[House Document 106-248]
[From the U.S. Government Publishing Office]



106th Congress, 2d Session - - - - - - - - - - - House Document 106-248


 
 SIX MONTH PERIODIC REVIEW ON THE NATIONAL EMERGENCY WITH RESPECT TO 
                         YUGOSLAVIA AND KOSOVO

                               __________

                                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) AND 
  KOSOVO, PURSUANT TO 50 U.S.C. 1703(c)




    May 25, 2000.--Message and accompanying papers referred to the 
     Committee on International Relations and ordered to be printed

                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
79-011                     WASHINGTON : 2000

To the Congress of the United States:
    As required by 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), I 
transmit herewith a 6-month periodic report on the national 
emergency with respect to the Yugoslavia (Serbia and 
Montenegro) emergency declared in Executive Order 12808 on May 
30, 1992, and with respect to the Kosovo emergency declared in 
Executive Order 13088 on June 9, 1998.

                                                William J. Clinton.
    The White House, May 25, 2000.
  Report to Congress on the National Emergencies With Respect to the 
   Federal Republic of Yugoslavia (Serbia and Montenegro) and Kosovo

    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 FRY (S&M), and prohibiting trade-
related transactions by U.S. 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.
    On November 22, 1995, the United Nations Security Council 
passed Resolution (``UNSCR'') 1022, immediately and 
indefinitely suspending UN economic sanctions against the FRY 
(S&M). On October 1, 1996, the United Nations passed UNSCR 
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. Both UNSCR 1022 
and UNSCR1074, however, provided that funds and assets 
previously blocked pursuant to sanctions against the FRY (S&M) that are 
subject to claims and encumbrances, or that are the property of persons 
deemed insolvent, shall 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, 
which directed the Secretary of the Treasury to suspend the application 
of sanctions on the FRY (S&M) and to continue to block property 
previously blocked.
    On June 9, 1998, by Executive Order 13088, I declared a 
national emergency to deal with the unusual and extraordinary 
threat to the national security and foreign policy of the 
United States constituted by the actions and policies of the 
Governments of the FRY (S&M) and the Republic of Serbia with 
respect to Kosovo. Executive Order 13088, with certain 
exceptions, blocked all property and interests in property of 
the Governments of the FRY (S&M), the Republic of Serbia, and 
the Republic of Montenegro within the United States or within 
the possession or control of U.S. persons, and prohibited all 
new investment in the territory of the Republic of Serbia by 
U.S. persons, and the approval or other facilitation by U.S. 
persons of other persons' new investment in the territory of 
the Republic of Serbia.
    On April 30, 1999, I took additional steps with respect to 
the national emergency declared in Executive Order 13088 by 
issuing Executive Order 13121 (64 Fed. Reg. 24021, May 5, 
1999), which became effective at 12:01 a.m., EDT, May 1, 1999. 
Executive Order 13121 blocks all property and interests in 
property of the Governments of the FRY (S&M), the Republic of 
Serbia, and the Republic of Montenegro within the United States 
or within the possession or control of U.S. persons. The Order 
also revoked section 2 of Executive Order 13088, which had 
permitted U.S. persons to engage in certain financial 
transactions within the territory of the FRY (S&M). Executive 
Order 13121 added a new section 2 to Executive Order 13088, 
which prohibits trade transactions involving the FRY (S&M). 
These Orders now prohibit: (1) the exportation, reexportation, 
sale, or supply, directly or indirectly, from the United 
States, or by a U.S. person, wherever located, to the FRY (S&M) 
or the Government of the FRY (S&M), the Government of the 
Republic of Serbia, or the Government of the Republic of 
Montenegro, of any goods (including petroleum and petroleum 
products), software, technology (including technical data), or 
services; (2) the importation into the United States, directly 
or indirectly, of any goods, software, technology (including 
technical data), or services from the FRY (S&M) or owned or 
controlled by the Government of the FRY (S&M), the Government 
of the Republic of Serbia, or the Government of the Republic of 
Montenegro; and (3) any transaction or dealing by a U.S. 
person, wherever located, in goods, software, technology 
(including technical data), or services, regardless of country 
of origin, for exportation, reexportation, sale, or supply to, 
or exportation from or by, the FRY (S&M) or the Government of 
the FRY (S&M), the Government of the Republic of Serbia, or the 
Government of the Republic of Montenegro. This final 
prohibition includes, without limitation, purchase, sale, 
transport, swap, or brokerage transactions in such items, and 
approving, financing, insuring, facilitating, or guaranteeing 
any such transactions. The Orders also prohibit any transaction 
by a U.S. person that evades or avoids, or has the purpose of 
evading or avoiding, or attempts to violate, any of the 
prohibitions of the Orders, and any conspiracy formed to 
violate the prohibitions of the Orders.
    Executive Order 13121 directs the Secretary of the 
Treasury,in consultation with the Secretary of State, and in 
implementation of the Order, to give special consideration to (1) the 
circumstances of the Government of the Republic of Montenegro and 
persons located in and organized under the laws of the Republic of 
Montenegro and (2) the humanitarian needs of refugees from Kosovo and 
other civilians within the FRY (S&M). The Order also directs the 
Secretary of the Treasury, in consultation with the Secretary of State, 
to authorize commercial sales of agricultural commodities and products, 
medicine, and medical equipment for civilian end-use in the territory 
of the FRY (S&M) under appropriate safeguards to prevent diversion to 
military, paramilitary, or political use by the Government of the FRY 
(S&M), the Government of the Republican of Serbia, or the Government of 
the Republic of Montenegro.
    The present report is submitted pursuant to 50 U.S.C. 
1641(c) and 1703(c) and covers the period from November 30, 
1999 through May 29, 2000. 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 modified by Executive 
Order 12810, Executive Order 12831, Executive Order 12846, and 
Executive Order 12934, and the declaration of a national 
emergency in Executive Order 13088, as revised by Executive 
Order 13121.
    1. The declaration of the national emergency in Executive 
Order 12808 on May 30, 1992, and the declaration of a national 
emergency in Executive Order 13088 on June 9, 1998, were 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 (``IEEPA'') (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. 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 of 1958 (49 U.S.C. App. 1514), and section 5 of 
the United Nations Participation Act of 1945 (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 CFR Part 585 (the 
``Regulations'') and the Federal Republic of Yugoslavia (Serbia 
and Montenegro) Kosovo Sanctions Regulations, 31 CFR Part 586 
(the ``Kosovo Sanctions Regulations'') (63 Fed. Reg. 54575, 
October 13, 1998). On November 8, 1999, pursuant to the Kosovo 
Sanctions Regulations, OFAC published in the Federal Register 
changes to appendix A to 31 CFR Chapter V, inter alia, adding 
the names of 650 entities determined to be state- or socially-
owned entities organized or located in the FRY (S&M) and 76 
individuals determined to be acting for or on behalf of the 
Governments of the FRY (S&M) and/or the Republic of Serbia by 
virtue of the high-level positions they hold in those 
governments (64 Fed. Reg. 60660).
    On June 10, 1998, OFAC issued General License No. 1, 
excluding the Government of the Republic of Montenegro from the 
blocking provisions of the Kosovo sanctions. On May 5, 1999, 
OFAC issued a Notice revoking provisions of the Kosovo 
Sanctions Regulations that were inconsistent with the 
additional sanctions imposed in Executive Order 13121. By the 
Notice of May 5, 1999, OFAC also issued General License No. 2 
authorizing trade transactions involving the Republic of 
Montenegro that would otherwise be prohibited by Executive 
Order 13121. These transactions include: (1) the exportation, 
reexportation, sale, or supply, directly or indirectly, from 
the United States, or by a U.S. person, wherever located, of 
any goods (including petroleum and petroleum products), 
software, technology (including technical data), or services 
destined for end-use in the Republic of Montenegro (except by 
the Government of the FRY (S&M) or the Government of the 
Republic of Serbia) or by the Government of the Republic of 
Montenegro; (2) the importation into the United States, 
directly or indirectly, of any goods, software, technology 
(including technical data), or services originating in the 
Republic of Montenegro or owned or controlled by the government 
of the Republic of Montenegro; and (3) any transaction or 
dealing by a U.S. person, whenever located, in goods, software, 
technology (including technical data), or services, regardless 
of country of origin, for exportation, reexportation, sale, or 
supply to, or exportation from or by, the Republic of 
Montenegro or the Government of the Republic of Montenegro.
    On May 20, 1999, OFAC issued General License No. 3, 
authorizing all transactions ordinarily incident to the 
exportation of goods (including petroleum and petroleum 
products), software, or technology (including technical data) 
from the United States or reexportation of U.S.-origin goods, 
software, or technology from a foreign country to any person in 
the FRY (S&M), to the Government of the FRY (S&M), or to the 
Government of the Republic of Serbia, provided that the 
following terms and conditions are met: (1) the exportation or 
reexportation is licensed or otherwise authorized by the 
Department of Commerce under the provisions of the 
ExportAdministration Act of 1979 (50 U.S.C. App. 2401, et seq.) and 
IEEPA; and (2) the exportation or reexportation is financed by a 
financial institution in a third country that is neither a U.S. person 
nor a person whose property is blocked pursuant to the Kosovo Sanctions 
Regulations, or by cash payment in advance, or by open account 
financing not to exceed 90 days net. General License No. 3 also 
provides that financial institutions that are U.S. persons, prior to 
confirming or advising, or accepting or paying drafts drawn under, or 
reimbursing themselves for payment made under, any letter of credit, or 
making any other payment or transfer of credit in connection with any 
exportation or reexportation licensed pursuant to this general license, 
or engaging in any other transactions authorized in this general 
license shall satisfy themselves that: (1) each such transaction is 
incident to a bona fide exportation or reexportation and is customary 
in the normal course of business, and that the value of such 
exportation or reexportation reasonably corresponds to the sums of 
money involved in financing such transaction; and (2) the exportation 
or reexportation and any financing therefor are made pursuant to all 
the terms and conditions of this general license.
    General License No. 3 does not authorize: (1) the financing 
of any transaction from a blocked account; (2) any transaction 
by a financial institution in the United States or by any U.S. 
person, wherever located, under, or with respect to an 
exportation or reexportation financed by, a letter of credit 
issued by a person whose property is blocked pursuant to the 
Kosovo Sanctions Regulations; (3) any transaction by a U.S. 
person related to the reexportation of non-U.S.-origin goods, 
software, or technology from a foreign country to any person in 
the FRY (S&M) or to the Governments of the FRY (S&M) or the 
Republic of Serbia; or (4) any transaction by a U.S. person 
related to the sale or supply within the same foreign country 
of goods, software, or technology to the Governments of the FRY 
(S&M) or the Republic of Serbia, except as incidental to an 
exportation or reexportation authorized pursuant to this 
general license; or (5) the opening or operation by any U.S. 
person of a correspondent account for a financial institution 
whose property is blocked pursuant to the Kosovo Sanctions 
Regulations. For the purposes of General License No. 3, the 
terms ``foreign country'' and ``third country'' include the 
Republic of Montenegro.
    On August 19, 1999, OFAC issued General License No. 4, 
authorizing the exportation, reexportation, sale, or supply, 
directly or indirectly, by a U.S. person, wherever located, of 
any services or non-U.S.-origin goods (including petroleum and 
petroleum products), software, or technology (including 
technical data) destined for end-use in the territory of Kosovo 
(except by the Governments of the FRY (S&M) or the Republic of 
Serbia), otherwise prohibited by Executive Order 13121 with 
respect, inter alia, to trade with the FRY (S&M). General 
License No. 4 also authorizes all transactions ordinarily 
incident to the exportation of goods (including petroleum and 
petroleum products), software, or technology (including 
technical data) from the United States or reexportation of 
U.S.-origin goods, software, or technology from a foreign 
country destined for end-use in the territory of Kosovo, 
provided that the following terms and conditions are met: (1) 
the exportation or reexportation is licensed or otherwise 
authorized by the Department of Commerce under the provisions 
of the Export Administration Act of 1979 (50 U.S.C. App. 2401 
et seq.) and IEEPA; (2) the exportation or reexportation is not 
financed by a person whose property is blocked pursuant to the 
Kosovo Sanctions Regulations; (3) the financing does not 
involve any debit to a blocked account; and (4) the transaction 
does not involve the opening or operation by any U.S. person of 
a correspondent account for a financial institution whose 
property is blocked pursuant to the Kosovo Sanctions 
Regulations. The General License also authorizes (1) the 
importation into the United States, directly or indirectly, of 
any goods, software, technology (including technical data), or 
services originating in the territory of Kosovo, and (2) any 
transaction or dealing by a U.S. person, wherever located, in 
goods, software, technology (including technical data), or 
services, regardless of country of origin, for exportation, 
reexportation, sale, or supply to, or exportation from, the 
territory of Kosovo. Finally, General License No. 4 authorizes 
all new investment by U.S. persons in the territory of Kosovo 
and the approval or other facilitation by U.S. persons of other 
persons' new investment in the territory of Kosovo.
    3. Over the past four years, the Departments of State and 
the Treasury have worked closely with European Union member 
states and other UN member nations to implement the provisions 
of UNSCR 1022 and UNSCR 1074. 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 a total of 61 
specific licenses pursuant to the Regulations. Specific 
licenses were issued to (1) unblock wire transfers involving 
generally small amounts of individuals' purely personal funds; 
(2) authorize receipt of payment for legal services; (3) 
authorize certain transactions relating to air safety policy; 
and (4) authorize certain administrative transactions by 
otherU.S. government agencies. OFAC also registered ten nongovernmental 
agencies providing humanitarian assistance in Kosovo, bringing the 
total of such registrations since the inception of the program to 50.
    During the past six months, OFAC has continued to oversee 
the maintenance of FRY (S&M) accounts blocked pursuant to 31 
CFR Part 585, and records with respect to: (1) liquidated 
tangible assets and personalty of the fifteen 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. Pursuant to the Kosovo Sanctions 
Regulations, 31 CFR Part 586, OFAC blocked 115 transactions 
totaling more than $1.2 million during this reporting period. 
Most of the blockings were of funds transfers originating from, 
or destined for, Serbian banks. In addition, 195 funds 
transfers totaling nearly $2.8 million were rejected by U.S. 
banking institutions as contrary to U.S. sanctions.
    5. OFAC has continued to work closely with the U.S. Customs 
Service and other cooperating agencies to investigate alleged 
violations of the sanctions imposed pursuant to Executive Order 
12808, as modified, and Executive Order 13088, as revised.
    On February 18, 2000, a resident alien, who had been named 
along with his company in a 40-count indictment, was arrested 
in California by U.S. Customs Service agents. The February 16 
indictment alleged unauthorized sales and exportation from the 
United States of aircraft parts to Yugoslav Airlines in the FRY 
(S&M). The indictment further alleged conspiracy with U.S. 
persons to acquire U.S.-manufactured aircraft parts from 
companies such as Boeing, Pratt & Whitney, Honeywell, and 
others for resale and exportation to Yugoslav Airlines. The 
defendant shipped the aircraft parts to Yugoslav Airlines in 
third countries with the knowledge that they would be 
transshipped to the FRY (S&M) without authorization by the U.S. 
Government.
    Since my last report, OFAC collected three civil monetary 
penalties totaling more than $8,500 for violations of the 
sanctions. These violations involved prohibited payments either 
to the Government of the FRY (S&M), persons in the FRY (S&M), 
or to blocked entities owned or controlled by the Government of 
the FRY (S&M). The violators included two U.S. financial 
institutions and one company. An additional three cases are 
undergoing penalty action for violation of the Regulations, and 
an additional 37 cases are undergoing penalty action for 
violation of the Kosovo Sanctions Regulations.
    6. The expenses incurred by the Federal Government in the 
six-month period from November 30, 1999 through May 29, 2000 
that are directly attributable to the declaration of the 
national emergencies in Executive Orders 12808 and 13088 are 
estimated at approximately $650,00, 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. The resolution of the crisis and conflict in the former 
Yugoslavia that 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 all remaining blocked property is resolved, 
the Peace Agreement implemented, and the terms of UNSCR 1022 
have been met. Therefore, on May 25, 2000, 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 declaration of the national emergency with respect to 
the Federal Republic of Yugoslavia (Serbia and Montenegro) and 
the Republic of Serbia contained in Executive Order No. 13088 
was made in reaction to the unacceptable actions and policies 
of the Belgrade authorities in Kosovo, and continues to apply. 
The current situation in Kosovo is fragile and, as yet, 
unresolved. It is of particular importance that developments in 
Kosovo should not disrupt progress in implementing the Dayton 
peace agreement. This threat to the peace of the region 
constitutes an unusual and extraordinary threat to the national 
security of the United States.
    With this in mind, on May 25, 2000, I continued for another 
year the national emergency declared on June 9, 1998, and will 
continue to enforce the measures adopted pursuant thereto. 
Therefore, I shall continue to exercise the powers at my 
disposal with respect to the measures against the Government of 
the FRY (S&M) and the Government of the Republic of Serbia 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).

                                  
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