[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.