    [House Document 105-207]
    [From the U.S. Government Publishing Office]

    105th Congress, 2d Session  - - - - - - - - - - House Document 105-207

      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 JULY 31, 1997,
        CONCERNING THE NATIONAL EMERGENCY WITH RESPECT TO IRAQ THAT WAS
    DECLARED IN EXECUTIVE ORDER NO. 12722 OF AUGUST 2, 1990, PURSUANT TO 50
                      U.S.C. 1641(c) AND 50 U.S.C. 1703(c)

      February 4, 1998.--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 July 31, 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 (IEEPA), 50 U.S.C. 1703(c).
        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 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 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.
        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
    August 2, 1997, through February 1, 1998.
        1. In April 1995, the U.N. Security Council adopted UNSCR
    986 authorizing Iraq to export up to $1 billion in petroleum
    and petroleum products every 90 days for a totalof 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
    President of the Security Council received the report prepared by the
    Secretary General as requested by paragraph 13 of UNSCR 986, making
    UNSCR 986 effective as of 12:01 a.m. December 10, 1996.
        On June 4, 1997, the U.N. Security Council adopted UNSCR
    1111, renewing for another 180 days the authorization for Iraqi
    petroleum sales and purchases of humanitarian aid contained in
    UNSCR 986 of April 13, 1995. The Resolution became effective on
    June 8, 1997. On September 12, 1997, the Security Council,
    noting Iraq's decision not to export petroleum and petroleum
    products pursuant to UNSCR 1111 during the period June 8 to
    August 13, 1997, and deeply concerned about the resulting
    humanitarian consequences for the Iraqi people, adopted UNSCR
    1129. This resolution replaced the two 90-day quotas with one
    120-day quota and one 60-day quota in order to enable Iraq to
    export its full $2 billion quota of oil within the original 180
    days of UNSCR 1111. On December 4, 1997, the U.N. Security
    Council adopted UNSCR 1143, renewing for another 180 days,
    beginning December 5, 1997, the authorization for Iraqi
    petroleum sales and humanitarian aid purchases contained in
    UNSCR 986. As of January 2, 1998, however, Iraq still had not
    exported any petroleum under UNSCR 1143. During the reporting
    period, imports into the United States under this program
    totaled about 14.2 million barrels, bringing total imports
    since December 10, 1996, to approximately 23.7 million barrels.
        2. There have been two 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. The Regulations were amended on August 25,
    1997. General reporting, recordkeeping, licensing, and other
    procedural regulations were moved from the Regulations to a
    separate part (31 C.F.R. Part 501) dealing solely with such
    procedural matters (62 Fed. Reg. 45098, August 25, 1997). A
    copy of the amendment is attached.
        On December 30, 1997, the Regulations were amended to
    remove from appendices A and B to 31 C.F.R. chapter V the name
    of an individual who had been determined previously to act for
    or on behalf of, or to be owned or controlled by, the
    Government of Iraq (62 Fed. Reg. 67729, December 30, 1997). A
    copy of the amendment is attached.
        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
    essential parts and equipment for the Kirkuk-Yumurtalik
    pipeline system, and sale 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
    United Nations and United States Government approval.
        All executory contracts must contain terms requiring that
    all proceeds of oil purchases from the Government of Iraq,
    including the State Oil Marketing Organization, must be
    placedin the U.N. escrow account at Banque Nationale 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 approval by the
    661 Committee and satisfaction of other conditions established by the
    United Nations, 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 OFAC to the U.S. Customs Service for investigation.
        On July 15, 1995, a jury in the Eastern District of New
    York returned a verdict of not guilty for two defendants
    charged with the attempted exportation and transshipment to
    Iraq of zirconium ingots in violation of IEEPA and the ISR. The
    two were charged in a Federal indictment on July 10, 1995,
    along with another defendant who entered a guilty plea on
    February 6, 1997.
        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 civil monetary
    penalties totaling more than $1.125 million for violations of
    IEEPA and the ISR relating to the sale and shipment of goods to
    the Government of Iraq and an entity in Iraq. Additional
    administrative proceedings have been initiated and others await
    commencement.
        4. The Office of Foreign Assets Control has issued hundreds
    of licensing determinations regarding transactions pertaining
    to Iraq or Iraqi assets since August 1990. Specific licenses
    have been issued for transactions such as the filing of legal
    actions against Iraqi governmental entities, legal
    representation of Iraq, and the exportation of Iraq of donated
    medicine, medical supplies, and food intended for humanitarian
    relief purposes, sales of humanitarian supplies to Iraq under
    UNSCR 986 and 1111, diplomatic transactions, 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, 88 specific licenses have been issued, most with
    respect to sales of humanitarian goods.
        Since December 10, 1996, OFAC has issued specific licenses
    authorizing commercial sales of humanitarian goods funded by
    Iraqi oil sales pursuant to UNSCR 986 and 1111 valued at more
    than $239 million. Of that amount, approximately $222 million
    represents sales of basic foodstuffs, $7.9 million for
    medicines and medical supplies, $8.2 million for water testing
    and treatment equipment, and nearly $700,000 to fund a variety
    of United Nations activities in Iraq. International
    humanitarian relief in Iraq is coordinated under the direction
    of the United Nations Office of the Humanitarian Coordinator of
    Iraq. Assisting U.N. agencies include the World Food Program,
    the U.N. Population Fund, the U.N. Food and Agriculture
    Organization, the World Health Organization, and UNICEF. As of
    January 8, 1998, OFAC had authorized sales valued at more than
    $165.8 million worth of humanitarian goods during the reporting
    period beginning August 2, 1997.
        5. The expenses incurred by the Federal Government in the
    6-month period from August 2, 1997, through February 1, 1998,
    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 theTreasury (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 Adviser), 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. Iraqi compliance with these resolutions is
    necessary before the United States will consider lifting
    economic sanctions. 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
    and a half 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 Kuwaiti border in October 1994;
    sponsorship of assassinations in Lebanon and in northern Iraq;
    incomplete declarations to weapons inspectors and refusal to
    provide immediate, unconditional, and unrestricted access to
    sites 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 systematic repression of all
    forms of political expression, oppression of minorities, and
    denial of humanitarian assistance. The Government of Iraq has
    repeatedly said it will not comply with UNSCR 688 of April 5,
    1991. The Iraqi military routinely harasses residents of the
    north, and has attempted to ``Arabize'' the Kurdish, Turkomen,
    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.
        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
    affirm 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 3, 1998.