[House Document 105-131]
[From the U.S. Government Publishing Office]




105th Congress, 1st Session - - - - - - - - - - - - House Document 105-131


 
  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 17, 1997.--Message and accompanying papers referred to the 
     Committee on International Relations and ordered to be printed

                                 -------

                      U.S. GOVERNMENT PRINTING OFFICE
                              WASHINGTON : 1997

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), section 401(c) of the National 
Emergencies Act, 50 U.S.C. 1641(c), 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 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 thatundermine the Middle East peace process, and its 
intensified efforts to acquire weapons of mass destruction. On May 6, 
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 dealings 
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 trade 
transactions that a United States person is prohibited from 
perform- ing; (6) continues the 1987 prohibition on the 
importation into the United States of goods and services of 
Iranian origin; (7) prohibits any transaction by a 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 
preexistingcontracts 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, Kazakhstan, 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 and the President of 
the Senate by letter dated May 6, 1995.
    2. On March 5, 1997, I renewed for another year the 
national emergency with respect to Iran pursuant to IEEPA. This 
renewal extended the authority for the current comprehensive 
trade embargo against Iran in effect since May 1995. Under 
these sanctions, virtually all trade with Iran is prohibited 
except for trade in information and informational materials and 
certain other limited exceptions.
    3. On August 19, 1997, I issued Executive Order 13059 in 
order to clarify the steps taken in Executive Order 12957 and 
Executive Order 12959, to confirm that the embargo on Iran 
prohibits all trade and investment activities by United States 
persons, wherever located, and to consolidate in one order the 
various prohibitions previously imposed to deal with the 
national emergency declared on March 15, 1995. A copy of 
Executive Order 13059 was transmitted to the Speaker of the 
House and the President of the Senate by letter dated August 
19, 1997.
    The order prohibits (1) the importation into the United 
States of any goods or services of Iranian origin or owned or 
controlled by the Government of Iran except information or 
informational material; (2) the exportation, reexportation, 
sale, or supply from the United States or by a United States 
person, wherever located, of goods, technology, or services to 
Iran or the Government of Iran, including knowing transfers toa 
third country for direct or indirect supply, transshipment, or 
reexportation to Iran or the Government of Iran, or specifically for 
use in the production, commingling with, or incorporation into goods, 
technology, or services to be supplied, transshipped, or reexported 
exclusively or predominantly to Iran or the Government of Iran; (3) 
reexportation from a third country of controlled U.S.-origin goods, 
technology, or services by a person other than a United States person; 
(4) purchase, sale, transport, swap, brokerage, approval, financing, 
facilitation, guarantee, or other transactions or dealings by United 
States persons, wherever located, related to direct or indirect trade 
with Iran or the Government of Iran or to goods or services of Iranian 
origin or owned or controlled by the Government of Iran; (5) new 
investment by United States persons in Iran or in property or entities 
owned or controlled by the Government of Iran; (6) approval, financing, 
facilitation, or guarantee by a United States person of any transaction 
by a foreign person that a United States person would be prohibited 
from performing under the embargo; and (7) any evasion, or attempt to 
violate a prohibition under the order.
    Executive Order 13059 became effective at 12:01 a.m., 
eastern daylight time on August 20, 1997. Revocation of 
corresponding provisions in prior Executive orders does not 
affect the applicability of those provisions, or of 
regulations, licenses, other administrative actions taken 
pursuant to those provisions, with respect to any transaction 
or violation occurring before the effective day of Executive 
Order 13059. Specific licenses issued pursuant to prior 
Executive orders continue in effect, unless revoked or amended 
by the Secretary of the Treasury. General licenses, 
regulations, orders, and directives issued pursuant to prior 
orders continue in effect, except to the extent inconsistent 
with Executive Order 13059 or otherwise revoked or modified by 
the Secretary of the Treasury.
    4. The Iranian Transactions Regulations, 31 CFR Part 560 
(the ``ITR''), were amended on April 18, 1997 (62 Fed. Reg. 
19670, April 23, 1997), on July 30, 1997 (62 Fed. Reg. 41851, 
August 4, 1997), and on August 25, 1997 (62 Fed. Reg. 45098, 
August 25, 1997). In April 1997, Section 560.603 was amended to 
require a United States person to file a transaction report as 
to each foreign affiliate that engages in reportable oil-
related transactions involving Iran of $1,000,000 or more 
during the calendar quarter.
    In July 1997, sections 560.510 (d)(1) and (d)(2) were 
amended to generally license all payments of awards against 
Iran issued by the Iran-United States Claims Tribunal in The 
Hague, irrespective of the source of funds for payment, and to 
generally license implementation (except exports or reexports 
that are subject to export license application requirements of 
Federal agencies other than the Department of the Treasury's 
Office of Foreign Assets Control (OFAC)) as well as payment of 
awards or settlements in cases to which the United States 
Government is a party.
    Sections 560.525 (a)(3) and (a)(5)(i) were amended to 
generally license the provision of legal services to initiate 
and conduct United States court and other domestic legal 
proceedings on behalf of persons in Iran or the Government of 
Iran and to initiate proceedings to resolve disputes between 
the Government of Iran or an Iranian national and the United 
States or a United States national, notwithstanding the 
prohibition on exportation of services to Iran. On August 25, 
1997, general reporting, record keeping, licensing, and other 
procedural regulations were moved from the ITR to a separate 
part (31 CFR Part 501) dealing solely with such procedural 
matters. (62 Fed. Reg. 45098, August 25, 1997). A copy of these 
amendments is attached.
    5. During the current 6-month period, OFAC made numerous 
decisions with respect to applications for licenses to engage 
in transactions under the ITR, and issued 12 licenses. The 
majority of denials were in response to requests to authorize 
commercial exports to Iran--particularly of machinery and 
equipment for various industries--and the importation of 
Iranian-origin goods. The licenses issued authorized certain 
financial transactions, including those relating to disposal of 
United States-owned goods located in Iran and extension of, but 
not payment under, standby letters of credit. Pursuant to 
sections 3 and 4 of Executive Order 12959 and consistent with 
the Iran-Iraq Arms Non-Proliferation Act of 1992 and other 
statutory restrictions concerning certain goods and technology, 
including those involved in air-safety cases, Treasury 
continues to consult with the Departments of State and Commerce 
on these matters.
    The United States financial community continues to 
scrutinize transactions associated with Iran and to consult 
with OFAC about their appropriate handling. Many of these 
inquiries have resulted in investigations into the activities 
of U.S. parties and, where appropriate, the initiation of 
enforcement action.
    6. On March 20, 1997, a seven-count indictment was returned 
by a grand jury in the District of Maryland against a United 
States resident and two Iranian co-conspirators. The March 
indictment superseded a two-count indictment handed down on 
February 13, 1997. Each indictment charged violations of IEEPA 
and the ITR involving the attempted exportation from the United 
States to Iran of sophisticated state-of-the-art gas 
chromatographs used in the electric power industry, which were 
prevented from reaching Iran.
    The United States Customs Service has continued to effect 
numerous seizures of Iranian-origin merchandise, primarily 
carpets, for violation of the import prohibitions of the ITR. 
Variousenforcement actions carried over from previous reporting 
periods are continuing and new reports of violations are being 
aggressively pursued. Since my last report on March 14, 1997, OFAC has 
collected four civil monetary penalties totaling nearly $22,000. The 
violations relate to the unlicensed import from or export of goods to 
Iran. Civil penalty action is pending against 37 companies, financial 
institutions, and individuals for violations of the Regulations.
    7. The expenses incurred by the Federal Government in the 
6-month period from March 15 through September 14, 1997, 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 represent 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 Intelligence and Research, and the Office of the 
Legal Adviser), and the Department of Commerce (the Bureau of 
Export Administration and the General Counsel's Office).
    8. The situation reviewed above continues to present 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 efforts 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 17, 1997.

    
    
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