[House Document 107-44]
[From the U.S. Government Publishing Office]
107th Congress, 1st Session - - - - - - - - - - - - - House Document 107-44
REPORT ON THE NATIONAL EMERGENCY
WITH RESPECT TO IRAQ
__________
MESSAGE
FROM
THE PRESIDENT OF THE UNITED STATES
TRANSMITTING
A 6-MONTH PERIODIC REPORT ON THE NATIONAL EMERGENCY WITH RESPECT TO
IRAQ THAT WAS DECLARED IN EXECUTIVE ORDER NO. 12722 OF AUGUST 2, 1990,
PURSUANT TO 50 U.S.C. 1703(c)
February 12, 2001.--Message and accompanying papers referred to the
Committee on International Relations and ordered to be printed
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, 50 U.S.C. 1703(c), I transmit
herewith a 6-month periodic report on the national emergency
with respect to Iraq that was declared in Executive Order 12722
of August 2, 1990.
George W. Bush.
The White House, February 8, 2001.
President's Periodic Report on the National Emergency With Respect to Iraq
I hereby report to the Congress on the developments since
the last report of July 28, 2000, concerning the national
emergency with respect to Iraq that was declared in Executive
Order 12722 of August 2, 1990. This report is submitted
pursuant to 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, 50 U.S.C. 1703(c) (``IEEPA'').
Executive Order 12722 ordered the immediate blocking of all
property and interests in property of the Government of Iraq
(including the Central Bank of Iraq) then or thereafter located
in the United States or within the possession or control of a
U.S. person. That order also prohibited the importation into
the United States of goods and services of Iraqi origin, as
well as the exportation of goods, services, and technology from
the United States to Iraq. The order prohibited travel-related
transactions to or from Iraq and the performance of any
contract in support of any industrial, commercial, or
governmental project in Iraq. United States persons were also
prohibited from granting or extending credit or loans to the
Government of Iraq.
The foregoing prohibitions (as well as the blocking of
Government of Iraq property) were continued and augmented on
August 9, 1990, by Executive Order 12724, which was issued in
order to align the sanctions imposed by the United States with
United Nations Security Council Resolution (``UNSCR'') 661 of
August 6, 1990. Subsequently, Executive Order 12817 was issued
to implement provisions of UNSCR 778, authorizing the Secretary
of the Treasury to identify the proceeds of the sale of Iraqi
petroleum or petroleum products paid for by or on behalf of the
purchaser on or after August 6, 1990, and directing U.S.
financial institutions holding such funds to transfer them to
the Federal Reserve Bank of New York (``FRBNY'').
This report discusses only matters concerning the national
emergency with respect to Iraq that was declared in Executive
Order 12722 and matters relating to Executive Orders 12724 and
12817 (the ``Executive Orders''). The report covers events from
August 2, 2000 through February 1, 2001.
1. In April 1995, the U.N. Security Council adopted UNSCR
986 authorizing Iraq to export up to $1 billion in petroleum
and petroleum products every 90 days for a total of 180 days
under United Nations supervision in order to finance the
purchase of food, medicine, and other humanitarian supplies.
UNSCR 986 includes arrangements to ensure equitable
distribution of humanitarian goods purchased with UNSCR 986 oil
revenues to all the people of Iraq. The resolution also
provides for the payment of compensation to victims of Iraqi
aggression and for the funding of other U.N. activities with
respect to Iraq. On May 20, 1996, a memorandum of understanding
was concluded between the Secretariat of the United Nations and
the Government of Iraq agreeing on terms for implementing UNSCR
986. On August 8, 1996, the U.N. Security Council (the
``Security Council'') committee established pursuant to UNSCR
661 (``the 661 Committee'') adopted procedures it would employ
in implementation of UNSCR 986. On December 9, 1996, the
President of the Security Council received the report prepared
by the Secretary General as requested by paragraph 13 of UNSCR
986, making UNSCR 986 effective as of 12:01 a.m. December 10,
1996.
On June 4, 1997, the Security Council adopted UNSCR 1111,
renewing for another 180 days the authorization of Iraqi
petroleum sales and purchases of humanitarian aid contained in
UNSCR 986 of April 14, 1995. The Resolution became effective on
June 8, 1997. On September 12, 1997, the Security Council,
noting Iraq's decision not to export petroleum and petroleum
products pursuant to UNSCR 1111 during the period June 8 to
August 13, 1997, and deeply concerned about the resulting
humanitarian consequences for the Iraqi people, adopted UNSCR
1129. This resolution replaced the two 90-day quotas with one
120-day quota and one 60-day quota in order to enable Iraq to
export its full $2 billion quota of oil within the original 180
days of UNSCR 1111. On December 4, 1997, the Security Council
adopted UNSCR 1143, renewing for another 180 days, beginning
December 5, 1997, the authorization for Iraqi petroleum sales
and humanitarian aid purchases contained in UNSCR 986.
On February 20, 1998, the Security Council adopted UNSCR
1153, authorizing the sale of Iraqi petroleum and petroleum
products and the purchase of humanitarian aid for a 180-day
period beginning with the date of notification by the President
of the Security Council to the members thereof of receipt of
the report requested in UNSCR 1153. UNSCR 1153 authorized the
sale of $5.256 billion of Iraqi petroleum and petroleum
products. On March 25, 1998, the Security Council, noting the
shortfall in revenue from Iraq's sale of petroleum and
petroleum productsduring the first 90-day period of
implementation of UNSCR 1143, due to the delayed resumption in sales
and a serious decrease in prices, and concerned about the resulting
humanitarian consequences for the Iraqi people, adopted UNSCR 1158.
This Resolution reaffirmed the authorization for Iraqi petroleum sales
and purchases of humanitarian aid contained in UNSCR 1143 for the
remainder of the second 90-day period and set the authorized value
during that timeframe to $1.4 billion pending implementation of UNSCR
1153. The 180-day period authorized in UNSCR 1153 began on May 30,
1998. On June 19, 1998, the Security Council adopted Resolution 1175,
authorizing the expenditure of up to $300 million on Iraqi oil
infrastructure repairs in order to help Iraq reach the higher export
ceiling permitted under UNSCR 1153. UNSCR 1175 also reaffirmed the
Security Council's endorsement of the Secretary General's
recommendation that the ``oil-for-food'' distribution plan be ongoing
and project-based. Subsequently, the Security Council extended the oil-
for-food program for 180-day periods twice more, on November 24, 1998
and on May 21, 1999.
Resolution 1266, adopted by the Security Council on October
4, 1999, authorized Iraq to export petroleum and petroleum
products in excess of $5.2 billion per 180-day phase under the
``oil-for-food'' program in order to make up for revenue
shortfalls from previous phases of the program. Resolutions
1275 and 1280 extended the sixth phase of the program for a
total of three weeks. On December 10, the Security Council
extended the ``oil-for-food'' program for a seventh 180-day
phase. On December 17, 1999, the Security Council adopted
resolution 1284, which permits Iraq to export petroleum
products as required to meet humanitarian needs. On June 8,
2000, the Security Council adopted resolution 1302 which
extended the ``oil-for-food'' program for an eighth 180-day
phase. On December 5, 2000, the Security Council adopted
resolution 1330, extending the ``oil for food'' program for
another 180-day phase beginning December 6, 2000. During the
period covered by this report, imports into the United States
under the program totaled about 50.2 million barrels. During
the prior period, U.S. imports included an additional 2 million
barrels not previously reported, bringing total imports since
December 10, 1996, to approximately 461 million barrels.
2. There have been no amendments to the Iraqi Sanctions
Regulations, 31 C.F.R. Part 575 (the ``Regulations''),
administered by the Office of Foreign Assets Control (``OFAC'')
of the Department of the Treasury, during the current reporting
period. As noted in the report of July 28, 2000, theRegulations
were amended effective November 10, 1998, to authorize U.S. persons to
enter into executory contracts for the sale of oilfield parts and
equipment to the Government of Iraq in conformity with UNSCR 1153 and
UNSCR 1175 (63 Fed. Reg. 62942, November 10, 1998).
As previously reported, the Regulations were amended on
December 10, 1996 to provide a statement of licensing policy
regarding specific licensing of U.S. persons seeking to
purchase Iraqi-origin petroleum and petroleum products (61 Fed.
Reg. 65312, December 11, 1996). Statements of licensing policy
were also provided regarding sales of essential parts and
equipment for the Kirkuk-Yumurtalik pipeline system, and sales
of humanitarian goods to Iraq, pursuant to United Nations
approval. A general license was also added to authorize
dealings in Iraqi-origin petroleum and petroleum products
exported from Iraq with United Nations and United States
Government approval.
All executory contracts must contain terms requiring that
all proceeds of oil purchases from the Government of Iraq,
including the State Oil Marketing Organization, be placed in
the U.N. escrow account at Banque Nationale de Paris, New York
(the ``986 Escrow Account''), and all Iraqi payments for
authorized sales of pipeline parts and equipment, humanitarian
goods, and incidental transaction costs borne by Iraq will,
upon approval by the 661 Committee and satisfaction of other
conditions established by the United Nations, be paid or
payable out of the 986 Escrow Account. In November 2000, OFAC
granted a license, amended in December 2000, to Banque
Nationale de Paris to establish a sub-account of the escrow
account for the issuance, confirmation, or advisement of
letters of credit in Euros. The use of Euros in addition to
dollars in no way changes the control exercised by the United
Nations over Iraqi's oil-for-food revenues.
3. Since the last report, OFAC has collected two civil
monetary penalties totaling more than $12,500 for violations of
the sanctions. One U.S. financial institution and one
individual paid the penalties for violations involving a
payment to Iraq and an attempted export of goods to Iraq. An
additional twenty-one cases are undergoing agency penalty
action or debt collection action for violation of the
Regulations.
4. Three foreign businessmen were arrested in San Diego on
March 21, 2000, by the U.S. Customs Service and subsequently
were charged with conspiracy to violate the embargo against
Iraq by purchasing oil from Iraq. They allegedly entered
theUnited States to complete the purchase of 160,000 metric tons of oil
from Iraq in violation of IEEPA and the Regulations.
Separately, OFAC continues to investigate the roles played
by various individuals and firms outside Iraq in the Iraqi
government procurement network. These investigations may lead
to additions to OFAC's listing of individuals and organizations
determined to be Specially Designated Nationals (``SDNs'') of
the Government of Iraq.
5. As of December 8, 2000, 24 transactions totaling
approximately $2.5 million had been blocked during the
reporting period. One hundred fifteen transactions, not
involving blockable interests, were rejected by U.S. banks
causing a disruption of more than $4.65 million in business for
Iraq.
6. OPAC has issued numerous licensing determinations
regarding transactions pertaining to Iraq or Iraqi assets since
August 1990. Specific licenses have been issued for
transactions such as the filing of legal actions against Iraqi
governmental entities, legal representation of Iraq, the
exportation to Iraq of donated medicine, medical supplies, and
food intended for humanitarian relief purposes, sales of
humanitarian supplies and oilfield parts and equipments to Iraq
under UNSCRs 986, 1111, 1143, 1153, 1210, 1242, 1284, 1302, and
1330, diplomatic transactions, the execution of powers of
attorney relating to the administration of personal assets and
decedents' estates in Iraq, and the protection of preexistent
intellectual property rights in Iraq. Since the last report,
104 specific licenses have been issued, most with respect to
sales of humanitarian goods and oilfield parts and equipment.
7. Since December 10, 1996, OFAC has issued specific
licenses authorizing participation by U.S. persons in
commercial sales of humanitarian goods to Iraq funded by Iraqi
oil sales, and imports of Iraqi petroleum products, pursuant to
UNSCRs 986, 1111, 1143, 1153,1210, 1242, 1284, 1302, and 1330,
valued at more than $587 million. Of that amount, approximately
$453 million represents sales of basic foodstuffs, $46 million
for medicines and medical supplies, $76 million for water
testing and treatment equipment, and nearly $12 million to fund
a variety of United Nations activities in Iraq. International
humanitarian relief in Iraq is coordinated under the direction
of the United Nations Office of the Humanitarian Coordinator in
Iraq. Assisting U.N. agencies include the World Food Program,
the U.N. Population Fund, the U.N. Food and Agriculture
Organization, and World Health Organization, and UNICEF. As
ofDecember 15, 2000, OFAC had authorized sales valued at nearly $77
million of humanitarian goods during the current reporting period. In
addition, in conformity with UNSCR 1153 and UNSCR 1175, OFAC has issued
165 licenses since November 10, 1998, authorizing U.S. persons to enter
into executory contracts for the sale of oilfield parts and equipment
to the Government of Iraq. The oil infrastructure merchandise covered
by such contracts is valued at approximately $67.7 million.
Earlier, in October 1992, OFAC had issued directive
licenses to eight commercial banks ordering the transfer of a
total of $200 million blocked Iraqi oil funds to the FRBNY for
further transfer to and use by the United Nations in Iraq. This
action was taken pursuant to UNSCR 778 and Executive Order
12817. Under UNSCR 986, and its successors, the funds were to
have been repaid from the proceeds of the oil-for-food program.
In late 1998, OFAC was informed that money was flowing back
into the FRBNY from the United Nations to effect this
repayment. At the request of the Department of State, OFAC
licensed the distribution of Iraqi funds repaid by the United
Nations, and held at the FRBNY, to the eight commercial banks.
The licenses were issued April 14, 1999, jointly to the FRBNY
and the eight commercial banks. A total amount of
$37,694,734.46 was transferred, representing $36,474,145.00 in
principal (amounts received from the United Nations) and
$1,220,589.46 in interest (earned at the FRBNY). As of December
15, 2000, an additional total of $17,319,828 has been received
at the FRBNY.
8. The expenses incurred by the Federal Government in the
six-month period from August 2, 2000 through February 1, 2001,
that are directly attributable to the exercise of powers and
authorities conferred by the declaration of a national
emergency with respect to Iraq are reported to be about
$895,000, 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 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 International Organization
Affairs, the Bureau of Political-Military Affairs, the Bureau
of Intelligence and Research, the U.S. Mission to the United
Nations, and the Office of the Legal Adviser), and the
Department of Transportation (particularly the U.S. Coast
Guard).
9. The United States imposed economic sanctions on Iraq in
response to Iraq's illegal invasion and occupation of Kuwait, a
clear act of brutal aggression. The United States, together
with the international community, is maintaining economic
sanctions against Iraq because the Iraqi regime has failed to
comply fully with relevant United Nations Security Council
resolutions. Iraqi compliance with these resolutions is
necessary before the United States will consider lifting
economic sanctions. Security Council resolutions on Iraq call
for the elimination of Iraqi weapons of mass destruction, Iraqi
recognition of Kuwait and the inviolability of the Iraq-Kuwait
boundary, the release of Kuwaiti and other third-country
nationals, compensation for victims of Iraqi aggression, long-
term monitoring of weapons of mass destruction capabilities,
the return of Kuwaiti assets stolen during Iraq's illegal
occupation of Kuwait, renunciation of terrorism, an end to
internal Iraqi repression of its own civilian population, and
the facilitation of access by international relief
organizations to all those in need in all parts of Iraq. Ten
years after the invasion, a pattern of defiance persists: a
refusal to account for missing Kuwaiti detainees; failure to
return Kuwaiti property worth millions of dollars, including
military equipment that was used by Iraq in its movement of
troops to the Kuwaiti border in October 1994; sponsorship of
assassinations in Lebanon and in northern Iraq; failure to
cooperate with the U.N. Special Commission, the U.N. Monitoring
and Verification Commission, its successor organization and the
International Atomic Energy Agency in accordance with Security
Council resolutions; and ongoing widespread human rights
violations. As a result, the U.N. sanctions remain in place and
the United States will continue to enforce those sanctions
under domestic authority.
The Baghdad government continues to violate basic human
rights of its own citizens through systematic repression of all
forms of political expression, oppression of minorities, and
arbitrary arrests and executions. The Government of Iraq has
repeatedly said it will not comply with UNSC Resolution 688 of
April 5, 1991. The Iraqi military routinely harasses residents
of the north, and has attempted to ``Arabize'' the Kurdish,
Turkomen, and Assyrian areas in the north. Iraq has not
relented in its attacks against civilian population centers in
the south, including the razing of villages.
The policies and actions of the Saddam Hussein regime
continue to pose an unusual and extraordinary threat to the
national security and foreign policy of the United States, as
well as to regional peace and security. The Security Council
resolutions affirm that the Security Council review Iraq's
policies and practices in judging Iraq's compliance with those
resolutions. Because of Iraq's failure to comply fully with
these resolutions, the United States will continue to apply
economic sanctions to deter it from threatening peace and
stability in the region.