[House Document 104-101]
[From the U.S. Government Publishing Office]
104th Congress, 1st Session - - - - - - - - - House Document
104-101
ACTIONS AND EXPENSES RELATED TO THE
NATIONAL EMERGENCY WITH RESPECT TO THE FEDERAL REPUBLIC OF YUGOSLAVIA
(SERBIA AND MONTENEGRO)
__________
MESSAGE
from
THE PRESIDENT OF THE UNITED STATES
transmitting
A REPORT ON ACTIONS AND EXPENSES DIRECTLY RELATED TO THE EXERCISE OF
POWERS AND AUTHORITIES CONFERRED BY THE DECLARATION OF A NATIONAL
EMERGENCY IN EXECUTIVE ORDER NO. 12808 AND EXECUTIVE ORDER NO. 12934
AND TO EXPANDED SANCTIONS AGAINST THE FEDERAL REPUBLIC OF YUGOSLAVIA
(SERBIA AND MONTENEGRO) (THE ``FRY (S/M)'') AND THE BOSNIAN SERBS,
PURSUANT TO 50 U.S.C. 1641(c) AND 1703(c)
July 18, 1995.--Message and accompanying papers referred to the
Committee on International Relations and ordered to be printed
To the Congress of the United States:
On May 30, 1992, in Executive Order No. 12808, the
President declared a national emergency to deal with the threat
to the national security, foreign policy, and economy of the
United States arising from actions and policies of the
Governments of Serbia and Montenegro, acting under the name of
the Socialist Federal Republic of Yugoslavia or the Federal
Republic of Yugoslavia, in their involvement in and support for
groups attempting to seize territory in Croatia and the
Republic of Bosnia and Herzegovina by force and violence
utilizing, in part, the forces of the so-called Yugoslav
National Army (57 FR 23299, June 2, 1992). I expanded the
national emergency in Executive Order No. 12934 of October 25,
1994, to address the actions and policies of the Bosnian Serb
forces and the authorities in the territory of the Republic of
Bosnia and Herzegovina that they control. The present report is
submitted pursuant to 50 U.S.C. 1641(c) and 1703(c). It
discusses Administration actions and expenses directly related
to the exercise of powers and authorities conferred by the
declaration of a national emergency in Executive Order No.
12808 and Executive Order No. 12934 and to expanded sanctions
against the Federal Republic of Yugoslavia (Serbia and
Montenegro) (the ``FRY (S/M)'') and the Bosnian Serbs contained
in Executive Order No. 12810 of June 5, 1992 (57 FR 24347, June
9, 1992), Executive Order No. 12831 of January 15, 1993 (58 FR
5253, Jan 21, 1993), Executive Order No. 12846 of April 25,
1993 (58 FR 25771, April 27, 1993), and Executive Order No.
12934 of October 25, 1994 (59 FR 54117, October 27, 1994).
1. Executive Order No. 12808 blocked all property and
interests in property of the Government of Serbia and
Montenegro, or held in the name of the former Government of the
Socialist Federal Republic of Yugoslavia or the Government of
the Federal Republic of Yugoslavia, then or thereafter located
in the United States or within the possession or control of
U.S. persons, including their overseas branches.
Subsequently, Executive Order No. 12810 expanded U.S.
actions to implement in the United States the United Nations
sanctions against the FRY (S/M) adopted in United Nations
Security Council (``UNSC'') Resolution 757 of May 30, 1992. In
addition to reaffirming the blocking of FRY (S/M) Government
property, this order prohibited transactions with respect to
the FRY (S/M) involving imports, exports, dealing in FRY-origin
property, air and sea transportation, contract performance,
funds transfers, activity promoting importation or exportation
or dealings in property, and official sports, scientific,
technical, or other cultural representation of, or sponsorship
by, the FRY (S/M) in the United States.
Executive Order No. 12810 exempted from trade restrictions
(1) transshipments through the FRY (S/M), and (2) activities
related to the United Nations Protection Force (``UNPROFOR''),
the Conference on Yugoslavia, or the European Community Monitor
Mission.
On January 15, 1993, Presidents Bush issued Executive Order
No. 12831 to implement new sanctions contained in U.N. Security
Council Resolution 787 of November 16, 1992. The order revoked
the exemption for transshipments through the FRY (S/M)
contained in Executive Order No. 12810, prohibited transactions
within the United States or by a U.S. person relating to FRY
(S/M) vessels and vessels in which a majority or controlling
interest is held by a person or entity in, or operating from,
the FRY (S/M), and stated that all such vessels shall be
considered as vessels of the FRY (S/M), regardless of the flag
under which they sail.
On April 25, 1993, I issued Executive Order No. 12846 to
implement in the United States the sanctions adopted in UNSC
Resolution 820 of April 17, 1993. That resolution called on the
Bosnian Serbs to accept the Vance-Owen peace plan for the
Republic of Bosnia and Herzegovina and, if they failed to do so
by April 26, called on member states to take additional
measures to tighten the embargo against the FRY (S/M) and
Serbian controlled areas of the Republic of Bosnia and
Herzegovina and the United Nations Protected Areas in Croatia.
Effective April 26, 1993, the order blocked all property and
interests in property of commercial, industrial, or public
utility undertakings or entities organized or located in the
FRY (S/M), including property and interests in property of
entities (wherever organized or located) owned or controlled by
such undertakings or entities, that are or thereafter come
within the possession or control of U.S. persons.
On October 25, 1994, in view of UNSC Resolution 942 of
September 23, 1994, I issued Executive Order No. 12934 in order
to take additional steps with respect to the crisis in the
former Yugoslavia. (59 FR 54117, October 27, 1994.) Executive
Order No. 12934 expands the scope of the national emergency
declared in Executive Order No. 12808 to address the unusual
and extraordinary threat to the national security, foreign
policy, and economy of the United States posed by the actions
and policies of the Bosnian Serb forces and the authorities in
the territory in the Republic of Bosnia and Herzegovina that
they control, including their refusal to accept the proposed
territorial settlement of the conflict in the Republic of
Bosnia and Herzegovina.
The Executive order blocks all property and interests in
property that are in the United States, that hereafter come
within the United States, or that are or hereafter come within
the possession or control of United States persons (including
their overseas branches) of: (1) the Bosnian Serb military and
paramilitary forces and the authorities in areas of the
Republic of Bosnia and Herzegovina under the control of those
forces; (2) any entity, including any commercial, industrial,
or public utility undertaking, organized or located in those
areas of the Republic of Bosnia and Herzegovina under the
control of Bosnian Serb forces; (3) any entity, wherever
organized or located, which is owned or controlled directly or
indirectly by any person in, or resident in, those areas of the
Republic of Bosnia and Herzegovina under the control of Bosnian
Serb forces; and (4) any person acting for or on behalf of any
person within the scope of the above definitions.
The Executive order also prohibits the provision or
exportation of services to those areas of the Republic of
Bosnia and Herzegovina under the control of Bosnian Serb
forces, or to any person for the purpose of any business
carried on in those areas, either from the United States or by
a U.S. person. The order also prohibits the entry of any U.S.-
flagged vessel, other than a U.S. naval vessel, into the
riverine ports of those areas of the Republic of Bosnia and
Herzegovina under the control of Bosnia Serb forces. Finally,
any transaction by any U.S. person that evades or avoids, or
has the purpose of evading or avoiding, or attempts to violate
any of the prohibitions set forth in the order is prohibited.
Executive Order No. 12934 became effective at 11:59 p.m.,
e.d.t., on October 25, 1994.
2. The declaration of the national emergency on May 30,
1992, was made pursuant to the authority vested in the
President by the Constitution and laws of the United States,
including the International Emergency Economic Powers Act (50
U.S.C. 1701 et seq.), the National Emergencies Act (50 U.S.C.
1601 et seq.), and section 301 of title 3 of the United States
Code. The emergency declaration was reported to the Congress on
May 30, 1992, pursuant to section 204(b) of the International
Emergency Economic Powers Act (50 U.S.C. 1703(b)) and the
expansion of that National Emergency under the same authorities
was reported to the Congress on October 25, 1994. The
additional sanctions set forth in related Executive orders were
imposed pursuant to the authority vested in the President by
the Constitution and laws of the United States, including the
statutes cited above, section 1114 of the Federal Aviation Act
(49 U.S.C. App. 1514), and section 5 of the United Nations
Participation Act (22 U.S.C. 287c).
3. There have been no amendments to the Federal Republic of
Yugoslavia (Serbia and Montenegro) Sanctions Regulations (the
``Regulations''), 31 C.F.R. Part 585, since the last report.
The Treasury Department had previously published 853 names in
the Federal Register on November 17, 1994 (59 FR 59460), as
part of a comprehensive listing of all blocked persons and
specially designated nationals (``SDNs'') of the FRY (S/M).
This list identified individuals and entities determined by the
Department of the Treasury to be owned or controlled by or
acting for or on behalf of the Government of the FRY (S/M),
persons in the FRY (S/M), or entities located or organized in
or controlled from the FRY (S/M). All prohibitions in the
Regulations pertaining to the Government of the FRY (S/M) apply
to the entitled and individuals identified. U.S. persons, on
notice of the status of such blocked persons and specially
designated nationals, are prohibited from entering into
transactions with them, or transactions in which they have an
interest, unless otherwise exempted or authorized pursuant to
the Regulations.
On February 22, 1995, pursuant to Executive Order 12934 and
the Regulations, Treasury identified 85 individuals as leaders
of the Bosnian Serb forces or civilian authorities in the
territories in the Republic of Bosnia and Herzegovina that they
control. Also on February 22, Treasury designated 19
individuals and 23 companies as SDNs of the FRY (S/M). These
designations include FRY (S/M)-connected companies around the
world that are being directed from Cyprus, two Cypriot-owned
firms that have had a central role in helping establish and
sustain sanctions-evading FRY (S/M) front companies in Cyprus,
and the head of the FRY (S/M)'s Central Bank who is also the
architect of the FRY (S/M) economic program.
Additionally, on March 13, 1995, Treasury named 32 firms
and eight individuals that are part of the Karic Brothers'
family network of companies as SDNs of the FRY (S/M). Their
enterprises span the globe and are especially active in former
East Bloc countries. These additions and amendments, published
in the Federal Register on April 18, 1995 (60 FR 19448), bring
the current total of Blocked Entities and SDNs of the FRY (S/M)
to 938 and the total number of individuals identified as
leaders of the Bosnian Serb military or paramilitary forces or
civilian authorities in the territories in the Republic of
Bosnia and Herzegovina that they control to 85. A copy of the
notice is attached.
Treasury's blocking authority as applied to FRY (S/M)
subsidiaries and vessels in the United States has been
challenged in court. In Milena Ship Management Company, Ltd. v.
Newcomb, 804 F.Supp. 846, 855, and 859 (E.D.L.A. 1992) aff'd,
995 F.2d 620 (5th Cir. 1993), cert. denied, 114 S.Ct. 877
(1994), involving five ships owned or controlled by FRY (S/M)
entities blocked in various U.S. ports, the blocking authority
as applied to these vessels was upheld. In IPT Company, Inc. v.
United States Department of the Treasury, No. 92 CIV 5542
(S.D.N.Y. 1994), the district court also upheld the blocking
authority as applied to the property of a Yugoslav subsidiary
located in the United States. The latter case is currently on
appeal to the Second Circuit.
4. Over the past 6 months, the Departments of State and
Treasury have worked closely with European Union (the ``EU'')
member states and other U.N. member nations to coordinate
implementation of the U.N. sanctions against the FRY (S/M).
This has included visits by assessment teams formed under the
auspices of the United States, the EU, and the Organization for
Security and Cooperation in Europe (the ``OSCE'') to states
bordering on Serbia and Montenegro; continued deployment of
OSCE sanctions assistance missions (``SAMs'') to Albania,
Bulgaria, Croatia, the former Yugoslav Republic of Macedonia,
Hungary, Romania, and Ukraine to assist in monitoring land and
Danube River traffic; support for the International Conference
on the Former Yugoslavia (``ICFY'') monitoring missions along
the Serbia-Montenegro-Bosnia border; bilateral contacts between
the United States and other countries for the purpose of
tightening financial and trade restrictions on the FRY (S/M);
and ongoing multilateral meetings by financial sanctions
enforcement authorities from various countries to coordinate
enforcement efforts and to exchange technical information.
5. In accordance with licensing policy and the Regulations,
FAC has exercised its authority to license certain specific
transactions with respect to the FRY (S/M) that are consistent
with U.S. foreign policy and the Security Council sanctions.
During the reporting period, FAC has issued 109 specific
licenses regarding transactions pertaining to the FRY (S/M) or
assets its own or controls, bringing the total as of April 25,
1995, to 930. Specific licenses have been issued (1) for
payment to U.S. or third-country secured creditors, under
certain narrowly-defined circumstances, for pre-embargo import
and export transactions; (2) for legal representation or advice
to the Government of the FRY (S/M) or FRY (S/M)-located or
controlled entities; (3) for the liquidation or protection of
tangible assets of subsidiaries of FRY (S/M)-located or
controlled firms located in the U.S.; (4) for limited
transactions related to FRY (S/M) diplomatic representation in
Washington and New York; (5) for patent, trademark and
copyright protection in the FRY (S/M) not involving payment to
the FRY (S/M) Government; (6) for certain communications, news
media, and travel-related transactions; (7) for the payment of
crews' wages, vessel maintenance, and emergency supplies for
FRY (S/M) controlled ships blocked in the United States; (8)
for the removal from the FRY (S/M), or protection within the
FRY (S/M), of certain property owned and controlled by U.S.
entities; (9) to assist the United Nations in its relief
operations and the activities of the U.N. Protection Force; and
(10) for payment from funds outside the United States where a
third country has licensed the transaction in accordance with
U.N. sanctions. Pursuant to U.S. regulations implementing UNSC
Resolutions, specific licenses have also been issued to
authorize exportation of food, medicine, and supplies intended
for humanitarian purposes in the FRY (S/M).
During the past 6 months, FAC has continued to oversee the
liquidation of tangible assets of the 15 U.S. subsidiaries of
entities organized in the FRY (S/M). Subsequent to the issuance
of Executive Order No. 12846, all operating licenses issued for
these U.S.-located Serbian or Montenegrin subsidiaries or joint
ventures were revoked, and the net proceeds of the liquidation
of their assets placed in blocked accounts.
In order to reduce the drain on blocked assets caused by
continuing to rent commercial space, FAC arranged to have the
blocked personalty, files, and records of the two Serbian
banking institutions in New York moved to secure storage. The
personalty is being liquidated, with the net proceeds placed in
blocked accounts.
Following the sale of the M/V Kapetan Martinovic in January
1995, five Yugoslav-owned vessels remain blocked in the United
States. Approval of the UNSC's Serbian Sanctions Committee was
sought and obtained for the sale of the M/V Kapetan Martinovic
(and the M/V Bor, which was sold in June 1994) based on U.S.
assurances that the sale would comply with four basic
conditions, which assure that both U.S. and U.N. sanctions
objectives with respect to the FRY (S/M) are met: (1) the sale
will be for fair market value; (2) the sale will result in a
complete divestiture of any interest of the FRY (S/M) (or of
commercial interests located in or controlled from the FRY (S/
M)) in the vessel; (3) the sale would result in no economic
benefit to the FRY (S/M) (or commercial interests located in or
controlled from the FRY (S/M)); and (4) the net proceeds of the
sale (the gross proceeds less the costs of sale normally paid
by the seller) will be placed in a blocked account in the
United States. Negotiations for the sale of the M/V Bar, now
blocked in New Orleans, are underway and are likely to be
concluded prior to my next report.
Other than the M/V Bar, the four remaining Yugoslav-owned
vessels are beneficially owned by Jugooceanija Plovidba of
Kotor, Montenegro, and managed by Milena Ship Management Co.
Ltd. in Malta. These vessels have many unpaid U.S. creditors
for services and supplies furnished during the time they have
been blocked in the United States; moreover, the owner appears
to have insufficient resources to provide for the future upkeep
and maintenance needs of these vessels and their crews. The
United States is notifying the UNSC's Serbian Sanctions
Committee of the United States' intention to license some or
all of these remaining four vessels upon the owner's request.
With the FAC-licensed sales of the M/V Kapetan Martinovic
and the M/V Bor, those vessels were removed from the list of
blocked FRY entities and merchant vessels maintained by FAC.
The new owners of several formerly Yugoslav-owned vessels,
which have been sold in other countries, have petitioned FAC to
remove those vessels from the list. FAC, in coordination with
the Department of State, is currently reviewing the sale terms
and conditions for those vessels to ascertain whether they
comply with U.N. sanctions objectives and UNSC's Serbian
Sanctions Committee practice.
During the past 6 months, U.S. financial institutions have
continued to block funds transfers in which there is an
interest of the Government of the FRY (S/M) or an entity or
undertaking located in or controlled from the FRY (S/M), and to
stop prohibited transfers to persons in the FRY (S/M). Such
interdicted transfers have accounted for $125.6 million since
the issuance of Executive Order No. 12808, including some $9.3
million during the past 6 months.
To ensure compliance with the terms of the licenses that
have been issued under the program, stringent reporting
requirements are imposed. More than 279 submissions have been
reviewed by FAC since the last report, and more than 125
compliance cases are currently open.
6. Since the issuance of Executive Order No. 12810, FAC has
worked closely with the U.S. Customs Service to ensure both
that prohibited imports and exports (including those in which
the Government of the FRY (S/M) or Bosnian Serb authorities
have an interest) are identified and interdicted, and that
permitted imports and exports move to their intended
destination without undue delay. Violations and suspected
violations of the embargo are being investigated and
appropriate enforcement actions are being taken. There are
currently 37 cases under active investigation. Since the last
report, FAC has collected nine civil penalties totaling nearly
$20,000. Of these, five were paid by U.S. financial
institutions for violative funds transfers involving the
Government of the FRY (S/M), persons in the FRY (S/M), or
entities located or organized in or controlled from the FRY (S/
M). Three U.S. companies and one air carrier have also paid
penalties related to exports or unlicensed payments to the
Government of the FRY (S/M) or persons in the FY (S/M) or other
violations of the Regulations.
7. The expenses incurred by the Federal Government in the
6-month period from November 30, 1994, through May 29, 1995,
that are directly attributable to the authorities conferred by
the declaration of a national emergency with respect to the FRY
(S/M) and the Bosnian Serb forces and authorities are estimated
at about $3.5 million, most of which represent wage and salary
costs for Federal personnel. Personnel costs were largely
centered in the Department of the Treasury (particularly in FAC
and its Chief Counsel's Office, and the U.S. Customs Service),
the Department of State, the National Security Council, the
U.S. Coast Guard, and the Department of Commerce.
8. The actions and policies of the Government of the FRY
(S/M), in its involvement in and support for groups attempting
to seize and hold territory in the Republics of Croatia and
Bosnia and Herzegovina by force and violence, and the actions
and policies of the Bosnian Serb forces and the authorities in
the areas of Bosnia and Herzegovina under their control,
continue to pose an unusual and extraordinary threat to the
national security, foreign policy, and economy of the United
States. The United States remains committed to a multilateral
resolution of the conflict through implementation of the United
Nations Security Council resolutions.
I shall continue to exercise the powers at my disposal to
apply economic sanctions against the FRY (S/M) and the Bosnian
Serb forces, civil authorities, and entities, as long as these
measures are appropriate, and will continue to report
periodically to the Congress on significant developments
pursuant to 50 U.S.C. 1703(c).
William J. Clinton.
The White House, July 18, 1995.