[House Document 104-254]
[From the U.S. Government Publishing Office]




104th Congress, 2d Session - - - - - - - - - - House Document 104-254


 
   DEVELOPMENTS CONCERNING THE NATIONAL EMERGENCY WITH RESPECT TO IRAQ

                               __________

                             COMMUNICATION

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

  A REPORT ON DEVELOPMENTS SINCE HIS LAST REPORT OF FEBRUARY 9, 1996, 
    CONCERNING THE NATIONAL EMERGENCY WITH RESPECT TO IRAQ THAT WAS 
DECLARED IN EXECUTIVE ORDER NO. 12722 OF AUGUST 2, 1990, PURSUANT TO 50 
                  U.S.C. 1641(c) AND 50 U.S.C. 1703(c)




    September 4, 1996.--Referred to the Committee on International 
                  Relations and ordered to be printed


                                           The White House,
                                       Washington, August 14, 1996.
Hon. Newt Gingrich,
Speaker of the House of Representatives,
Washington, DC.
    Dear Mr. Speaker: I hereby report to the Congress on the 
developments since my last report of February 9, 1996, 
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 are 
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 (``UNSCR'') 778 of October 
2, 1992. UNSCR 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 February 2, 1996, through August 1, 1996.
    1. In April 1995, the U.N. Security Council adopted UNSCR 
986 authorizing Iraq to export up to $1 billion in petroleum 
and petroleum products per quarter for 6 months under U.N. 
supervision in order to finance the purchase of food, medicine, 
and other humanitarian supplies. This arrangement may be 
renewed by the Security Council for additional 6-month periods. 
UNSCR 986 includes arrangements to ensure equitable 
distribution of humanitarian goods purchased with UNSCR 986 oil 
revenues 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. On May 20, 1996, a memorandum of understanding 
was concluded between the Secretariat of the United Nations and 
the Government of Iraq agreeing on terms for implementing UNSCR 
986. Further implementation procedures are being considered by 
the Iraq Sanctions Committee which is composed of members of 
the Security Council.
    2. During the reporting period, there was one amendment to 
the Iraqi Sanctions Regulations (the ``ISR''). On July 10, 
1996, the Department of the Treasury's Office of Foreign Assets 
Control (``OFAC'') amended the ISR to provide a general license 
authorizing U.S. persons to enter into executory contracts with 
the Government of Iraq for the purchase of Iraqi-origin 
petroleum and petroleum products, the sale of essential parts 
and equipment for the Kirkuk-Yumurtalik pipeline system, and 
the sale of humanitarian goods and services, with performance 
conditioned upon approval by the Office of Foreign Assets 
Control within the framework of United Nations Security Council 
Resolution 986 (1995). (61 Fed. Reg. 36627, July 12, 1996.) A 
copy of the amended Regulations is attached.
    All executory contracts must contain terms requiring that 
all proceeds of oil purchases from the Government of Iraq, 
including the State Oil marketing organization, must be placed 
in the U.N. escrow account at Banque Nationale de Paris, New 
York (the ``986 Escrow Account''), and all Iraqi payments for 
authorized sales of pipeline parts and equipment, humanitarian 
goods, and incidental transaction costs borne by Iraq will, 
upon approval by the UNSC committee established pursuant to 
UNSCR 661 (``the 661 Committee''), be paid or payable out of 
the 986 Escrow Account.
    3. 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 OFAC to the U.S. Customs Service for investigation. Several 
OFAC civil penalty proceedings are pending.
    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 OFAC'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 UNSCR 
778, on October 28, 1992, OFAC 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. Cumulative transfers from the blocked Federal Reserve 
Bank of New York account since issuance of Executive Order No. 
12817 amounted to $200 million as of December 21, 1995, fully 
satisfying the United States' commitment to match the payments 
of other Member States from blocked Iraqi oil payments, and its 
obligation pursuant to UNSCR 778.
    5. The Office of Foreign Assets Control has issued a total 
of 630 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, and 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, 12 specific licenses have 
been issued.
    6. The expenses incurred by the Federal Government in the 
6-month period from February 2, 1996, through August 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 
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 
Advisor), 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. Six 
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 refusal of unimpeded 
access; 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 
UNSC Resolution 688. For nearly 5 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.
    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 must 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.
            Sincerely,
                                                William J. Clinton.


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