[House Document 105-16]
[From the U.S. Government Publishing Office]




105th Congress, 1st Session - - - - - - - - - -  House Document No. 105-16



  DEVELOPMENTS CONCERNING THE NATIONAL EMERGENCY WITH RESPECT TO THE 
 
FEDERAL REPUBLIC OF YUGOSLAVIA (SERBIA AND MONTENEGRO) AND THE BOSNIAN 
                                 SERBS

                               __________

                             COMMUNICATION

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              TRAnsmitting

A REPORT ON DEVELOPMENTS CONCERNING THE NATIONAL EMERGENCY WITH RESPECT 
  TO THE FEDERAL REPUBLIC OF YUGOSLAVIA (SERBIA AND MONTENEGRO) (THE 
  ``FRY (S/M)'') AND THE BOSNIAN SERBS--RECEIVED IN THE UNITED STATES 
   HOUSE OF REPRESENTATIVES DECEMBER 9, 1996, PURSUANT TO 50 U.S.C. 
                                1703(c)




January 7, 1997.--Referred to the Committee on International Relations 
                       and ordered to be printed


                                           The White House,
                                      Washington, December 6, 1996.
Hon. Newt Gingrich,
Speaker of the House of Representatives,
Washington, DC.
    Dear Mr. Speaker: On May 30, 1992, by Executive Order 
12808, President Bush declared a national emergency to deal 
with the unusual and extraordinary threat to the national 
security, foreign policy, and economy of the United States 
constituted by the actions and policies of the Governments of 
Serbia and Montenegro, blocking all property and interests in 
property of those Governments. President Bush took additional 
measures to prohibit trade and other transactions with the 
Federal Republic of Yugoslavia (Serbia and Montenegro) by 
Executive Orders 12810 and 12831, issued on June 5, 1992, and 
January 15, 1993, respectively.
    On April 25, 1993, I issued Executive Order 12846, blocking 
the property and interests in property of all commercial, 
industrial, or public utility undertakings or entities 
organized or located in the Federal Republic of Yugoslavia 
(Serbia and Montenegro) (the ``FRY (S&M)''), and prohibiting 
trade-related transactions by United States persons involving 
those areas of the Republic of Bosnia and Herzegovina 
controlled by the Bosnian Serb forces and the United Nations 
Protected Areas in the Republic of Croatia. On October 25, 
1994, because of the actions and policies of the Bosnian Serbs, 
I expanded the scope of the national emergency by issuance of 
Executive Order 12934 to block the property of the Bosnian Serb 
forces and the authorities in the territory that they control 
within the Republic of Bosnia and Herzegovina, as well as the 
property of any entity organized or located in, or controlled 
by any person in, or resident in, those areas.
    On December 27, 1995, I issued Presidential Determination 
No. 96-7, directing the Secretary of the Treasury, inter alia, 
to suspend the application of sanctions imposed on the FRY 
(S&M) pursuant to the above-referenced Executive orders and to 
continue to block property previously blocked until provision 
is made to address claims or encumbrances, including the claims 
of the other successor states of the former Yugoslavia. This 
sanctions relief, in conformity with United Nations Security 
Council Resolution (``UNSCR'') 1022 of November 22, 1995, was 
an essential factor motivating Serbia and Montenegro's 
acceptance of the General Framework Agreement for Peace in 
Bosnia and Herzegovina initialed by the parties in Dayton, 
Ohio, on November 21, 1995 (the ``Peace Agreement'') and signed 
in Paris on December 14, 1995. The sanctions imposed on the FRY 
(S&M) and on the United Nations Protected areas in the Republic 
of Croatia were accordingly suspended prospectively, effective 
January 16, 1996. Sanctions imposed on the Bosnian Serb forces 
and authorities and on the territory that they control within 
the Republic of Bosnia and Herzegovina were subsequently 
suspended prospectively, effective May 13, 1996, in conformity 
with UNSCR 1022. On October 1, 1996, the United Nations passed 
UNSCR 1074, terminating U.N. sanctions against the FRY (S&M) 
and the Bosnian Serbs in light of the elections that took place 
in Bosnia and Herzegovina on September 14, 1996. UNSCR 1074, 
however, reaffirms the provisions of UNSCR 1022 with respect to 
the release of blocked assets, as set forth above.
    The present report is submitted pursuant to 50 U.S.C. 
1641(c) and 1703(c) and covers the period from May 30 to 
November 29, 1996. 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 12808 of May 30, 1992 (57 FR 
23299) and Executive Order 12934 (59 FR 54117) and to expanded 
sanctions against the FRY (S&M) and the Bosnian Serbs contained 
in Executive Order 12810 of June 5, 1992 (57 FR 24347, June 9, 
1992), Executive Order 12831 of January 15, 1993 (58 FR 5253, 
January 21, 1993), Executive Order 12846 of April 25, 1993 (58 
FR 25771, April 27, 1993), and Executive Order 12934 of October 
25, 1994 (59 FR 54117, October 27, 1994).
    1. 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)) and the 
expansion of that national emergency under the same authorities 
was reported to the Congress on October 25, 1994. The 
additional sanctions set forth in related 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).
    2. Since the declaration of the national emergency with 
respect to the FRY (S&M) on May 30, 1992, the Office of Foreign 
Assets Control (OFAC) acting under authority delegated by the 
Secretary of the Treasury has implemented the sanctions imposed 
under the foregoing statutes. Effective January 16, 1996, OFAC 
amended the Federal Republic of Yugoslavia (Serbia and 
Montenegro) and Bosnian Serb-Controlled Areas of the Republic 
of Bosnia and Herzegovina Sanctions Regulations, 31 CFR Part 
585 (the ``Regulations''), to implement in the United States 
provisions of the Peace Agreement and UNSCR 1022 (61 FR 1282, 
January 19, 1996). The amended Regulations authorize 
prospectively all transactions with respect to the FRY (S&M) 
otherwise prohibited. Property and interests in property of the 
FRY (S&M) previously blocked within the jurisdiction of the 
United States remain blocked, in conformity with the Peace 
Agreement and UNSCR 1022, until provision is made to address 
claims or encumbrances, including the claims of the other 
successor states of the former Yugoslavia. On May 10, 1996, 
OFAC amended the Regulations to authorize prospectively those 
transactions previously prohibited with respect to the Bosnian 
Serb forces and authorities; entities organized or located in 
those areas of the Republic of Bosnia and Herzegovina under 
their control; entities owned or controlled directly or 
indirectly by any person in, or resident in, those areas; and 
any person acting for or on behalf of any of the foregoing. 
United States persons are also authorized to engage in 
transactions involving the areas of the Republic of Bosnia and 
Herzegovina under the control of the Bosnian Serb forces, and 
services may be exported either from the United States or by 
United States persons to those areas. Property and interests in 
property previously blocked because of an interest of any of 
the above persons remain blocked. (61 FR 24696, May 16, 1996.)
    3. Over the past 6 months, the Departments of State and the 
Treasury have worked closely with European Union member states 
and other U.N. member nations to implement the provisions of 
UNSCR 1022. In the United States, retention of blocking 
authority pursuant to the extension of a national emergency 
provides a framework for administration of an orderly claims 
settlement. This accords with past policy and practice with 
respect to the suspension of sanction regimes.
    4. Subsequent to the prospective authorization of 
transactions with the FRY (S&M), effective January 16, 1996, 
OFAC has issued 28 specific licenses regarding transactions 
pertaining to the FRY (S&M) or assets it owns or controls. As 
of October 28, 1996, specific licenses have been issued (1) to 
authorize the unblocking of certain funds and other financial 
assets previously blocked; (2) for the payment of crews' wages, 
vessel maintenance, and emergency supplies for FRY (S&M)-
controlled ships blocked in the United States; and (3) to 
authorize performance of certain transactions under pre-
sanctions contracts.
    During the past 6 months, OFAC has continued to oversee the 
maintenance of blocked accounts and records with respect to: 
(1) liquidated tangible assets and personalty of the 15 blocked 
U.S. subsidiaries of entities organized in the FRY (S&M); (2) 
the blocked personalty, files, and records of the 2 Serbian 
banking institutions in New York previously placed in secure 
storage; (3) remaining tangible property, including real 
estate; and (4) the 5 Yugoslav-owned vessels still blocked in 
the United States.
    5. Despite the prospective authorization of transactions 
with the FRY (S&M), OFAC has continued to work closely with the 
U.S. Customs Service and other cooperating agencies to 
investigate alleged violations that occurred while sanctions 
were in force.
    Since the last report, OFAC has collected five civil 
monetary penalties totaling more than $28,300 for violations of 
the sanctions. These violations included prohibited exports and 
payments to persons in the FRY (S&M) or to blocked entities 
owned or controlled by the FRY (S&M).
    6. The expenses incurred by the Federal Government in the 
6-month period from May 30, 1996, through November 29, 1996, 
that are directly attributable to the declaration of a national 
emergency with respect to the FRY (S&M) and the Bosnian Serb 
forces and authorities are estimated at about $1.252 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 OFAC 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.
    7. In the last year, substantial progress has been achieved 
to bring about a settlement of the conflict in the former 
Yugoslavia acceptable to the parties. UNSCR 1074 terminates 
sanctions in view of the first free and fair elections to occur 
in the Republic of Bosnia and Herzegovina, as provided for in 
the Peace Agreement. In reaffirming Resolution 1022, however, 
UNSCR 1074 contemplates the continued blocking of assets 
potentially subject to conflicting claims and encumbrances 
until provision is made to address them, including claims of 
the other successor states of the former Yugoslavia.
    The resolution of the crisis and conflict in the former 
Yugoslavia that has resulted from the actions and policies of 
the Government of the Federal Republic of Yugoslavia (Serbia 
and Montenegro), and of the Bosnian Serb forces and the 
authorities in the territory that they control, will not be 
complete until such time as the Peace Agreement is implemented 
fully and the terms of UNSCR 1022 have been met. Therefore, I 
have continued for another year the national emergency declared 
on May 30, 1992, as expanded in scope on October 25, 1994, and 
will continue to enforce the measures adopted pursuant thereto.
    I shall continue to exercise the powers at my disposal with 
respect to the measures against the Government of the Federal 
Republic of Yugoslavia (Serbia and Montenegro), and the Bosnian 
Serb forces, civil authorities, and entities, 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.

                                
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