[House Document 104-5]
[From the U.S. Government Publishing Office]





                                     

        104th Congress, 1st Session - - - - - - - - - - - - - House 
Document 104-5



                         DEVELOPMENTS CONCERNING 
 
THE NATIONAL EMERGENCY WITH RESPECT TO THE GOVERNMENTS OF SERBIA AND MONTENEGRO

                               __________

                             COMMUNICATION

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

A REPORT ON DEVELOPMENTS SINCE HIS LAST REPORT CONCERNING THE NATIONAL 
  EMERGENCY WITH RESPECT TO THE GOVERNMENTS OF SERBIA AND MONTENEGRO, 
                     PURSUANT TO 50 U.S.C. 1703(c)




January 4, 1995.--Referred to the Committee on International Relations 
                       and ordered to be printed
                                           The White House,
                                      Washington, December 1, 1994.
Hon. Thomas S. Foley,
Speaker of the House of Representatives,
Washington, DC.
    Dear Mr. Speaker: On May 30, 1992, in Executive Order No. 
12808, the President declared a national emergency to deal with 
the threat to the national security, foreign policy, and 
economy of the United States arising from actions and policies 
of the Governments of Serbia and Montenegro, acting under the 
name of the Socialist Federal Republic of Yugoslavia or the 
Federal Republic of Yugoslavia, in their involvement in and 
support for groups attempting to seize territory in Croatia and 
the Republic of Bosnia and Herzegovina by force and violence 
utilizing, in part, the forces of the so-called Yugoslav 
National Army (57 FR 23299, June 2, 1992). The present report 
is submitted pursuant to 50 U.S.C. 1641(c) and 1703(c). It 
discusses Administration actions and expenses directly related 
to the exercise of powers and authorities conferred by the 
declaration of a national emergency in Executive Order No. 
12808 and to expanded sanctions against the Federal Republic of 
Yugoslavia (Serbia and Montenegro) (the ``FRY (S/M)'') 
contained in Executive Order No. 12810 of June 5, 1992 (57 FR 
24347, June 9, 1992), Executive Order No. 12831 of January 15, 
1993 (58 FR 5253, January 21, 1993), and Executive Order No. 
12846 of April 26, 1993 (58 FR 25771, April 27, 1993).
    1. Executive Order No. 12808 blocked all property and 
interests in property of the Governments of Serbia and 
Montenegro, or held in the name of the former Government of the 
Socialist Federal Republic of Yugoslavia or the Government of 
the Federal Republic of Yugoslavia, then or thereafter located 
in the United States or within the possession or control of 
United States persons, including their overseas branches.
    Subsequently, Executive Order No. 12810 expanded U.S. 
actions to implement in the United States the United Nations 
sanctions against the FRY (S/M) adopted in United Nations 
Security Council Resolution (UNSCR) 757 of May 30, 1992. In 
addition to reaffirming the blocking of FRY (S/M) Government 
property, this order prohibited transactions with respect to 
the FRY (S/M) involving imports, exports, dealing in FRY-origin 
property, air and sea transportation, contract performance, 
funds transfers, activity promoting importation or exportation 
or dealings in property, and official sports, scientific, 
technical, or other cultural representation of, or sponsorship 
by, the FRY (S/M) in the United States.
    Executive Order No. 12810 exempted from trade restrictions 
(1) transshipments through the FRY (S/M), and (2) activities 
related to the United Nations Protection Force (UNPROFOR), the 
Conference on Yugoslavia, or the European Community Monitor 
Mission.
    On January 15, 1993, President Bush issued Executive Order 
No. 12831 to implement new sanctions contained in UNSCR 787 of 
November 16, 1992. The order revoked the exemption for 
transshipments through the FRY (S/M) contained in Executive 
Order No. 12810, prohibited transactions within the United 
States or by a United States person relating to FRY (S/M) 
vessels and vessels in which a majority or controlling interest 
is held by a person or entity in, or operating from, the FRY 
(S/M), and stated that all such vessels shall be considered as 
vessels of the FRY (S/M), regardless of the flag under which 
they sail.
    On April 26, 1993, I issued Executive Order No. 12846 to 
implement in the United States the sanctions adopted in UNSCR 
Resolution 820 of April 17, 1993. That resolution called on the 
Bosnian Serbs to accept the Vance-Owen peace plan for the 
Republic of Bosnia and Herzegovina and, if they failed to do so 
by April 26, called on member states to take additional 
measures to tighten the embargo against the FRY (S/M) and 
Serbian-controlled areas of the Republic of Bosnia and 
Herzegovina and the United Nations Protected Areas of Croatia. 
Effective April 26, 1993, the order blocked all property and 
interests in property of commercial, industrial, or public 
utility undertakings or entities organized or located in the 
FRY (S/M), including property and interests in property of 
entities (wherever organized or located) owned or controlled by 
such undertakings or entities, that are or thereafter come 
within the possession or control of United States persons.
    On October 25, 1994, in view of UNSCR 942 of September 23, 
1994, I issued Executive Order No. 12934 in order to take 
additional steps with respect to the crisis in the former 
Yugoslavia. (59 FR 54117, October 27, 1994.) Executive Order 
No. 12934 expands the scope of the national emergency declared 
in Executive Order No. 12808 to address the unusual and 
extraordinary threat to the national security, foreign policy, 
and economy of the United States posed by the actions and 
policies of the Bosnian Serb forces and the authorities in the 
territory that they control, including their refusal to accept 
the proposed territorial settlement of the conflict in the 
Republic of Bosnia and Herzegovina.
    The Executive order blocks all property and interests in 
property that are in the United States, that hereafter come 
within the United States, or that are or hereafter come within 
the possession or control of United States persons (including 
their overseas branches) of: (1) the Bosnian Serb military and 
paramilitary forces and the authorities in areas of the 
Republic of Bosnia and Herzegovina under the control of those 
forces; (2) any entity, including any commercial, industrial, 
or public utility undertaking, organized or located in those 
areas of the Republic of Bosnia and Herzegovina under the 
control of Bosnian Serb forces; (3) any entity, wherever 
organized or located, which is owned or controlled directly or 
indirectly by any person in, or resident in, those areas of the 
Republic of Bosnia and Herzegovina under the control of Bosnian 
Serb forces; and (4) any person acting for or on behalf of any 
person within the scope of the above definitions.
    The Executive order also prohibits the provision or 
exportation of services to those areas of the Republic of 
Bosnia and Herzegovina under the control of Bosnian Serb 
forces, or to any person for the purpose of any business 
carried on in those areas, either from the United States or by 
a United States person. The order also prohibits the entry of 
any U.S-flagged vessel, other than a U.S. naval vessel, into 
the riverine ports of those areas of the Republic of Bosnia and 
Herzegovina under the control of Bosnian Serb forces. Finally, 
any transaction by any United States person that evades or 
avoids, or has the purpose of evading or avoiding, or attempts 
to violate any of the prohibitions set forth in the order is 
prohibited. Executive Order No. 12934 became effective at 11:59 
p.m., e.d.t. on October 25, 1994. A copy of the Executive order 
is attached for reference.
    2. The declaration of the national emergency on May 30, 
1992, was made pursuant to the authority vested in the 
President by the Constitution and laws of the United States, 
including the International Emergency Economic Powers Act (50 
U.S.C. 1701 et seq.), the National Emergencies Act (50 U.S.C. 
1601 et seq.), and section 301 of title 3 of the United States 
Code. The emergency declaration was reported to the Congress on 
May 30, 1992, pursuant to section 204(b) of the International 
Emergency Economic Powers Act (50 U.S.C. 1703(b)). The 
additional sanctions set forth in subsequent Executive orders 
were imposed pursuant to the authority vested in the President 
by the Constitution and laws of the United States, including 
the statutes cited above, section 1114 of the Federal Aviation 
Act (49 U.S.C. App. 1514), and section 5 of the United Nations 
Participation Act (22 U.S.C. 287c).
    3. There have been no amendments to the Federal Republic of 
Yugoslavia (Serbia and Montenegro) Sanctions Regulations (the 
``Regulations''), 31 C.F.R. Part 585, since the last report. 
Treasury's blocking authority as applied to FRY (S/M) 
subsidiaries and vessels in the United States has been 
challenged in court. A case involving a blocked subsidiary, IPT 
Company, Inc. v. United States Department of the Treasury, No. 
92 CIV 5542 (S.D.N.Y.), is pending a decision by the court on 
the Government's motion for a summary judgment.
    4. Over the past 6 months, the Departments of State and 
Treasury have worked closely with European Union (the ``EU'') 
member states and other U.N. member nations to coordinate 
implementation of the U.N. sanctions against the FRY (S/M). 
This has included visits by assessment teams formed under the 
auspices of the United States, the EU, and the Conference for 
Security and Cooperation in Europe (the ``CSCE'') to states 
bordering on Serbia and Montenegro; deployment of CSCE 
sanctions assistance missions (SAMs) to Albania, Bulgaria, 
Croatia, the former Yugoslav Republic of Macedonia, Hungary, 
Romania, and Ukraine to assist in monitoring land and Danube 
River traffic; bilateral contacts between the United States and 
other countries for the purpose of tightening financial and 
trade restrictions on the FRY (S/M); and ongoing multilateral 
meetings by financial sanctions enforcement authorities from 
various countries to coordinate enforcement efforts and to 
exchange technical information.
    5. In accordance with licensing policy and the Regulations, 
the Department of the Treasury's Office of Foreign Assets 
Control (FAC) has exercised its authority to license certain 
specific transactions with respect to the FRY (S/M) that are 
consistent with the Security Council sanctions. During the 
reporting period, FAC has issued 144 specific licenses 
regarding transactions pertaining to the FRY (S/M) or assets it 
owns or controls, bringing the total as of October 25, 1994, to 
821. Specific licenses have been issued (1) for payment to U.S. 
or third-country secured creditors, under certain narrowly 
defined circumstances, for pre-embargo import and export 
transactions; (2) for legal representation or advice to the 
Government of the FRY (S/M) or FRY (S/M)-controlled entities; 
(3) for the liquidation or protection of tangible assets of 
subsidiaries of FRY (S/M)-controlled firms located in the 
United States; (4) for limited FRY (S/M) diplomatic 
representation in Washington and New York; (5) for patent, 
trademark and copyright protection, and maintenance 
transactions in the FRY (S/M) not involving payment to the FRY 
(S/M) Government; (6) for certain communications, news media, 
and travel-related transactions; (7) for the payment of crews' 
wages, vessel maintenance, and emergency supplies for FRY (S/
M)-controlled ships blocked in the United States; (8) for the 
removal from the FRY (S/M), or protection within the FRY (S/M), 
of certain property owned and controlled by U.S. entities; (9) 
to assist the United Nations in its relief operations and the 
activities of the UNPROFOR; and (10) for payment from funds 
outside the United States where a third country has licensed 
the transaction in accordance with U.N. sanctions. Pursuant to 
U.S. regulations implementing UNSCR 757, specific licenses have 
also been issued to authorize exportation of food, medicine, 
and supplies intended for humanitarian purposes in the FRY (S/
M).
    During the past 6 months, FAC has continued to oversee the 
liquidation of tangible assets of the 15 U.S. subsidiaries of 
entities organized in the FRY (S/M). Subsequent to the issuance 
of Executive Order No. 12846, all operating licenses issued for 
these U.S.-located Serbian or Montenegrin subsidiaries or joint 
ventures were revoked, and the net proceeds of the liquidation 
of their assets placed in blocked accounts.
    Bank regulators again worked closely with FAC with regard 
to two Serbian banking institutions in New York that were not 
permitted to conduct normal business after June 1, 1992. The 
banks had been issued licenses to maintain a limited staff for 
audit purposes while full-time bank examiners were posted in 
their offices to ensure that banking records were appropriately 
safeguarded. Subsequent to the issuance of Executive Order No. 
12846, all licenses previously issued were revoked. In order to 
reduce the drain on blocked assets caused by continuing to rent 
commercial space, FAC has arranged to have the blocked 
personalty, files, and records moved to secure storage. The 
personalty will be liquidated and the net proceeds placed in 
blocked accounts.
    A similar liquidation involved the motor vessel Bor, a 
Montenegrin-owned, Maltese-flagged vessel, blocked in Norfolk 
on September 15, 1992. The owners of the vessel requested that 
it be sold in order to provide funds for the support of another 
of their Maltese-flagged vessels, the M/V Bar, blocked in the 
port of New Orleans. The FAC submitted this request to the U.N. 
Sanctions Committee, which approved sale of the Bor on March 
11, 1994.
    Through a contractor, FAC auctioned the vessel on June 24, 
1994, for $1.35 million. Prior to authorizing the sale, FAC 
determined that the purchaser of the vessel was neither 
organized or located in a country subject to U.N. or U.S. 
economic sanctions, nor owned or controlled by entities that 
are organized or located in a country subject to economic 
sanctions, nor owned or controlled by, or acting or purporting 
to act directly or indirectly on behalf of, the government or 
de facto regime of a country subject to economic sanctions.
    The proceeds of sale were deposited into a blocked, 
interest-bearing account in a U.S. financial institution, after 
certain payments were made related to the costs of maintaining 
the vessel in blocked status and the costs of sale. During the 
2 years that the Bor was blocked, vendors continued to provide 
provisions and fuel to the vessel despite deferred payment due 
to lack of funds. U.N. Security Council Sanctions Committee 
approval of the sale also provided for Treasury reimbursement 
of auction and other expenses from the proceeds of the sale.
    The previous and new owners of the vessel concluded the 
transaction on July 28, 1994, and the vessel was unblocked and 
removed from the Treasury's list of blocked entities. 
Arrangements were made for payment of wages to the crew and 
their travel to their port of embarkation.
    During the past 6 months, U.S. financial institutions have 
continued to block funds transfers in which there is an 
interest of the Government of the FRY (S/M) or an entity or 
undertaking located in or controlled from the FRY (S/M) and to 
stop prohibited transfers to persons in the FRY (S/M). Such 
interdicted transfers have accounted for $91.5 million since 
the issuance of Executive Order No. 12808, including some $7.3 
million during the past 6 months.
    To ensure compliance with the terms of the licenses that 
have been issued under the program, stringent reporting 
requirements are imposed. More than 292 submissions have been 
reviewed since the last report and more than 193 compliance 
cases are currently open.
    6. Since the issuance of Executive Order No. 12810, FAC has 
worked closely with the U.S. Customs Service to ensure both 
that prohibited imports and exports (including those in which 
the Government of the FRY (S/M) has an interest) are identified 
and interdicted, and that permitted imports and exports move to 
their intended destination without undue delay. Violations and 
suspected violations of the embargo are being investigated and 
appropriate enforcement actions are being taken. There are 
currently 59 cases under active investigation. Since the last 
report, FAC has collected 31 civil penalties totaling more than 
$141,000. Of these, 24 were paid by U.S. financial institutions 
for violative funds transfers involving the Government of the 
FRY (S/M), persons in the FRY (S/M) or entities located or 
organized in or controlled from the FRY (S/M). Five U.S. 
companies, one organization, and one law firm have also paid 
penalties related to exports or unlicensed payments to the 
Government of the FRY (S/M) or persons in the FRY (S/M) for 
trademark registrations.
    As previously reported, FAC has issued a series of General 
Notices announcing the names of entities and individuals 
determined by the Department of the Treasury to be Blocked 
Entities or Specially Designated Nationals (SDNs) of the FRY 
(S/M). On May 4, 1994, Treasury announced the identification of 
three companies registered in Cyprus as FRY (S/M) owned or 
controlled. Additionally, on September 15, 1994, FAC announced 
that two firms previously named as SDNs of the FRY (S/M), had 
changed their corporate names. The FAC published those name 
changes. These additions and amendments bring the current total 
of Blocked Entities and SDNs of the FRY (S/M) to 853. All 
prohibitions in the Regulations pertaining to the Government of 
the FRY (S/M) apply to the entities and individuals identified. 
United States persons on notice of the status of such blocked 
persons are prohibited from entering into transactions with 
them, or transactions in which they have an interest, unless 
otherwise exempted or authorized pursuant to the Regulations. 
Copies of these announcements are attached to this report.
    7. The expenses incurred by the Federal Government in the 
6-month period from May 30 through November 29, 1994, that are 
directly attributable to the authorities conferred by the 
declaration of a national emergency with respect to the FRY (S/
M) are estimated at about $4 million, most of which represent 
wage and salary costs for Federal personnel. Personnel costs 
were largely centered in the Department of the Treasury 
(particularly in FAC and its Chief Counsel's Office, and the 
U.S. Customs Service), the Department of State, the National 
Security Council, the U.S. Coast Guard, and the Department of 
Commerce.
    8. The actions and policies of the Government of the FRY 
(S/M), in its involvement in and support for groups attempting 
to seize and hold territory in Croatia and the Republic of 
Bosnia and Herzegovina by force and violence, the actions and 
policies of the Bosnian Serb military and paramilitary forces, 
and the authorities in the areas of Bosnia and Herzegovina 
under the control of those forces, continue to pose an unusual 
and extraordinary threat to the national security, foreign 
policy, and economy of the United States. The United States 
remains committed to a multilateral resolution of the conflict 
through implementation of the United Nations Security Council 
mandate.
    I shall continue to exercise the powers at my disposal to 
apply economic sanctions against the FRY (S/M) as long as these 
measures are appropriate, and will continue to report 
periodically to the Congress on significant developments 
pursuant to 50 U.S.C. 1703(c).
            Sincerely,
                                                William J. Clinton.