[House Document 104-175]
[From the U.S. Government Publishing Office]



                                     

        104th Congress, 2d Session - - - - - - - - - - - - House 
Document 104-175


 
  DEVELOPMENTS CONCERNING THE NATIONAL EMERGENCY WITH RESPECT TO IRAQ

                               __________

                                MESSAGE

                                  From

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

   A REPORT ON DEVELOPMENTS SINCE HIS LAST REPORT OF AUGUST 1, 1995, 
CONCERNING THE NATIONAL EMERGENCY WITH RESPECT TO IRAQ, PURSUANT TO 50 
                  U.S.C. 1641(c) AND 50 U.S.C. 1703(c)




  February 13, 1996.--Message and accompanying papers referred to the 
     Committee on International Relations and ordered to be printed
To the Congress of the United States:
    I hereby report to the Congress on the developments since 
my last report of August 1, 1995, concerning the national 
emergency with respect to Iraq that was declared in Executive 
Order No. 12722 of August 2, 1990. This report is submitted 
pursuant to section 401(c) of the National Emergencies Act, 50 
U.S.C. 1641(c), and section 204(c) of the International 
Emergency Economic Powers Act, 50 U.S.C. 1703(c).
    Executive Order No. 12722 ordered the immediate blocking of 
all property and interests in property of the Government of 
Iraq (including the Central Bank of Iraq) then or thereafter 
located in the United States or within the possession or 
control of a U.S. person. That order also prohibited the 
importation into the United States of goods and services of 
Iraqi origin, as well as the exportation of goods, services, 
and technology from the United States to Iraq. The order 
prohibited travel-related transactions to or from Iraq and the 
performance of any contract in support of any industrial, 
commercial, or governmental project in Iraq. U.S. persons were 
also prohibited from granting or extending credit or loans to 
the Government of Iraq.
    The foregoing prohibitions (as well as the blocking of 
Government of Iraq property) were continued and augmented on 
August 9, 1990, by Executive Order No. 12724, which was issued 
in order to align the sanctions imposed by the United States 
with United Nations Security Council Resolution 661 of August 
6, 1990.
    Executive Order No. 12817 was issued on October 21, 1992, 
to implement in the United States measures adopted in United 
Nations Security Council Resolution 778 of October 2, 1992. 
Resolution 778 requires U.N. Member States to transfer to a 
U.N. escrow account any funds (up to $200 million apiece) 
representing Iraqi oil sale proceeds paid by purchasers after 
the imposition of U.N. sanctions on Iraq, to finance Iraq's 
obligations for U.N. activities with respect to Iraq, such as 
expenses to verify Iraqi weapons destruction, and to provide 
humanitarian assistance in Iraq on a nonpartisan basis. A 
portion of the escrowed funds also funds the activities of the 
U.N. Compensation Commission in Geneva, which handles claims 
from victims of the Iraqi invasion and occupation of Kuwait. 
Member States also may make voluntary contributions to the 
account. The funds placed in the escrow account are to be 
returned, with interest, to the Member States that transferred 
them to the United Nations, as funds are received from future 
sales of Iraqi oil authorized by the U.N. Security Council. No 
Member State is required to fund more than half of the total 
transfers or contributions to the escrow account.
    This report discusses only matters concerning the national 
emergency with respect to Iraq that was declared in Executive 
Order No. 12722 and matters relating to Executive Orders No. 
12724 and 12817 (the ``Executive orders''). The report covers 
events from August 2, 1995, through February 1, 1996.
    1. During the reporting period, there were no amendments to 
the Iraqi Sanctions Regulations.
    2. The Department of the Treasury's Office of Foreign 
Assets Control (FAC) continues its involvement in lawsuits 
seeking to prevent the unauthorized transfer of blocked Iraqi 
assets. In Consarc Corporation v. Iraqi Ministry of Industry 
and Minerals, No. 94-5390 (D.C. Cir. Dec. 15, 1995), the U.S. 
Court of Appeals for the D.C. Circuit issued its second opinion 
in this case, finding in FAC's favor on all issues presented to 
the court. The court ordered the district court judge to direct 
Consarc Corporation to restore the status quo by returning $6.4 
million plus interest to the blocked Iraqi government account 
from which it was withdrawn after the district court 
erroneously held that these funds were not blocked Iraqi 
government property. The court also found that the unsold 
furnace manufactured for the Iraqi government and sales 
proceeds of a second furnace were blocked property. Finally, 
the court reversed the district court's ruling that Consarc 
held a specific claim against a blocked Iraqi government 
account for $6.4 million, holding that any claim Consarc had 
against the Government of Iraq was as a general creditor only.
    Investigations of possible violations of the Iraqi 
sanctions continue to be pursued and appropriate enforcement 
actions taken. Several cases from prior reporting periods are 
continuing and recent additional allegations have been referred 
by FAC to the U.S. Customs Service for investigation. 
Additional FAC civil penalty notice were prepared during the 
reporting period for violations of the International Emergency 
Economic Powers Act and Iraqi Sanctions Regulations with 
respect to transactions involving Iraq. One de minimis penalty 
has been collected from an organization for unlicensed exports 
in violation of the prohibitions against transactions involving 
Iraq. Several other penalty proceedings are pending completion.
    3. Investigation also continues into the roles played by 
various individuals and firms outside Iraq in the Iraqi 
government procurement network. These investigations may lead 
to additions to FAC's listing of individuals and organizations 
determined to be Specially Designated Nationals (SDNs) of the 
Government of Iraq.
    4. Pursuant to Executive Order No. 12817 implementing 
United Nations Security Council Resolution 778, on October 26, 
1992, FAC directed the Federal Reserve Bank of New York to 
establish a blocked account for receipt of certain post-August 
6, 1990, Iraqi oil sales proceeds, and to hold, invest, and 
transfer these funds as required by the order. On September 5, 
1995, following payments by the Governments of Australia 
($216,360.00), Denmark ($168,985.00), Japan ($4,075,000.00), 
The Netherlands ($4,168,745.47), New Zealand ($67,050.00), 
Switzerland ($265,108.20), and by the European Union 
($647,463.31), respectively, to the special United Nations-
controlled account, entitled ``United Nations Security Council 
Resolution 778 Escrow Account,'' the Federal Reserve Bank of 
New York was directed to transfer a corresponding amount of 
$9,606,711.98 from the blocked account it holds to the United 
Nations-controlled account. Similarly, on October 30, 1995, 
following the payment of $1,504,000.00 by the European 
Community, and payments by the Governments of Germany 
($355,871.89), The Netherlands ($2,698,348.13), Norway 
($199,983.00), and the United Kingdom ($2,188,992.67), the 
Federal Reserve Bank of New York was directed to transfer a 
corresponding amount of $6,947,195.69 to the United Nations-
controlled account. Finally, on December 21, 1995, following 
the payment of $3,062,197.28 by the European Union, and 
payments by the Governments of the Netherlands ($1,922,719.00), 
Sweden ($4,223,178.20), and the United Kingdom ($208,600.44), 
the Federal Reserve Bank of New York was directed to transfer 
the amount of $8,313,066.13 to the United Nations-controlled 
account. Cumulative transfers from the blocked Federal Reserve 
Bank of New York account since issuance of Executive Order No. 
12817 now have amounted to $200 million, fully satisfying the 
U.S. commitment to match the payments of other Member States 
from blocked Iraqi oil payments, and its obligation pursuant to 
United Nations Security Council Resolution 778.
    5. The Office of Foreign Assets Control has issued a total 
of 618 specific licenses regarding transactions pertaining to 
Iraq or Iraqi assets since August 1990. Licenses have been 
issued for transactions such as the filing of legal actions 
against Iraqi governmental entities, legal representation of 
Iraq, and the exportation to Iraq of donated medicine, medical 
supplies, food intended for humanitarian relief purposes, the 
execution of powers of attorney relating to the administration 
of personal assets and decedents' estates in Iraq and the 
protection of preexistent intellectual property rights in Iraq. 
Since my last report, 28 specific licenses have been issued.
    6. The expenses incurred by the Federal Government in the 
6-month period from August 2, 1995, through February 1, 1996, 
that are directly attributable to the exercise of powers and 
authorities conferred by the declaration of a national 
emergency with respect to Iraq are reported to be about $1.6 
million, most of which represents wage and salary costs for 
Federal personnel. Personnel costs were largely centered in the 
Department of the Treasury (particularly in the Office of 
Foreign Assets Control, the U.S. Customs Service, the Office of 
the Under Secretary for Enforcement, and the Office of the 
General Counsel), the Department of State (particularly the 
Bureau of Economic and Business Affairs, the Bureau of Near 
Eastern Affairs, the Bureau of International Organization 
Affairs, the Bureau of Political-Military Affairs, the U.S. 
Mission to the United Nations, and the Office of the Legal 
Adviser), and the Department of Transportation (particularly 
the U.S. Coast Guard).
    7. The United States imposed economic sanctions on Iraq in 
response to Iraq's illegal invasion and occupation of Kuwait, a 
clear act of brutal aggression. The United States, together 
with the international community, is maintaining economic 
sanctions against Iraq because the Iraqi regime has failed to 
comply fully with United Nations Security Council resolutions. 
Security Council resolutions on Iraq call for the elimination 
of Iraqi weapons of mass destruction, Iraqi recognition of 
Kuwait, and the inviolability of the Iraq-Kuwait boundary, the 
release of Kuwaiti and other third-country nationals, 
compensation for victims of Iraqi aggression, long-term 
monitoring of weapons of mass destruction capabilities, the 
return of Kuwaiti assets stolen during Iraq's illegal 
occupation of Kuwait, renunciation of terrorism, an end to 
internal Iraqi repression of its own civilian population, and 
the facilitation of access of international relief 
organizations to all those in need in all parts of Iraq. More 
than 5 years after the invasion, a pattern of defiance 
persists: a refusal to account for missing Kuwaiti detainees; 
failure to return Kuwaiti property worth millions of dollars, 
including military equipment that was used by Iraq in its 
movement of troops to the Kuwaiti border in October 1994; 
sponsorship of assassinations in Lebanon and in northern Iraq; 
incomplete declarations to weapons inspectors; and ongoing 
widespread human rights violations. As a result, the U.N. 
sanctions remain in place; the United States will continue to 
enforce those sanctions under domestic authority.
    The Baghdad government continues to violate basic human 
rights of its own citizens through systematic repression of 
minorities and denial of humanitarian assistance. The 
Government of Iraq has repeatedly said it will not be bound by 
United Nations Security Council Resolution 688. For more than 4 
years, Baghdad has maintained a blockade of food, medicine, and 
other humanitarian supplies against northern Iraq. The Iraqi 
military routinely harasses residents of the north, and has 
attempted to ``Arabize'' the Kurdish, Turcomen, and Assyrian 
areas in the north. Iraq has not relented in its artillery 
attacks against civilian population centers in the south, or in 
its burning and draining operations in the southern marshes, 
which have forced thousands to flee to neighboring States.
    In April 1995, the U.N. Security Council adopted Resolution 
986 authorizing Iraq to export limited quantities of oil (up to 
$1 billion per quarter) under U.N. supervision in order to 
finance the purchase of food, medicine, and other humanitarian 
supplies. The resolution includes arrangements to ensure 
equitable distribution of such assistance to all the people of 
Iraq. The resolution also provides for the payment of 
compensation to victims of Iraqi aggression and for the funding 
of other U.N. activities with respect to Iraq. Resolution 986 
was carefully crafted to address the issues raised by Iraq to 
justify its refusal to implement similar humanitarian 
resolutions adopted in 1991 (Resolutions 706 and 712), such as 
oil export routes and questions of national sovereignty. 
Nevertheless, Iraq refused to implement this humanitarian 
measure. This only reinforces our view that Saddam Hussein is 
unconcerned about the hardships suffered by the Iraqi people.
    The policies and actions of the Saddam Hussein regime 
continue to pose an unusual and extraordinary threat to the 
national security and foreign policy of the United States, as 
well as to regional peace and security. The U.N. resolutions 
affirm that the Security Council be assured of Iraq's peaceful 
intentions in judging its compliance with sanctions. Because of 
Iraq's failure to comply fully with these resolutions, the 
United States will continue to apply economic sanctions to 
deter it from threatening peace and stability in the region.
                                                William J. Clinton.
    The White House, February 9, 1996.