[House Document 104-29]
[From the U.S. Government Publishing Office]





                                     

        104th Congress, 1st Session - - - - - - - - - - - - - House 
document 104-29


 
  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 2, 1994, 
CONCERNING THE NATIONAL EMERGENCY WITH RESPECT TO IRAQ, PURSUANT TO 50 
                  U.S.C. 1641(c) AND 50 U.S.C. 1703(c)




  February 8, 1995.--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 2, 1994, 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 United States 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. United States 
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 No. 778 requires U.N. Member States temporarily to 
transfer to a U.N. escrow account up to $200 million apiece in 
Iraqi oil sale proceeds paid by purchasers after the imposition 
of U.N. sanctions on Iraq, to finance Iraqi'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 will also fund the activities of the U.N. 
Compensation Commission in Geneva, which will handle claims 
from victims of the Iraqi invasion 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 Nos. 
12724 and 12817 (the ``Executive orders''). The report covers 
events from August 2, 1994, through February 1, 1995.
    1. There has been one action affecting the Iraqi Sanctions 
Regulations, 31 C.F.R. Part 575 (the ``Regulations''), 
administered by the Office of Foreign Assets Control (FAC) of 
the Department of the Treasury, since my last report on August 
2, 1994. On February 1, 1995 (60 Fed. Reg. 6376), FAC amended 
the Regulations by adding to the list of Specially Designated 
Nationals (SDNs) of Iraq set forth in Appendices A (``entities 
and individuals'') and B (``merchant vessels''), the names of 
24 cabinet ministers and 6 other senior officials of the Iraqi 
government, as well as 4 Iraqi state-owned banks, not 
previously identified as SDNs. Also added to the Appendices 
were the names of 15 entities, 11 individuals, and 1 vessel 
that were newly identified as Iraqi SDNs in the comprehensive 
list of SDNs for all sanctions programs administered by FAC 
that was published in the Federal Register (59 Fed. Reg. 59460) 
on November 17, 1994. In the same document, FAC also provided 
additional addresses and aliases for 6 previously identified 
Iraqi SDNs. This Federal Register publication brings the total 
number of listed Iraqi SDNs to 66 entities, 82 individuals, and 
161 vessels.
    Pursuant to section 575.306 of the Regulations, FAC has 
determined that these entities and individuals designated as 
SDNs are owned or controlled by, or are acting or purporting to 
act directly or indirectly on behalf of, the Government of 
Iraq, or are agencies, instrumentalities or entities of that 
government. By virtue of this determination, all property and 
interests in property of these entities or persons that are in 
the United States or in the possession or control of United 
States persons are blocked. Further, United States persons are 
prohibited from engaging in transactions with these individuals 
or entities unless the transactions are licensed by FAC. The 
designations were made in consultation with the Department of 
State. A copy of the amendment is attached to this report.
    2. Investigations of possible violations of the Iraqi 
sanctions continue to be pursued and appropriate enforcement 
actions taken. The FAC continues its involvement in lawsuits, 
seeking to prevent the unauthorized transfer of blocked Iraqi 
assets. There are currently 38 enforcement actions pending, 
including nine cases referred by FAC to the U.S. Customs 
Service for joint investigation. Additional FAC civil penalty 
notices were prepared during the reporting period for 
violations of the International Emergency Economic Powers Act 
and the Regulations with respect to transactions involving 
Iraq. Four penalties totaling $26,043 were collected from two 
banks, one company, and one individual for violations of the 
prohibitions against transactions involving Iraq.
    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 SDNs of the Government of Iraq.
    4. Pursuant to Executive Order No. 12817 implementing 
United Nations Security Council Resolution No. 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 October 5, 
1994, following payments by the Governments of Canada 
($677,756.99), the United Kingdom ($1,740,152.44), and the 
European Community ($697,055.93), 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 $3,114,965.36 from the blocked account 
it holds to the United Nations-controlled account. Similarly, 
on December 16, 1994, following the payment of $721,217.97 by 
the Government of the Netherlands, $3,000,891.06 by the 
European Community, $4,936,808.84 by the Government of the 
United Kingdom, $190,476.19 by the Government of France, and 
$5,565,913.29 by the Government of Sweden, the Federal Reserve 
Bank of New York was directed to transfer a corresponding 
amount of $14,415,307.35 to the United Nations-controlled 
account. Again, on December 28, 1994, following the payment of 
$853,372.95 by the Government of Denmark,, $1,049,719.82 by the 
European Community, $70,716.52 by the Government of France, 
$625,390.86 by the Government of Germany, $1,151,742.01 by the 
Government of the Netherlands, and $1,062,500.00 by the 
Government of the United Kingdom, the Federal Reserve Bank of 
New York was directed to transfer a corresponding amount of 
$4,813,442.16 to the United Nations-controlled account. 
Finally, on January 13, 1995, following the payment of 
$796,167.00 by the Government of the Netherlands, $810,949.24 
by the Government of Denmark, $613,030.61 by the Government of 
Finland, and $2,049,600.12 by the European Community, the 
Federal Reserve Bank of New York was directed to transfer a 
corresponding amount of $4,269,746.97 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 have amounted to $157,542,187.88 of 
the up to $200 million that the United States is obligated to 
match from blocked Iraqi oil payments, pursuant to United 
Nations Security Council Resolution 778.
    5. The Office of Foreign Assets Control has issued a total 
of 533 specific licenses regarding transactions pertaining to 
Iraq or Iraqi assets since August 1990. Since my last report, 
37 specific licenses have been issued. Licenses were 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.
    6. The expenses incurred by the Federal Government in the 
6-month period from August 2, 1994, through February 1, 1995, 
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 $2.25 
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 
East Affairs, the Bureau of Organization Affairs, 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, 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 4 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 weapons 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 3 
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 1991, the United Nations Security Council adopted 
Resolutions 706 and 712, which would permit Iraq to sell up to 
$1.6 billion of oil under U.N. auspices to fund the provision 
of food, medicine, and other humanitarian supplies to the 
people of Iraq. The resolutions also provide for the payment of 
compensation to victims of Iraqi aggression and other U.N. 
activities with respect to Iraq. The equitable distribution 
within Iraq of this humanitarian assistance would be supervised 
and monitored by the United Nations. The Iraqi regime so far 
has refused to accept these resolutions and has thereby chosen 
to perpetuate the suffering of its civilian population. More 
than a year ago, the Iraqi government informed the United 
Nations that it would not implement Resolutions 706 and 712.
    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 
require 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 8, 1995.