[House Document 104-145]
[From the U.S. Government Publishing Office]





        104th Congress, 1st Session - - - - - - - - - - - - House 
Document 104-145



  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)




  December 11, 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) and covers the period from May 30, 1995, to 
November 29, 1995. 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, January 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 Governments 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 
United States 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 (S&M)-
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, President Bush issued Executive Order 
No. 12831 to implement new sanctions contained in UNSC 
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 United States 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, 1993, 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 United States 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 United States 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 Bosnian Serb forces. Finally, 
any transaction by any United States 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. Effective June 30, 1995, the Federal Republic of 
Yugoslavia (Serbia and Montenegro) Sanctions Regulations, 31 
C.F.R. Part 585 (the ``Regulations''), were amended to 
implement Executive Order No. 12934 (60 FR  34144, June 30, 
1995). The name of the Regulations was changed to reflect the 
expansion of the national emergency to the Bosnian Serbs, and 
now reads ``Federal Republic of Yugoslavia (Serbia & 
Montenegro) and Bosnian Serb-Controlled Areas of the Republic 
of Bosnia and Herzegovina Sanctions Regulations.'' A copy of 
the amended Regulations 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, and the case was subsequently 
settled.
    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 continued deployment of Organization for 
Security and Cooperation in Europe (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 contracts 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, 
the Office of Foreign Assets Control (FAC) has exercised its 
authority to license certain specific transactions with respect 
to the FRY (S&M), which are consistent with U.S. foreign policy 
and the Security Council sanctions. During the reporting 
period, FAC has issued 90 specific licenses regarding 
transactions pertaining to the FRY (S&M) or assets it owns or 
controls, bringing the total specific licenses issued as of 
October 13, 1995, to 1,020. Specific licenses have been issued: 
(1) for payment to U.S. or third country secured creditors, 
under certain narrowly defined circumstances, for preembargo 
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 United States; (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 UNPROFOR; 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 period, FAC addressed the status of the 
unallocated debt of the former Yugoslavia by authorizing 
nonblocked U.S. creditors under the New Financing Agreement for 
Yugoslavia (Blocked Debt) to exchange a portion of the Blocked 
Debt for new debt (bonds) issued by the Republic of Slovenia. 
The completion of this exchange will mark the transfer to 
Slovenia of sole liability for a portion of the face value of 
the $4.2 billion unallocated debt of the FRY (S&M) for which 
Slovenia, prior to the authorized exchange, was jointly and 
severally liable. The exchange will relieve Slovenia of the 
joint and several liability for the remaining unallocated FRY 
(S&M) debt and pave the way for its entry into international 
capital markets.
    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).
    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 (S&M) entities and merchant vessels maintained by 
FAC. As of October 12, 1995, five additional vessels have been 
removed from the list of blocked FRY (S&M) entities and 
merchant vessels maintained by FAC as a result of sales 
conditions that effectively extinguished any FRY (S&M) 
interest: the M/V Blue Star, M/V Budva, M/V Bulk Star, M/V 
Hanuman, and M/V Sumadija. The new owners of several other 
formerly Yugoslav-owned vessels, which have been sold in other 
countries, have petitioned FAC to remove those vessels from the 
list.
    During the past 6 months, U.S. financial institutions have 
continued to block funds transfers in which there is a possible 
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). The 
value of transfers blocked has amounted to $137.5 million since 
the issuance of Executive Order No. 12808, including some $13.9 
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 318 submissions have been 
reviewed by FAC since the last report, and more than 130 
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. Numerous 
investigations carried over from the prior reporting period are 
continuing. Since the last report, FAC has collected 10 civil 
penalties totaling more than $27,000. 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). One U.S. company and one air carrier have also 
paid penalties related to unlicensed payments to the Government 
of the FRY (S&M) or other violations of the Regulations. Two 
companies and one law firm have also remitted penalties for 
their failure to follow the conditions of FAC licenses.
    7. The expenses incurred by the Federal Government in the 
6-month period from May 30, 1995, through November 29, 1995, 
that are directly attributable to 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 
resolutions 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, December 8, 1995.

    

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