[House Document 105-331]
[From the U.S. Government Publishing Office]




105th Congress, 2d Session - - - - - - - - - - - House Document 105-331


 
 DEVELOPMENTS CONCERNING NATIONAL EMERGENCY WITH FEDERAL REPUBLIC OF 
                              YUGOSLAVIA

                               __________

                             COMMUNICATION

                                  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), PURSUANT 
                          TO 50 U.S.C. 1641(c)




    December 17, 1998.--Referred to the Committee on International 
                  Relations and ordered to be printed

                               --------

                    U.S. GOVERNMENT PRINTING OFFICE                    
69-011                     WASHINGTON : 1998




                                           The White House,
                                      Washington, December 3, 1998.
Hon. Newt Gingrich,
Speaker of the House of Representatives,
Washington, DC.
    Dear Mr. Speaker: 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) 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 Federal Republic of Yugoslavia 
(Serbia and Montenegro) (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 U.N. economic sanctions against the FRY 
(S&M). Sanctions were subsequently lifted by the United Nations 
Security Council pursuant to Resolution 1074 on 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 
Security Council 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 May 30 through 
November 29, 1998. It discusses Administration actions and 
expenses directly related to the exercise of powers and 
authorities conferred by the declaration of a national 
emergency in Executive Order 12808 as expanded with respect to 
the Bosnian Serbs in Executive Order 12934, and against the FRY 
(S&M) contained in Executive Order 12810, Executive Order 
12831, and Executive Order 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 sanctionsset 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 Fed. Reg. 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 Fed. Reg. 24696, May 16, 1996). On 
December 4, 1996, OFAC amended Appendices A and B to 31 C.F.R. 
Chapter V, containing the names of entities and individuals in 
alphebetical 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 from the FRY (S&M) had any 
interest in those assets (61 Fed. Reg. 64289, December 4, 
1996).
    On April 18, 1997, the Regulations were amended by adding 
new section 585.528, to provide for the unblocking of the 
following five vessels: the M/V MOSLAVINA, M/V ZETA, M/V 
LOVCEN, M/V DURMITOR and M/V BAR (a/k/a M/V INVIKEN) after 30 
days (62 Fed. Reg. 19672, April 23, 1997). Two previously 
blocked vessels, the M/V KAPETAN MARTINOVIC and the M/V BOR, 
were sold prior to August 18, 1997, pursuant to licenses and 
the proceeds of the sales placed in blocked interest-bearing 
accounts at U.S. financial institutions as substitute property 
for the blocked vessels.
    On November 6, 1998, section 585.528 was amended to provide 
for the unblocking of these accounts, representing the two 
vessels, after 30 days (63 Fed. Reg. 59883), November 6, 1998). 
During this period, United States persons may negotiate 
settlements of their outstanding claims with respect to the 
vessels with the vessels' owners or agents. If claims remain 
unresolved by November 27, United States persons are generally 
licensed to seek and obtain judicial writs of attachment 
against the funds during the 10-day period prior to the 
accounts' unblocking. A copy of the amendment is attached to 
this report.
    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 the payment from blocked funds of 
licensing fees due to the New York State Banking Department for 
one of the Serbian financial institutions blocked in 1992 and 
(2) to authorize the transfer of a blocked account from one 
financial institution into another.
    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; and (3) remaining blocked FRY (S&M) 
tangible property, including real estate.
    D.C. Precision, Inc. v. United States, et al., 97 Civ. 9123 
CRLC, was filed in the Southern District of New York on 
December 10, 1997, alleging that the Government had improperly 
blocked Precision's funds held at one of the closed Serbia 
banking agencies in New York. This case is still pending.
    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 theFRY 
(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. On October 23, 1998, the 
defendants in the case entered guilty pleas. A sentencing date has not 
yet been scheduled.
    Since my last report, OFAC had collected one civil monetary 
penalty totaling nearly $4,200 for violations of the sanctions. 
These violations involved prohibited importations into the 
United States of goods originating in Serbia.
    6. The expenses incurred by the Federal Government in the 
6-month period from May 30 through November 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 Bosnia-
Herzegovina acceptable to the parties. Resolution 1074 
terminated sanctions in view of the first free and fair 
elections to occur in Bosnia and Herzegovina, as provided for 
in the Dayton 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, on 
May 28, 1998, I 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. The importance of maintaining these 
sanctions is further reinforced by the unacceptable actions and 
policies of Belgrade authorities in Kosovo and in the areas of 
human rights, democratization, and war crimes investigations. 
These developments threaten to disrupt progress in 
implementation of Dayton and security in the region generally.
    Accordingly, 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).
            Sincerely,
                                                William J. Clinton.



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