.

The bill would impose sanctions on anyone who undermines peace, security or stability, or a negotiated settlement to Ethiopia’s civil war; has committed gross human rights breaches in the conflict; has undermined democratic processes or institutions; has hindered the delivery of humanitarian aid; or has attacked UN staff.

It also places sanctions on anyone who has provided conventional arms, training or financial support to any party in the war.

The bill would require Washington to pressure organizations like the International Monetary Fund to block loans to Addis Ababa, and stop the US International Development Finance Corporation from funding projects in Ethiopia.

Secretary of State Antony Blinken will need to decide within three months of the bill becoming law whether actions by the Ethiopian government or Tigray People’s Liberation Front (TPLF) constitute genocide. 

In December, President Biden’s administration decided against a legal review into human rights abuses in Tigray, in favor of diplomatic talks with leaders. 

Executive Order 14046: Key Takeaways

The new sanction measures are pursuant to Executive Order 14046, and declare a national emergency to deal with the threat in Ethiopia. Guidance is currently high-level to raise awareness, but more comprehensive regulations are expected.In the Executive Order, President Biden states: “Widespread violence, atrocities, and serious human rights abuse, including those involving ethnic-based violence, rape and other forms of gender-based violence, and obstruction of humanitarian operations — constitutes an unusual and extraordinary threat to the national security and foreign policy of the United States.” 

He adds that the conflict has left millions in need of humanitarian aid and placed the region on the brink of famine. While continuing to push for a negotiated ceasefire, the US will try to ensure that appropriate personal remittances to non-blocked persons and humanitarian assistance to at-risk populations can continue through “legitimate and transparent” channels.

Overview of US Sanctions on Ethiopia 

In September 2021, the US unveiled a smart sanctions regime targeting members of the Ethiopian government, Tigray and Amhara leaders, and Eritrean forces. This exempted humanitarian aid. Sanctions against Eritrean forces were implemented, but other sanctions were delayed in a bid to foster internal negotiations and continue with humanitarian aid. 

Ethiopia’s eligibility for duty-free imports under the US African Growth and Opportunity Act (AGOA) has been impacted by human rights breaches in Tigray, as certification is linked to human rights compliance. AGOA brought Ethiopia about $100m annually and generated employment for 100,000-200,00 people.

In October 2021 reports that Ethiopia had used its flagship commercial airline to transport weapons during the war in Tigray were denied. The following month, while the Ethiopian government restored a humanitarian-work license to Médecins Sans Frontières, four entitles and two individuals were sanctioned by the US Office of Foreign Assets Control (OFAC) in connection with the crisis in Ethiopia. The State Department also established a task force to oversee the departure of some US Embassy personnel and of citizens seeking to leave Ethiopia as the conflict grew.

In December 2021, the advance of ENDF forces at the Tigray borders was halted, though air strikes continued into January 2022, with civilian casualties. Humanitarian access remains hampered. Ethiopian lawmakers also agreed to establish a commission for national dialogue at the end of 2021. 

Canada hasn’t yet deployed any new sanctions, but Ethiopia is a major recipient of government aid and there have been some protests calling on the government to withdraw help. 

Sanctions Next Steps

Firms should remain aware that these latest sanctions are likely to be highly targeted, ensuring they have the maximum possible impact while minimizing any knock-on effects to humanitarian efforts. While many of the countries surrounding Ethiopia, including Eritrea and Somalia, should already be designated as high-risk due to ongoing conflicts, it remains important for firms to understand their risk exposure across the region. An assessment of connections to Politically Exposed Persons (PEPs) – particularly in relation to sensitive financial flows such as aid – should also be considered. Ensure that robust sanctions and adverse media screening systems are in place to identify not only designated persons, but firms with direct exposure to designated persons and associates.

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