[House Document 105-312]
[From the U.S. Government Publishing Office]



105th Congress, 2d Session - - - - - - - - - - - House Document 105-312


 
  DEVELOPMENTS CONCERNING THE NATIONAL EMERGENCY WITH RESPECT TO IRAN

                               __________

                                MESSAGE

                                  from



                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

A REPORT ON DEVELOPMENTS CONCERNING THE NATIONAL EMERGENCY WITH RESPECT 
      TO IRAN, PURSUANT TO 50 U.S.C. 1703(c) AND 50 U.S.C. 1641(c)





 September 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:
    I hereby report to the Congress on developments concerning 
the national emergency with respect to Iran that was declared 
in Executive Order 12957 of March 15, 1995, and matters 
relating to the measures in that order and in Executive Order 
12959 of May 6, 1995, and in Executive Order 13059 of August 
19, 1997. This report is submitted pursuant to section 204(c) 
of the International Emergency Economic Powers Act, 50 U.S.C. 
1703(c) (IEEPA), section 401(c) of the National Emergencies 
Act, 50 U.S.C. 1641(c), and section 505(c) of the International 
Security and Development Cooperation Act of 1985, 22 U.S.C. 
2349aa-(c). This report discusses only matters concerning the 
national emergency with respect to Iran that was declared in 
Executive Order 12957 and does not deal with those relating to 
the emergency declared on November 14, 1979, in connection with 
the hostage crisis.
    1. On March 15, 1995, I issued Executive Order 12957 (60 
Fed. Reg. 14615, March 17, 1995) to declare a national 
emergency with respect to Iran pursuant to IEEPA, and to 
prohibit the financing, management, or supervision by United 
States persons of the development of Iranian petroleum 
resources. This action was in response to actions and policies 
of the Government of Iran, including support for international 
terrorism, efforts to undermine the Middle East peace process, 
and the acquisition of weapons of mass destruction and the 
means to deliver them. A copy of the Order was provided to the 
Speaker of the House and the President of the Senate by letter 
dated March 15, 1995.
    Following the imposition of these restrictions with regard 
to the development of Iranian petroleum resources, Iran 
continued to engage in activities that represent a threat to 
the peace and security of all nations, including Iran's 
continuing support for international terrorism, its support for 
acts that undermine the Middle East peace process, and its 
intensified efforts to acquire weapons of mass destruction. On 
May 6, 1995, I issued Executive Order 12959 (60 Fed. Reg. 
24757, May 9, 1995) to further respond to the Iranian threat to 
the national security, foreign policy, and economy of the 
United States. The terms of that order and an earlier order 
imposing an import ban on Iranian-origin goods and services 
(Executive Order 12613 of October 29, 1987) were consolidated 
and clarified in Executive Order 13059 of August 19, 1997.
    At the time of signing Executive Order 12959, I directed 
the Secretary of the Treasury to authorize through specific 
licensing certain transactions, including transactions by 
United States persons related to the Iran-United States Claims 
Tribunal in The Hague, established pursuant to the Algiers 
Accords, and related to other international obligations and 
U.S. Government functions, and transactions related to the 
export of agricultural commodities pursuant to preexisting 
contracts consistent with section 5712(c) of title 7, United 
States Code. I also directed the Secretary of the Treasury, in 
consultation with the Secretary of State, to consider 
authorizing United States persons through specific licensing to 
participate in market-based swaps of crude oil from the Caspian 
Sea area for Iranian crude oil in support of energy projects in 
Azerbaijan, Kazakhstan, and Turkmenistan.
    Executive Order 12959 revoked sections 1 and 2 of Executive 
Order 12613 of October 29, 1987, and sections 1 and 2 of 
Executive Order 12957 of March 15, 1995, to the extent they are 
inconsistent with it. A copy of Executive Order 12959 was 
transmitted to the Congressional leadership by letter dated May 
6, 1995.
    2. On August 19, 1997, I issued Executive Order 13059 in 
order to clarify the steps taken in Executive Order 12957 and 
Executive Order 12959, to confirm that the embargo on Iran 
prohibits all trade and investment activities by United States 
persons, wherever located, and to consolidate in one order the 
various prohibitions previously imposed to deal with the 
national emergency declared on March 15, 1995. A copy of the 
Order was transmitted to the Speaker of the House and the 
President of the Senate by letter dated August 19, 1997.
    The Order prohibits (1) the importation into the United 
States of any goods or services of Iranian origin or owned or 
controlled by the Government of Iran except information or 
informational material; (2) the exportation, reexportation, 
sale, or supply from the United States or by a United States 
person, wherever located, of goods, technology, or services to 
Iran or the Government of Iran, including knowing transfers to 
a third country for direct or indirect supply, transshipment, 
or reexportation to Iran or the Government of Iran, or 
specifically for use in the production, commingling with, or 
incorporation into goods, technology, or services to be 
supplied, transshipped, or reexported exclusively or 
predominantly to Iran or the Government of Iran; (3) knowing 
reexportation from a third country to Iran or the Government of 
Iran of certain controlled U.S.-origin goods, technology, or 
services by a person other than a United States person; (4) the 
purchase, sale, transport, swap, brokerage, approval, 
financing, facilitation, guarantee, or other transactions or 
dealings by United States persons, wherever located, related to 
goods, technology, or services for exportation, reexportation, 
sale or supply, directly or indirectly, to Iran or the 
Government of Iran, or to goods or services of Iranian origin 
or owned or controlled by the Government of Iran; (5) new 
investment by United States persons in Iran or in property or 
entities owned or controlled by the Government of Iran; (6) 
approval, financing, facilitation, or guarantee by a United 
States person of any transaction by a foreign person that a 
United States person would be prohibited from performing under 
the terms of the Order; and (7) any transaction that evades, 
avoids, or attempts to violate a prohibition under the Order.
    Executive Order 13059 became effective at 12:01 a.m., 
eastern daylight time on August 20, 1997. Because the Order 
consolidated and clarified the provisions of prior orders, 
Executive Order 12613 and paragraphs (a), (b), (c), (d) and (f) 
of section 1 of Executive Order 12959 were revoked by Executive 
Order 13059. The revocation of corresponding provisions in the 
prior Executive orders did not affect the applicability of 
those provisions, or of regulations, licenses or other 
administrative actions taken pursuant to those provisions, with 
respect to any transaction or violation occurring before the 
effective date of Executive Order 13059. Specific licenses 
issued pursuant to prior Executive orders continue in effect, 
unless revoked or amended by the Secretary of the Treasury. 
General licenses, regulations, orders, and directives issued 
pursuant to prior orders continue in effect, except to the 
extent inconsistent with Executive Order 13059 or otherwise 
revoked or modified by the Secretary of the Treasury.
    The declaration of national emergency made by Executive 
Order 12957, and renewed each year since, remains in effect and 
is not affected by the Order.
    3. On March 4, 1998, I renewed for another year the 
national emergency with respect to Iran pursuant to IEEPA. This 
renewal extended the authority for the current comprehensive 
trade embargo against Iran in effect since May 1995. Under 
these sanctions, virtually all trade with Iran is prohibited 
except for trade in information and informational materials and 
certain other limited exceptions.
    4. There have been no amendments to the Iranian 
Transactions Regulations, 31 CFR Part 560 (the ``ITR''), since 
my report of March 16, 1998.
    5. During the current 6-month period, the Department of the 
Treasury's Office of Foreign Assets Control (OFAC) made 
numerous decisions with respect to applications for licenses to 
engage in transactions under the ITR, and issued 12 licenses.
    The majority of denials were in response to requests to 
authorize commercial exports to Iran--particularly of machinery 
and equipment for various industries--and the importation of 
Iranian-origin goods. The licenses that were issued authorized 
certain financial transactions and transactions relating to air 
safety policy. Pursuant to sections 3 and 4 of Executive Order 
12959, Executive Order 13059, and consistent with statutory 
restrictions concerning certain goods and technology, including 
those involved in air safety cases, the Department of the 
Treasury continues to consult with the Departments of State and 
Commerce on these matters.
    Since the issuance of Executive Order 13059, more than 
1,500 transactions involving Iran initially have been 
``rejected'' by U.S. financial institutions under IEEPA and the 
ITR. United States banks declined to process these transactions 
in the absence of OFAC authorization. Twenty percent of the 
1,500 transactions scrutinized by OFAC resulted in 
investigations by OFAC to assure compliance with IEEPA and ITR 
by United States persons.
    Such investigations resulted in 15 referrals for civil 
penalty action, issuance of 5 warning letters, and an 
additional 52 cases still under compliance or legal review 
prior to final agency action.
    Since my last report, OFAC has collected 20 civil monetary 
penalties totaling more than $110,000 for violations of IEEPA 
and the ITR related to the import or export to Iran of goods 
and services. Five U.S. financial institutions, twelve 
companies, and three individuals paid penalties for these 
prohibited transactions. Civil penalty action is pending 
against another 45 United States persons for violations of the 
ITR.
    6. On January 22, 1997, an Iranian national resident in 
Oregon and a U.S. citizen were indicted on charges related to 
the attempted exportation to Iran of spare parts for gas 
turbines and precursor agents utilized in the production of 
nerve gas. The 5-week trial of the American citizen defendant, 
which began in early February 1998, resulted in his conviction 
on all counts. That defendant is awaiting sentencing. The other 
defendant pleaded guilty to one count of criminal conspiracy 
and was sentenced to 21 months in prison.
    On March 24, 1998, a Federal grand jury in Newark, New 
Jersey, returned an indictment against a U.S. national and an 
Iranian-born resident of Singapore for violation of IEEPA and 
the ITR relating to exportation of munitions, helicopters, and 
weapons systems components to Iran. Among the merchandise the 
defendants conspired to export were parts for Phoenix air-to-
air missiles used on F-14A fighter jets in Iran. Trial is 
scheduled to begin on October 6, 1998.
    The U.S. Customs Service has continued to effect numerous 
seizures of Iranian-origin merchandise, primarily carpets, for 
violation of the import prohibitions of the ITR. Various 
enforcement actions carried over from previous reporting 
periods are continuing and new reports of violations are being 
aggressively pursued.
    7. The expenses incurred by the Federal Government in the 
6-month period from March 15 through September 14, 1998, that 
are directly attributable to the exercise of powers and 
authorities conferred by the declaration of a national 
emergency with respect to Iran are reported to be approximately 
$1.7 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 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 Intelligence and Research, and 
the Office of the Legal Adviser); and the Department of 
Commerce (the Bureau of Export Administration and the General 
Counsel's Office).
    8. The situation reviewed above continues to present an 
extraordinary and unusual threat to the national security, 
foreign policy, and economy of the United States. The 
declaration of the national emergency with respect to Iran 
contained in Executive Order 12957 and the comprehensive 
economic sanctions imposed by Executive Order 12959 underscore 
the Government's opposition to the actions and policies of the 
Government of Iran, particularly its support of international 
terrorism and its efforts to acquire weapons of mass 
destruction and the means to deliver them. The Iranian 
Transactions Regulations issued pursuant to Executive Orders 
12957, 12959, and 13059 continue to advance important 
objectives in promoting the nonproliferation and anti-terrorism 
policies of the United States. I shall exercise the powers at 
my disposal to deal with these problems and will report 
periodically to the Congress on significant developments.
                                                William J. Clinton.
    The White House, September 16, 1998.

                                
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