[House Document 104-214]
[From the U.S. Government Publishing Office]




104th Congress, 2d Session - - - - - - - - - - House Document 104-214


 
  DEVELOPMENTS CONCERNING THE NATIONAL EMERGENCY WITH RESPECT TO IRAN

                               __________

                                MESSAGE

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

A REPORT ON DEVELOPMENTS SINCE THE LAST PRESIDENTIAL REPORT OF NOVEMBER 
 28, 1995, CONCERNING THE NATIONAL EMERGENCY WITH RESPECT TO IRAN THAT 
    WAS DECLARED IN EXECUTIVE ORDER NO. 12170 OF NOVEMBER 14, 1979, 
                     PURSUANT TO 50 U.S.C. 1703(c)




    May 16, 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 developments since the 
last Presidential report on November 28, 1995, concerning the 
national emergency with respect to Iran that was declared in 
Executive Order No. 12170 of November 14, 1979. This report is 
submitted pursuant to section 204 of the International 
Emergency Economic Powers Act, 50 U.S.C. 1703(c). This report 
covers events through March 1, 1996. My last report, dated 
November 28, 1995, covered events through September 29, 1995.
    1. Effective March 1, 1996, the Department of the 
Treasury's Office of Foreign Assets Control (``FAC'') amended 
the Iranian Assets Control Regulations, 31 CFR Part 535 
(``IACR''), to reflect changes in the status of litigation 
brought by Iran against close relatives of the former Shah of 
Iran seeking the return of property alleged to belong to Iran 
(61 Fed. Reg. 8216, March 4, 1996). In 1991, Shams Pahlavi, 
sister of the former Shah of Iran, was identified in section 
535.217(b) of the IACR as a person whose assets were blocked 
based on proof of service upon her in litigation of the type 
described in section 535.217(a). Pursuant to that provision, 
all property and assets located in the United States within the 
possession or control of Shams Pahlavi were blocked until all 
pertinent litigation against her was finally terminated. 
Because the litigation has been finally terminated, reference 
to Shams Pahlavi has been deleted from section 535.217(b). A 
copy of the amendment is attached to this report.
    2. The Iran-U.S. Claims Tribunal, established at The Hague 
pursuant to the Algiers Accords, continues to make progress in 
arbitrating the claims before it. Since my last report, the 
Tribunal had rendered one award, bringing the total number to 
567. The majority of those awards have been in favor of U.S. 
claimants. As of March 1996, the value of awards to successful 
U.S. claimants from the Security Account held by the NV 
Settlement Bank was $2,376,010,041.91.
    In February 1996, Iran deposited funds into the Security 
Account, established by the Algiers Accords to ensure payment 
of awards to successful U.S. claimants for the first time since 
October 8, 1992. The Account was credited $15 million on 
February 22, 1996. However, the Account has remained 
continuously below the $500 million balance required by the 
Algiers Accords since November 5, 1992. As of March 1, 1996, 
the total amount in the Security Account was $195,370,127.71, 
and the total amount in the Interest Account was 
$37,055,050.92.
    Therefore, the United States continues to pursue Case A/28, 
filed in September 1993, to require Iran to meet its 
obligations under the Algiers Accords to replenish the Security 
Account. Iran filed its Statement of Defense in that case on 
August 30, 1995. The United States filed a Reply on December 4, 
1995. Iran is scheduled to file its Rejoinder on June 4, 1996.
    3. The Department of State continues to present other 
United States Government claims against Iran and to respond to 
claims brought against the United States by Iran, in 
coordination with concerned government agencies.
    In November 1995, Iran filed its latest Response concerning 
the United States Request to Dismiss Certain Claims from Case 
B/61. The United States had filed its Request to Dismiss in 
August 1995 as part of its consolidated submission on the 
merits. Iran had previously filed its initial response in July 
1995, and the United States filed a reply in August 1995. Case 
B/61 involves a claim by Iran for compensation with respect to 
primarily military equipment that Iran alleges it did not 
receive. Iran had sought to purchase or repair the equipment 
pursuant to commercial contracts with more than 50 private 
American companies. Iran alleges that it suffered direct losses 
and consequential damages in excess of $2 billion in total 
because of the United States Government refusal to allow the 
export of the equipment after January 19, 1981, in alleged 
contravention of the Algiers Accords. Iran's November 1995 
filing failed to show why the Tribunal should not dismiss 
immediately certain duplicative or otherwise improperly pleaded 
claims from Case B/61.
    In December 1995, the Department of State represented the 
United States in hearings before the Tribunal on two 
government-to-government claims. In the first, Chamber Two 
heard oral arguments in Case B/36, the U.S. claim against Iran 
for its failure to honor debt obligations created by the sale 
of military surplus property to Iran shortly after the Second 
World War. In the second, also before Chamber Two, the 
Department of State presented the U.S. defense in Case B/58, 
Iran's claim that the United States is liable for damage caused 
to the Iranian State Railways during the Second World War.
    In January 1996, in Case B/1 (Claims 2 & 3), Iran filed its 
Rebuttal Memorial Concerning Responsibility for Termination 
Costs, along with 20 volumes of exhibits and affidavits. In 
this briefing stream, the Tribunal is asked to decide whether 
Iran or the United States is liable for the costs arising from 
the termination of the U.S.-Iran Foreign Military Sales program 
after Iran's default and its subsequent seizure of the U.S. 
embassy in Tehran in 1979. The United States is currently 
preparing a comprehensive response to Iran's brief.
    In February 1996, the Departments of State and Justice 
represented the United States in a hearing before the full 
Tribunal in a government-to-government claim filed by Iran. 
Case A/27 is an interpretive dispute in which Iran claims that 
the United States is liable under the Algiers Accords for 
Tribunal awards issued in favor of Iran against U.S. nationals. 
The United States maintains that its obligation under the 
Algiers Accords is satisfied by the availability of domestic 
judicial procedures through which Iran can enforce awards in 
its favor.
    Also in February 1996, Iran and the United States settled 
Iran's claims against the United States filed before the 
International Court of Justice concerning the July 3, 1988, 
downing of Iran Air 655 and certain of Iran's claims against 
the United States filed before the Iran-United States Tribunal 
concerning certain banking matters. The cases in question were 
dismissed from the International Court of Justice and the Iran-
United States Tribunal on February 22, 1996. The settlement, 
inter alia, fulfills President Reagan's 1988 offer to make ex 
gratia payments to the survivors of the victims of the Iran Air 
shootdown. The survivors of each victim of the Iran Air 
shootdown. The survivors of each victim of the Iran Air 
shootdown will be paid $300,000 (for wage-earning victims) or 
$150,000 (for non-wage-earning victims). For this purpose, $61 
million was deposited with the Union Bank of Switzerland in 
Zurich in an account jointly held by the New York Federal 
Reserve Bank, acting as fiscal agent of the United States, and 
Bank Markazi, the central bank of Iran. Of an additional $70 
million in the settlement package, $15 million was deposited in 
the Security Account established as part of the Algiers 
Accords. The remaining $55 million was deposited in an account 
at the New York Federal Reserve Bank, from which funds can be 
drawn only (1) for deposits into the Security Account used to 
pay Tribunal awards to American claimants or for the payment of 
Iran's share of the operating expenses of the Tribunal, or (2) 
to pay debts incurred before the date of settlement and owed by 
Iranian banks to U.S. nationals. Under the terms of the 
settlement, no money will be paid to the Government of Iran.
    4. Since my last report, the Tribunal has issued one 
important award in favor of a U.S. national considered a dual 
U.S.-Iranian national by the Tribunal. On November 7, 1995, 
Chamber Three issued a significant decision in Claim No. 213, 
Dadras Int'l and Per-Am Construction Corp. v. The Islamic 
Republic of Iran, awarding a dual national claimant $3.1 
million plus interest for architectural work performed for an 
Iranian government agency developing a housing complex outside 
Tehran, Iran.
    The Tribunal held hearings in four large private claims. On 
October 23-27, 1995, Chamber One held a hearing in Claim No. 
432, Brown & Root, Inc. v. The Iranian Navy, involving contract 
amounts owed in connection with the construction of the Iranian 
Navy Chahbahar and Bandar Projects in Iran. On January 18-19, 
1996, Chamber One held a second hearing in Claim Nos. 842, 843, 
and 844, Vera Aryeh, et al. v. The Islamic Republic of Iran, in 
which allegations of fraud and forgery were considered. 
Finally, the United States Government filed a Memorial on the 
Application of the Treaty of Amity to Dual United States-
Iranian Nationals in three private claims before the Tribunal: 
Claim No. 485, Riahi v. The Islamic Republic of Iran, in 
Chamber One on January 29, 1996; Claim No. 953, Hakim v. The 
Islamic Republic of Iran, in Chamber Two on February 27, 1996; 
and Claim No. 266, Aryeh, et al. v. The Islamic Republic of 
Iran, in Chamber Three on February 29, 1996. The Memorial 
argues that a good faith interpretation of the ordinary meaning 
of the 1955 Treaty of Amity leads to the conclusion that it 
protects all persons deemed to be U.S. nationals under U.S. 
laws when they undertake activities in Iran, regardless of 
whether they also possess another nationality.
    5. The situation reviewed above continues to implicate 
important diplomatic, financial, and legal interests of the 
United States and its nationals and presents an unusual 
challenge to the national security and foreign policy of the 
United States. The Iranian Assets Control Regulations issued 
pursuant to Executive Order No. 12170 continue to play an 
important role in structuring our relationship with Iran and in 
enabling the United States to implement properly the Algiers 
Accords. I shall continue to exercise the powers at my disposal 
to deal with these problems and will continue to report 
periodically to the Congress on significant developments.

                                                William J. Clinton.
    The White House, May 16, 1996.


    
                                
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