[House Document 105-260]
[From the U.S. Government Publishing Office]



105th Congress, 2d Session - - - - - - - - - - - House Document 105-260


 
   DEVELOPMENTS CONCERNING NATIONAL EMERGENCY WITH RESPECT TO BURMA

                               __________

                             COMMUNICATION

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

A REPORT ON DEVELOPMENTS CONCERNING THE NATIONAL EMERGENCY WITH RESPECT 
 TO BURMA THAT WAS DECLARED IN EXECUTIVE ORDER 13047 OF MAY 20, 1997, 
                     PURSUANT TO 50 U.S.C. 1703(c)





June 3, 1998.--Referred to the Committee on International Relations and 
                         ordered to be printed


                                           The White House,
                                          Washington, May 26, 1998.
Hon. Newt Gingrich,
Speaker of the House of Representatives,
Washington, DC.
    Dear Mr. Speaker: I hereby report to the Congress on 
developments concerning the national emergency with respect to 
Burma that I declared in Executive Order 13047 of May 20, 1997, 
pursuant to section 570 of the Foreign Operations, Export 
Financing, and Related Programs Appropriations Act, 1997, 
Public Law 104-208 (the ``Act'') and the International 
Emergency Economic Powers Act (IEEPA). This report is submitted 
pursuant to section 204(c) of IEEPA, 50 U.S.C. 1703(c) and 
section 401(c) of the National Emergencies Act, 50 U.S.C. 
1641(c). This report discusses only matters concerning the 
national emergency with respect to Burma that was declared in 
Executive Order 13047.
    On May 20, 1997, I issued Executive Order 13047 (62 Fed. 
Reg. 28301, May 22, 1997), effective on May 21, 1997, to 
declare a national emergency with respect to Burma and to 
prohibit new investment in Burma by United States persons, 
except to the extent provided in regulations, orders, 
directives, or licenses that may be issued in conformity with 
section 570 of the Act. I renewed this order on May 19, 1998. 
The order also prohibits any approval or other facilitation by 
a United States person, wherever located, of a transaction by a 
foreign person where the transaction would constitute new 
investment in Burma prohibited by the order if engaged in by a 
United States person or within the United States. This action 
was taken in response to the large-scale repression of the 
democratic opposition by the Government of Burma since 
September 30, 1996. A copy of the order was transmitted to the 
Congress on May 20, 1997.
    By its terms, Executive Order 13047 does not prohibit the 
entry into, performance of, or financing of a contract to sell 
or purchase goods, services, or technology, except: (1) where 
the entry into such contract on or after May 21, 1997, is for 
the general supervision and guarantee of another person's 
performance of a contract for the economic development of 
resources located in Burma; or (2) where such contract provides 
for payment, in whole or in part, in (i) shares of ownership, 
including an equity interest, in the economic development of 
resources located in Burma; or (ii) participation in royalties, 
earnings, or profits in the economic development of resources 
located in Burma.
    On May 21, 1998, the Department of the Treasury's Office of 
Foreign Assets Control (OFAC) issued the Burmese Sanctions 
Regulations (the ``BSR'' or the ``Regulations''), 31 C.F.R. 
Part 537, to implement the prohibitions of Executive Order 
13047. The Regulations apply to United States persons, defined 
to include U.S. citizens and permanent resident aliens wherever 
they are located, entities organized under U.S. law (including 
their foreign branches), and entities and individuals actually 
located in the United States. The sanctions do not apply 
directly to foreign subsidiaries of U.S. firms, although 
foreign firms' activities may be affected by the restriction on 
United States persons' facilitation of a foreign person's 
investment transactions in Burma.
    The term ``new investment'' means any of the following 
activities, if such an activity is undertaken pursuant to an 
agreement, or pursuant to the exercise of rights under such an 
agreement, that is entered into with the Government of Burma, 
or a nongovernmental entity in Burma, on or after May 21, 1997: 
(a) The entry into a contract that includes the economic 
development of resources located in Burma; (b) the entry into a 
contract providing for the general supervision and guarantee of 
another person's performance of a contract that includes the 
economic development of resources located in Burma; (c) the 
purchase of a share of ownership, including an equity interest, 
in the economic development of resources located in Burma; or 
(d) the entry into a contract providing for the participation 
in royalties, earnings, or profits in the economic development 
of resources located in Burma, without regard to the form of 
participation.
    Since the issuance of Executive Order 13047 on May 20, 
1997, OFAC, acting under authority delegated by the Secretary 
of the Treasury, has implemented sanctions against Burma as 
imposed by the order. OFAC has issued several determinations 
with respect to transactions provided for by agreements and/or 
rights pursuant to contracts entered into by United States 
persons prior to May 21, 1997. One license was necessary to 
authorize a United States person's disinvestment in Burma, 
since this transaction facilitated a foreign person's 
investment in Burma.
    On May 21, 1997, OFAC disseminated details of this program 
to the financial, securities, and international trade 
communities by both electronic and conventional media. This 
included posting notices on the Internet, on ten computer 
bulletin boards, and two fax-on-demand services, and providing 
the material to the U.S. Embassy in Rangoon for distribution to 
U.S. companies operating in Burma.
    In addition, in early July, OFAC sent notification letters 
to approximately 50 U.S. firms with operations in or ties to 
Burma informing them of the restrictions on new investment. The 
letters included copies of Executive Order 13047, provided 
clarification of several technical issues, and urged firms to 
contact OFAC if they had specific questions on the application 
of the Executive order to their particular circumstances.
    The expenses incurred by the Federal Government in the 6-
month period from November 20, 1997, through May 19, 1998, that 
are directly attributable to the exercise of powers and 
authorities conferred by the declaration of a national 
emergency with respect to Burma are estimated at approximately 
$370,000, 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 Office of the Under Secretary for 
Enforcement, and the Office of General Counsel), and the 
Department of State (particularly the Bureau of Economic and 
Business Affairs, the Bureau of East Asian and Pacific Affairs, 
and the Office of the Legal Adviser).
    The situation reviewed above continues to present an 
extraordinary and unusual threat to the national security and 
foreign policy of the United States. The declaration of the 
national emergency with respect to the Burma contained in 
Executive Order 13047 in response to the large-scale repression 
of the democratic opposition by the Government of Burma since 
September 30, 1996, reflected the belief that it is in the 
national security and foreign policy interests of the United 
States to seek an end to abuses of human rights in Burma, to 
support efforts to achieve democratic reform that would promote 
regional peace and stability, and to urge effective counter-
narcotics policies.
    In the past 6 months, the State Law and Order Restoration 
Council, recently renamed the State Peace and Development 
Council (SPDC), has shown no sign of willingness to cede its 
hold on absolute power. Since refusing to recognize the results 
of the free and fair 1990 elections in which the National 
League for Democracy won a vast majority of both the popular 
vote and the parliamentary seats, the ruling junta has 
continued to refuse to negotiate with pro-democracy forces and 
ethnic groups for a genuine political settlement to allow a 
return to the rule of law and respect for basic human rights. 
Burma has taken limited but insufficient steps to counter 
narcotics production and trafficking.
    The net effort of U.S. and international measures to 
pressure the SPDC to end its repression and move toward 
democratic government has been a further decline in investor 
confidence in Burma and deeper stagnation of the Burmese 
economy. Observers agree that the Burmese economy appears to be 
further weakening and that the government has a serious 
shortage of foreign exchange reserves with which to pay for 
imports. While Burma's economic crisis is largely a result of 
the SPDC's own heavy-handed mismanagement, the SPDC is unlikely 
to find a way out of the crisis unless political developments 
permit an easing of international pressure. I shall continue to 
exercise the powers at my disposal to deal with these problems 
and will report periodically to the Congress on significant 
developments.
            Sincerely,
                                                William J. Clinton.

                                
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