[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.





                                
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