[House Document 104-261]
[From the U.S. Government Publishing Office]



                                     

104th Congress, 2d Session - - - - - - - - - - - House Document 104-261


 
  DEVELOPMENTS CONCERNING THE NATIONAL EMERGENCY WITH RESPECT TO IRAN

                               __________

                                MESSAGE

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

A REPORT ON DEVELOPMENTS CONCERNING THE NATIONAL EMERGENCY WITH RESPECT 
  TO IRAN THAT WAS DECLARED IN EXECUTIVE ORDER NO. 12957 OF MARCH 15, 
    1995, AND MATTERS RELATING TO THE MEASURES IN THAT ORDER AND IN 
EXECUTIVE ORDER NO. 12959 OF MAY 6, 1995, PURSUANT TO 50 U.S.C. 1703(c)

 


 September 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 concerning 
the national emergency with respect to Iran that was declared 
in Executive Order 12957 of March 15, 1995, and matters 
relating to the measures in that order and in Executive Order 
12959 of May 6, 1995. This report is submitted pursuant to 
section 204(c) of the International Emergency Economic Powers 
Act, 50 U.S.C. 1703(c) (IEEPA), and section 505(c) of the 
International Security and Development Cooperation Act of 1985, 
22 U.S.C. 2349aa-9(c). This report discusses only matters 
concerning the national emergency with respect to Iran that was 
declared in Executive Order 12957 and does not deal with those 
relating to the emergency declared on November 14, 1979, in 
connection with the hostage crisis.
    1. On March 15, 1995, I issued Executive Order 12957 (60 
Fed. Reg. 14615, March 17, 1995) to declare a national 
emergency with respect to Iran pursuant to IEEPA, and to 
prohibit the financing, management, or supervision by United 
States persons of the development of Iranian petroleum 
resources. This action was in response to actions and policies 
of the Government of Iran, including support for international 
terrorism, efforts to undermine the Middle East peace process, 
and the acquisition of weapons of mass destruction and the 
means to deliver them. A copy of the order was provided to the 
Speaker of the House of Representatives and the President of 
the Senate by letter dated March 15, 1995. Following the 
imposition of these restrictions with regard to the development 
of Iranian petroleum resources, Iran continued to engage in 
activities that represent a threat to the peace and security of 
all nations, including Iran's continuing support for 
international terrorism, its support for acts that undermine 
the Middle East peace process, and its intensified efforts to 
acquire weapons of mass destruction. On May 5, 1995, I issued 
Executive Order 12959 to further respond to the Iranian threat 
to the national security, foreign policy, and economy of the 
United States.
    Executive Order 12959 (60 Fed. Reg. 24757, May 9, 1995) (1) 
prohibits exportation from the United States to Iran or to the 
Government of Iran of goods, technology, or services; (2) 
prohibits the reexportation of certain U.S. goods and 
technology to Iran from third countries; (3) prohibits 
transactions such as brokering and other dealing by United 
States persons in goods and services of Iranian origin or owned 
or controlled by the Government of Iran; (4) prohibits new 
investments by United States persons in Iran or in property 
owned or controlled by the Government of Iran; (5) prohibits 
U.S. companies and other United States persons from approving, 
facilitating, or financing performance by a foreign subsidiary 
or other entity owned or controlled by a United States person 
of certain reexport, investment, and certain trade transactions 
that a United States person is prohibited from performing; (6) 
continue the 1987 prohibition on the importation into the 
United States of goods and services of Iranian origin; (7) 
prohibits any transaction by any United States person or within 
the United States that evades or avoids or attempts to violate 
any prohibition of the order; and (8) allowed U.S. companies a 
30-day period in which to perform trade transactions pursuant 
to contracts predating the Executive order.
    At the time of signing Executive Order 12959, I directed 
the Secretary of the Treasury to authorize through specific 
licensing certain transactions, including transactions by 
United States persons related to the Iran-United States Claims 
Tribunal in The Hague, established pursuant to the Algiers 
Accords, and related to other international obligations and 
United States Government functions, and transactions related to 
the export of agricultural commodities pursuant to preexisting 
contracts consistent with section 5712(c) of title 7, United 
States Code. I also directed the Secretary of the Treasury in 
consultation with the Secretary of State, to consider 
authorizing United States persons through specific licensing to 
participate in market-based swaps of crude oil from the Caspian 
Sea area for Iranian crude oil in support of energy projects in 
Azerbaijan, Kazakstan, and Turkmenistan.
    Executive Order 12959 revoked sections 1 and 2 of Executive 
Order 12613 of October 29, 1987, and sections 1 and 2 of 
Executive Order 12957 of March 15, 1995, to the extent they are 
inconsistent with it. A copy of Executive Order 12959 was 
transmitted to the Speaker of the House of Representatives and 
the President of the Senate by letters dated May 6, 1995.
    2. On March 8, 1996, I renewed for another year the 
national emergency with respect to Iran pursuant to IEEPA. This 
renewal extended the current comprehensive trade embargo 
against Iran in effect since May 1995. Under these sanctions, 
virtually all trade with Iran is prohibited except for 
information and informational materials and certain other 
limited exceptions.
    3. There were no amendments to the Iranian Transactions 
Regulations, 31 CFR Part 560 (the ``ITR'') during the reporting 
period.
    4. During the current 6-month period, the Department of the 
Treasury's Office of Foreign Assets Control (OFAC) made 
numerous decisions with respect to applications for licenses to 
engage in transactions under the ITR, and issued 24 licenses. 
The majority of denials were in response to requests to 
authorize commercial exports to Iran and the importation of 
Iranian-origin goods. The majority of the licenses issued 
authorized the completion of commodity ``string transactions'' 
entered into by U.S. parties with respect to foreign 
commodities and having no knowledge or control over the Iranian 
interest in the contracts; the export and reexport of goods, 
services, and technology essential to ensure the safety of 
civil aviation and safe operation of certain commercial 
passenger aircraft in Iran; licenses relating to Iranian 
participation in the 1996 Atlanta Olympic and Paralympic Games; 
the importation of Iranian-origin artwork for public 
exhibition; and certain humanitarian imports and exports. In 
light of statutory restrictions applicable to goods and 
technology involved in the air safety cases, the Department of 
the Treasury continues to consult and coordinate with the 
Departments of State and Commerce on these matters, consistent 
with section 4 of Executive Order 12959.
    In consultation with the Board of Governors of the Federal 
Reserve System and bank regulators in New York and California, 
OFAC revoked the licenses of all Iranian banking agencies in 
the United States. State regulators then required them to 
convert to Representative Office status. There are now no 
Iranian banks authorized to conduct banking business in the 
United States. Activities have been restricted to ``limited 
representation,'' allowing only research and coordination with 
U.S. holders of affiliate correspondent accounts.
    Bank Saderat, Iran's New York Representative Office, was 
nominated by the Central Bank of Iran to act as its agent for 
procedures outlined in the ``Airbus'' settlement at The Hague. 
Accordingly, Bank Saderat was separately licensed by OFAC for 
the limited purpose of collecting information for the Central 
Bank of Iran about U.S. commercial claims against Iranian 
banks. The information will be forwarded to and cleared by 
Iranian and State Department officials and used in making 
independent determinations as to which claims can be paid from 
a special escrow account established at the Federal Reserve 
Bank of New York.
    The U.S. financial community continues to interdict 
transactions associated with Iran and to consult with OFAC 
about their appropriate handling. During this reporting period, 
OFAC took decisive action to prevent the U.S. clearing of third 
country dollar travelers checks sold by Iranian banks.
    5. The U.S. Customs Service has continued to effect 
numerous seizures of Iranian-origin merchandise, primarily 
carpets, for violation of the import prohibitions of the ITR. 
Various enforcement actions carried over from previous 
reporting periods are continuing and new reports of violations 
are being aggressively pursued. Since March 11, 1996, OFAC has 
collected two civil penalties totaling $6,000. The violations 
underlying these collections involve unlicensed exports to 
Iran. Civil penalty action is pending against 12 U.S. companies 
and financial institutions for violations of the Regulations.
    6. The expenses incurred by the Federal Government in the 
6-month period from March 15 through September 14, 1996, that 
are directly attributable to the exercise of powers and 
authorities conferred by the declaration of a national 
emergency with respect to Iran are approximately $850,000, 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 Political-Military Affairs, and 
the Office of the Legal Adviser), and the Department of 
Commerce (the Bureau of Export Administration and the General 
Counsels Office).
    7. The situation reviewed above continues to involve 
important diplomatic, financial, and legal interests of the 
United States and its nationals and presents an extraordinary 
and unusual threat to the national security, foreign policy, 
and economy of the United States. The declaration of the 
national emergency with respect to Iran contained in Executive 
Order 12957 and the comprehensive economic sanctions imposed by 
Executive Order 12959 underscore the United States Government 
opposition to the actions and policies of the Government of 
Iran, particularly its support of international terrorism and 
its effort to acquire weapons of mass destruction and the means 
to deliver them. The Iranian Transactions Regulations issued 
pursuant to Executive Orders 12957 and 12959 continue to 
advance important objectives in promoting the nonproliferation 
and antiterrorism policies of the United States. I shall 
exercise the powers at my disposal to deal with these problems 
and will report periodically to the Congress on significant 
developments.

                                                William J. Clinton.
    The White House, September 13, 1996.

                                
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