[House Document 105-114]
[From the U.S. Government Publishing Office]



105th Congress, 1st Session  - - - - - - - - - - House Document 105-114


 
     REPORT CONCERNING THE NATIONAL EMERGENCY WITH RESPECT TO IRAQ

                               __________

                                MESSAGE

                                  FROM

                   THE PRESIDENT OF THE UNITED STATES

                              TRANSMITTING

A REPORT ON DEVELOPMENTS CONCERNING THE NATIONAL EMERGENCY DECLARED BY 
EXECUTIVE ORDER NO. 12722 OF AUGUST 2, 1990, TO DEAL WITH THE THREAT TO 
THE NATIONAL SECURITY, FOREIGN POLICY, AND ECONOMY OF THE UNITED STATES 
CAUSED BY THE LAPSE OF THE EXPORT ADMINISTRATION ACT OF 1979, PURSUANT 
                          TO 50 U.S.C. 1641(c)





   August 1, 1997.--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 February 10, 1997, concerning the national 
emergency with respect to Iraq that was declared in Executive 
Order 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).
    This report discusses only matters concerning the national 
emergency with respect to Iraq that was declared in Executive 
Order 12722 and matters relating to Executive Orders 12724 and 
12817 (the ``Executive Orders''). The report covers events from 
February 2 through August 1, 1997.
    Executive Order 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 contracting 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 12724, which was issued in 
order to align the sanctions imposed by the United States with 
United Nations Security Council Resolution (UNSCR) 661 of 
August 6, 1990.
    1. In April 1995, the U.N. Security Council adopted UNSCR 
986 authorizing Iraq to export up to $1 billion in petroleum 
andpetroleum products every 90 days for a total of 180 days 
under U.N. supervision in order to finance the purchase of food, 
medicine, and other humanitarian supplies. 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. On 
August 8, 1996, the UNSC committee established pursuant to UNSCR 661 
(``the 661 Committee'') adopted procedures to be employed by the 661 
Committee in implementation of UNSCR 986. On December 9, 1996, the 
Secretary General released the report requested by paragraph 13 of 
UNSCR 986, making UNSCR 986 effective as of 12:01 a.m. December 10.
    On June 4, 1997, the U.N. Security Council adopted UNSCR 
1111, renewing for another 180 days the authorization for Iraqi 
petroleum sales contained in UNSCR 986 of April 14, 1995. The 
Resolution became effective on June 8, 1997. During the 
reporting period, imports into the United States under this 
program totaled approximately 9.5 million barrels.
    2. There have been no amendments to the Iraqi Sanctions 
Regulations, 31 C.F.R. Part 575 (the ``ISR'' or the 
``Regulations'') administered by the Office of Foreign Assets 
Control (OFAC) of the Department of the Treasury during the 
reporting period.
    As previously reported, the Regulations were amended on 
December 10, 1996, to provide a statement of licensing policy 
regarding specific licensing of United States persons seeking 
to purchase Iraqi-origin petroleum and petroleum products from 
Iraq (61 Fed. Reg. 65312, December 11, 1996). Statements of 
licensing policy were also provided regarding sales of 
essentialparts and equipment for the Kirkuk-Yumurtalik pipeline 
systems, and sales of humanitarian goods to Iraq, pursuant to United 
Nations approval. A general license was also added to authorize 
dealings in Iraqi-origin petroleum and petroleum products that have 
been exported from Iraq with the United Nations and United States 
Government approval.
    All executory contracts must contain terms requiring that 
all proceeds of the oil purchases from the Government of Iraq, 
including the State Oil Marketing Organization, must be placed 
in the U.N. escrow account at Banque National 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 arrival by 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 the Office of Foreign Assets Control (OFAC) to the U.S. 
Customs Service for investigation.
    On July 10, 1995, an indictment was brought against three 
U.S. citizens in the Eastern District of New York for 
conspiracy in a case involving the attempted exportation and 
transshipment to Iraq of zirconium ingots in violation of the 
IEEPA and the ISR. The intended use of the merchandise was the 
manufacture of cladding for radioactive materials to be used in 
nuclear reactors. The case was the culmination of a successful 
undercover operation conducted by agents of the U.S. Customs 
Service in New York in cooperation with OFAC and the U.S. 
Attorney's Office for the Eastern District of New York. On 
February 6, 1997, one of the defendants plead guilty to a 10-
count criminal indictment including conspiracy to violatethe 
Iraqi Sanctions and the IEEPA. The trial of the remaining defendants is 
ongoing.
    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.
    Since my last report, OFAC collected four civil monetary 
penalties totaling more that $470,000 for violations of IEEPA 
and the ISR. The violations involved brokerage firms' failure 
to block assets of an Iraqi SDN and effecting certain 
securities trades with respect thereto. Additional 
administrative proceedings have been initiated and others await 
commencement.
    4. The Office of Foreign Assets Control has issued a total 
of 700 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 action 
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, 
executory contracts pursuant to UNSCR 986, sales of 
humanitarian supplies to Iraq under UNSCR 986, 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, 47 specific licenses have been issued.
    5. The expense incurred by the Federal Government in the 6-
month period from February 2 through August 1, 1997, 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 $1.2 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 
Bureau of Intelligence and Research, 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).
    6. 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 relevant 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. Seven 
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 Kuwaitiborder in October 1994; sponsorship of 
assassinations in Lebanon and in northern Iraq; incomplete declarations 
to weapons instructors and refusal of unimpeded access by these 
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 the systematic repression of 
minorities and denial of humanitarian assistance. The 
Government of Iraq has repeatedly said it will not be bound by 
UNSCR 668. 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 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.S. 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 the resolutions, 
the United States will continue to apply economic sanctions to 
deter it from threatening peace and stability in the region.
                                                William F. Clinton.
    The White House, July 31, 1997.

                                
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