[House Document 105-286]
[From the U.S. Government Publishing Office]
105th Congress, 2d Session - - - - - - - - - - - House Document 105-286
DEVELOPMENTS CONCERNING NATIONAL EMERGENCY WITH RESPECT TO SERBIA AND
MONTENEGRO
__________
MESSAGE
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, PURSUANT TO 50 U.S.C. 1703(c)
July 17, 1998.--Message and accompanying papers referred to the
Committee on International Relations and ordered to be printed
To the Congress of the United States:
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) (the ``FRY (S&M)''), 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 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 controlled 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 November 22, 1995, the United Nations Security Council
passed Resolution 1022 (``Resolution 1022''), immediately and
indefinitely suspending economic sanctions against the FRY
(S&M). Sanctions were subsequently lifted by the United Nations
Security Council pursuant to Resolution 1074 October 1, 1996.
Resolution 1022, however, continues to provide for the release
of funds and assets previously blocked pursuant to sanctions
against the FRY (S&M), provided that such funds and assets that
are subject to claims and encumbrances, or that are the
property of persons deemed insolvent, remain blocked until
``released in accordance with applicable law.'' This provision
was implemented in the United States on December 27, 1995, by
Presidential Determination No. 96-7. The determination, in
conformity with Resolution 1022, directed 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 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 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 controlled within
the Republic of Bosnia and Herzegovina were subsequently
suspended prospectively, effective May 10, 1996, in conformity
with Resolution 1022. On October 1, 1996, the United Nations
passed Resolution 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.
Resolution 1074, however, reaffirms the provisions of
Resolution 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 November 30,
1997, through May 29, 1998. It discusses Administration actions
and expenses directly related to the exercise of powers and
authorities conferred by the declaration of a national
emergencyIn Executive Order 12808 as expanded with respect to
the Bosnian Serbs in Executive Order 12934, and against the FRY (S&M)
contained in Executive Orders 12810, 12831, and 12846.
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. The Office of Foreign Assets Control (OFAC), acting
under authority delegated by the Secretary of the Treasury,
implemented the sanctions imposed under the foregoing statutes
in the Federal Republic of Yugoslavia (Serbia and Montenegro)
and Bosnian Serb-Controlled Areas of the Republic of Bosnia and
Herzegovina Sanctions Regulations, 31 C.F.R. Part 585 (the
``Regulations'').
To implement Presidential Determination No. 96-7, the
Regulations were amended to authorize prospectively all
transactions with respect to the FRY (S&M) otherwise prohibited
(61 FR 1282, January 19, 1996). 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 Resolution 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 all transactions with respect to the Bosnian
Serbs otherwise prohibited, except with respect to property
previously blocked (61 FR 24696, May 16, 1996). On December 4,
1996, OFAC amended Appendices A and B to 31 chapter V,
containing the names of entities and individuals in
alphabetical order and by location that are subject to the
various economic sanctions programs administered by OFAC, to
remove the entries for individuals and entities that were
determined to be acting for or on behalf of the Government of
the Federal Republic of Yugoslavia (Serbia and Montenegro).
These assets were blocked on the basis of these persons'
activities in support of the FRY (S&M)--activities no longer
prohibited--not because the Government of the FRY (S&M) or
entities located in or controlled by the FRY (S&M) had any
interest in those assets (61 FR 64289, December 4, 1996).
On April 18, 1997, the Regulations were amended by adding a
new Section 585.528, authorizing all transactions after 30 days
with respect to the following vessels that remained blocked
pursuant to the Regulations, effective at 10:00 a.m. local time
in the location of the vessel on May 19, 1997: the M/V
Moslavina, M/V Zeta, M/V Lovcen, M/V Durmitor and M/V Bar (a/k/
a M/V Inviken) (62 FR 19672, April 23, 1997). During the 30-day
period, United States persons were authorized to negotiate
settlements of their outstanding claims with respect to the
vessels with the vessels' owners or agents and were generally
licensed to seek and obtain judicial warrants of maritime
arrest. If claims remained unresolved 10 days prior to the
vessels' unblocking (May 8, 1997), service of the warrants
could be effected at that time through the United States
Marshal's Office in the district where the vesselwas located to
ensure that U.S. creditors of a vessel had the opportunity to assert
their claims. Appendix C to 31 CFR, chapter V, containing the names of
vessels blocked pursuant to the various economic sanctions programs
administered by OFAC (61 FR 32936, June 26, 1996), was also amended to
remove these vessels from the list effective May 19, 1997. There have
been no amendments to the Regulations since my report of December 3,
1997.
3. Over the past 2 years, 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
Resolution 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 sanctions regimes.
4. During this reporting period. OFAC issued two specific
licenses regarding transactions pertaining to the FRY (S&M) or
property in which it has an interest. Specific licenses were
issued (1) to authorize U.S. creditors to exchange a portion of
blocked unallocated FRY (S&M) debt obligations for the share of
such obligations assumed by the obligors in the Republic of
Bosnia and Herzegovina; and (2) to authorize certain financial
transactions with respect to blocked funds located at a foreign
branch of a U.S. bank.
During the past 6 months, OFAC has continued to oversee the
maintenance of blocked FRY (S&M) 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 two Serbian banking institutions in New York previously
placed in secure storage; (3) remaining blocked FRY (S&M)
tangible property, including real estate; and (4) the 5
Yugoslav-owned vessels recently unblocked in the United States.
On September 29, 1997, the United States filed Statements
of Interest in cases being litigated in the Southern District
of New York: Beogradska Banka A.D. Belgrade v. Interenergo,
Inc., 97 Civ. 2065 (JGK); and Jugobanka A.D. Belgrade v. U.C.F.
International Trading, Inc. et al., 97 Civ. 3912, 3913 and 6748
(LAK). These cases involved actions by blocked New York Serbian
bank agencies and their parent offices in Belgrade, Serbia, to
collect on defaulted loans made prior to the imposition of
economic sanctions and dispensed, in one case, to the U.S.
subsidiary of a Bosnian firm and, in the other cases, to
various foreign subsidiaries of a Slovenian firm. Because these
loan receivables are a form of property that was blocked prior
to December 27, 1995, any funds collected as a consequence of
these actions would remain blocked and subject to United States
jurisdiction. Defendants asserted that the loans had been made
from the currency reserves of the central bank of the former
Yugoslavia to which all successor states had contributed, and
that the loan funds represent assets of the former Yugoslavia
and are therefore subject to claims by all five successor
states. The Department of State, in consultation with the
Department of the Treasury, concluded that the collection of
blocked receivables through the actions by the bank and the
placement of those collected funds into a blocked account did
not prejudice the claims of successor states nor compromise
outstanding claims on the part of any creditor of the bank,
since any monies collected would remain in a blocked status and
available to satisfy obligations to United States and foreign
creditors and other claimants--including possible distribution
to successor states under a settlement arising from the
negotiations on the division of assets and liabilities of the
former Yugoslavia. On March 31, 1998, however, the Court
dismissed the claims as nonjustifiable. Another case, D.C.
Precision, Inc. v. United States, et al., 97 Civ. 9123 CRLC,
was filed in the Southern District of New York onDecember 10,
1997, alleging that the Government had improperly blocked Precision's
funds held at one of the closed Serbia banking agencies in New York.
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. On February 13, 1997, a Federal grand jury in
the Southern District of Florida, Miami, returned a 13-count
indictment against one U.S. citizen and two nationals of the
FRY (S&M). The indictment charges that the subjects
participated and conspired to purchase three Cessna propeller
aircraft, a Cessna jet aircraft, and various aircraft parts in
the United States and to export them to the FRY (S&M) in
violation of U.S. sanctions and the Regulations. Timely
interdiction action prevented the aircraft from being exported
from the United States.
Since my last report, OFAC has collected one civil monetary
penalty totaling nearly $153,000 for violations of the
sanctions. These violations involved prohibited payments to the
Government of the FRY (S&M) by a U.S. company.
6. The expenses incurred by the Federal Government in the
6-month period from November 30, 1997, through May 29, 1998,
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 approximately $360,000,
most of which represents 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, and the Department of
Commerce.
7. In the last 2 years substantial progress has been
achieved to bring about a settlement of the conflict in the
former Yugoslavia acceptable to the parties. Resolution 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, Resolution 1074 contemplates the
continued blocking of assets potentially subject to conflicting
claims and encumbrances until provision is made to address them
under applicable law, 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 controlled, will not be complete until such time as the
Peace Agreement is implemented and the terms of Resolution 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).
William J. Clinton.
The White House, July 16, 1998.