Venezuela-related General License 62, "Authorizing Negotiations of and Entry Into Contingent Contracts for Investment in the Telecommunications Sector of Venezuela."

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TURBOFAC Commentary (533 words)

Consolidated Comment on Venezuela General License 61, Venezuela General License 62 and FAQ # 1266

1) On 8-21-26, OFAC issued the three documents referenced above in connection with the Venezuelan telecommunications sector. 62 is a “contingent contracts for new investment” GL that broadly parallels Venezuela GL 55 in the mining context (see comments thereto). The term “new investment” is not defined for purposes of the GL, but it should be presumed to cover a range of activity not covered by the concurrently issued GL 61 “Authorizing the Supply of Certain Items and Services to Venezuela Related to Telecommunications”. It is clear from Note 2 that “establish new telecommunication service providers in Venezuela” and “expand existing telecommunications operations in Venezuela” would constitute “new investment”.

2) Concurrently, OFAC issued Venezuela GL 61 and related FAQ # 1266. GL 61, which is like the parallel Venezuela GL 48B (for “goods, technology, software, or services for the exploration, development, or production of oil, gas, or petrochemical products in Venezuela”). Note the removal of the Foreign Government Deposit Funds requirement (unlikely to be an issue in the context of sales to Venezuela). Note in addition the exclusion for “[t]he formation of new joint ventures or other entities in Venezuela to develop or invest in the telecommunications sector,” which are to be addressed through GL 62.

3) Other aspects of GL 62 and the related FAQ are helpful for both interpretation of the GL and certain other OFAC licenses. First, OFAC specifies that “For purposes of this general license, telecommunications includes data, telephone, internet connectivity, radio, television, news wire feeds, and similar services, regardless of the medium of transmission, including transmission by satellite or through submarine cables.” The “For purposes of this general license” language indicates that OFAC does not necessarily intend the meaning of “telecommunications” here to extend to the standard telecom GL (e.g. at 560.508) discussed at General Note on General Licenses for Transactions Related to Telecommunications and Mail, but in the absence of any other definition of “telecommunications,” the definitions here are useful at indicators of what the term could mean in other contexts.

4) FAQ # 1266 clarifies that “[t]he provision of other financial services for the refurbishment, repair, upgrade, operation, or support of telecommunications in Venezuela would also be authorized to the extent ordinarily incident and necessary to the authorized telecommunications-related activity and provided that it does not involve debt swaps or other payment terms prohibited by GL 61.” Compare Case No. BU-2013-302061-1 (export financing as “ordinarily incident” to authorized export of goods). This FAQ appears to take a similar view, as “other financial services” would be services other than “processing payments,” which is explicit in the FAQ. As it relates to “other financial services for the refurbishment, repair, upgrade, operation, or support of telecommunications in Venezuela,” one would expect this to cover debt financing by banks, given the high capital expenditures that such infrastructure-related activities can entail, and the fact that these financial services are only covered when “ordinarily incident and necessary to the authorized telecommunications-related activity” indicates that the FAQ is relevant for the interpretation of the standard “ordinarily incident” interpretive provision (591.404 in the VSR).

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Venezuela-related General License 62, "Authorizing Negotiations of and Entry Into Contingent Contracts for Investment in the Telecommunications Sector of Venezuela."

TURBOFAC Commentary (533 words)