[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.