[Congressional Record Volume 141, Number 116 (Tuesday, July 18, 1995)]
[Senate]
[Pages S10239-S10241]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


 REPORT ON THE NATIONAL EMERGENCY WITH SERBIA AND MONTENEGRO--MESSAGE 
                       FROM THE PRESIDENT--PM 67

  THE PRESIDING OFFICER laid before the Senate the following message 
from the President of the United States, together with an accompanying 
report; which was referred to the Committee on Banking, Housing, and 
Urban Affairs.

To the Congress of the United States:
  On May 30, 1992, in Executive Order No. 12808, the President declared 
a national emergency to deal with the threat to the national security, 
foreign policy, and economy of the United States arising from actions 
and policies of the Governments of Serbia and Montenegro, acting under 
the name of the Socialist Federal Republic of Yugoslavia or the Federal 
Republic of Yugoslavia, in their involvement in and support for groups 
attempting to seize territory in Croatia and the Republic of Bosnia and 
Herzegovina by force and violence utilizing, in part, the forces of the 
so-called Yugoslav National Army (57 FR 23299, June 2, 1992). I 
expanded the national emergency in Executive Order No. 12934 of October 
25, 1994, to address the actions and policies of the Bosnian Serb 
forces and the authorities in the territory of the Republic of Bosnia 
and Herzegovina that they control. The present report is submitted 
pursuant to 50 U.S.C. 1641(c) and 1703(c). 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 No. 12808 and Executive Order No. 12934 and to expanded 
sanctions against the Federal Republic of Yugoslavia (Serbia and 
Montenegro) (the ``FRY (S/M)'') and the Bosnian Serbs contained in 
Executive Order No. 12810 of June 5, 1992 (57 FR 24347, June 9, 1992), 
Executive Order No. 12831 of January 15, 1993 (58 FR 5253, Jan. 21, 
1993), Executive Order No. 12846 of April 25, 1993 (58 FR 25771, April 
27, 1993), and Executive Order No. 12934 of October 25, 1994 (59 FR 
54117, October 27, 1994).
  1. Executive Order No. 12808 blocked all property and interests in 
property of the Governments of Serbia and Montenegro, or held in the 
name of the former Government of the Socialist Federal Republic of 
Yugoslavia or the Government of the Federal Republic of Yugoslavia, 
then or thereafter located in the United States or within the 
possession or control of U.S. persons, including their overseas 
branches.
  Subsequently, Executive Order No. 12810 expanded U.S. actions to 
implement in the United States the United Nations sanctions against the 
FRY (S/M) adopted in United Nations Security Council (``UNSC'') 
Resolution 757 of May 30, 1992. In addition to reaffirming the blocking 
of FRY (S/M) Government property, this order prohibited transactions 
with respect to the FRY (S/M) involving imports, exports, dealing in 
FRY-origin property, air and sea transportation, contract performance, 
funds transfers, activity promoting importation or exportation or 
dealings in property, and official sports, scientific, technical, or 
other cultural representation of, or sponsorship by, the FRY (S/M) in 
the United States.
  Executive Order No. 12810 exempted from trade restrictions (1) 
transshipments through the FRY (S/M), and (2) activities related to the 
United Nations Protection Force (``UNPROFOR''), the Conference on 
Yugoslavia, or the European Community Monitor Mission.
  On January 15, 1993, President Bush issued Executive Order No. 12831 
to implement new sanctions contained in U.N. Security Council 
Resolution 787 of November 16, 1992. The order revoked the exemption 
for transshipments through the FRY (S/M) contained in Executive Order 
No. 12810, prohibited transactions within the United States or by a 
U.S. person relating to FRY (S/M) vessels and vessels in which a 
majority or controlling interest is held by a person or entity in, or 
operating from, the FRY (S/M), and stated that all such vessels shall 
be considered as vessels of the FRY (S/M), regardless of the flag under 
which they sail.
  On April 25, 1993, I issued Executive Order No. 12846 to implement in 
the United States the sanctions adopted in UNSC Resolution 820 of April 
17, 1993. That resolution called on the Bosnian Serbs to accept the 
Vance-Owen peace plan for the Republic of Bosnia and Herzegovina and, 
if they failed to do so by April 26, called on member states to take 
additional measures to tighten the embargo against the FRY (S/M) and 
Serbian controlled areas of the Republic of Bosnia and Herzegovina and 
the United Nations Protected Areas in Croatia. Effective April 26, 
1993, the order blocked all property and interests in property of 
commercial, industrial, or public utility undertakings or entities 
organized or located in the FRY (S/M), including property and interests 
in property of entities (wherever organized or located) owned or 
controlled by such undertakings or entities, that are or thereafter 
come within the possession or control of U.S. persons.
  On October 25, 1994, in view of UNSC Resolution 942 of September 23, 
1994, I issued Executive Order No. 12934 in order to take additional 
steps with respect to the crisis in the former Yugoslavia. (59 FR 
54117, October 27, 1994.) Executive Order No. 12934 expands the scope 
of the national emergency declared in Executive Order No. 12808 to 
address the unusual and extraordinary threat to the national security, 
foreign policy, and economy of the United States posed by the actions 
and policies of the Bosnian Serb forces and the authorities in the 
territory in the Republic of Bosnia and Herzegovina that they control, 
including their refusal to accept the proposed territorial settlement 
of the conflict in the Republic of Bosnia and Herzegovina.
  The Executive order blocks all property and interests in property 
that are in the United States, that hereafter come within the United 
States, or that are or hereafter come within the possession or control 
of United States persons (including their overseas branches) of: (1) 
the Bosnian Serb military and paramilitary forces and the authorities 
in areas of the Republic of Bosnia and Herzegovina under the control of 
those forces; (2) any entity, including any commercial, industrial, or 
public utility undertaking, organized or located in those areas of the 
Republic of Bosnia and Herzegovina under the control of Bosnian Serb 
forces; (3) any entity, wherever organized or located, which is owned 
or controlled directly or indirectly by any person in, or resident in, 
those areas of the Republic of Bosnia and Herzegovina under the control 
of Bosnian Serb forces; and (4) any person acting for or on behalf of 
any person within the scope of the above definitions.
  The Executive order also prohibits the provision or exportation of 
services to those areas of the Republic of Bosnia and Herzegovina under 
the control of Bosnian Serb forces, or to any person for the purpose of 
any business carried on in those areas, either from the United States 
or by a U.S. person. The order also prohibits the entry of any U.S.-
flagged vessel, other than a U.S. naval vessel, into the riverine ports 
of those areas of the Republic of Bosnia and Herzegovina under the 
control of Bosnia Serb forces. Finally, any transaction by any U.S. 
person that evades or avoids, or has the purpose of evading or 
avoiding, or attempts to violate any of the prohibitions set forth in 
the order is prohibited. Executive Order No. 12934 became effective at 
11:59 p.m., e.d.t., on October 25, 1994.
  2. 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 

[[Page S 10240]]
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).

  3. There have been no amendments to the Federal Republic of 
Yugoslavia (Serbia and Montenegro) Sanctions Regulations (the 
``Regulations''), 31 C.F.R. Part 585, since the last report. The 
Treasury Department had previously published 853 names in the Federal 
Register on November 17, 1994 (59 FR 59460), as part of a comprehensive 
listing of all blocked persons and specially designated nationals 
(``SDNs'') of the FRY (S/M). This list identified individuals and 
entities determined by the Department of the Treasury to be owned or 
controlled by or acting for or on behalf of the Government of the FRY 
(S/M), persons in the FRY (S/M), or entities located or organized in or 
controlled from the FRY (S/M). All prohibitions in the Regulations 
pertaining to the Government of the FRY (S/M) apply to the entities and 
individuals identified. U.S. persons, on notice of the status of such 
blocked persons and specially designated nationals, are prohibited from 
entering into transactions with them, or transactions in which they 
have an interest, unless otherwise exempted or authorized pursuant to 
the Regulations.
  On February 22, 1995, pursuant to Executive Order 12934 and the 
Regulations, Treasury identified 85 individuals as leaders of the 
Bosnian Serb forces or civilian authorities in the territories in the 
Republic of Bosnia and Herzegovina that they control. Also on February 
22, Treasury designated 19 individuals and 23 companies as SDNs of the 
FRY (S/M). These designations include FRY (S/M)-connected companies 
around the world that are being directed from Cyprus, two Cypriot-owned 
firms that have had a central role in helping establish and sustain 
sanctions-evading FRY (S/M) front companies in Cyprus, and the head of 
the FRY (S/M)'s Central Bank who is also the architect of the FRY (S/M) 
economic program.
  Additionally, on March 13, 1995, Treasury named 32 firms and eight 
individuals that are part of the Karic Brothers' family network of 
companies as SDNs of the FRY (S/M). Their enterprises span the globe 
and are especially active in former East Bloc countries. These 
additions and amendments, published in the Federal Register on April 
18, 1995 (60 FR 19448), bring the current total of Blocked Entities and 
SDNs of the FRY (S/M) to 938 and the total number of individuals 
identified as leaders of the Bosnian Serb military or paramilitary 
forces or civilian authorities in the territories in the Republic of 
Bosnia and Herzegovina that they control to 85. A copy of the notice is 
attached.
  Treasury's blocking authority as applied to FRY (S/M) subsidiaries 
and vessels in the United States has been challenged in court. In 
Milena Ship Management Company, Ltd. v. Newcomb, 804 F Supp. 846, 855, 
and 859 (E.D.L.A. 1992) aff'd, 995 F.2d 620 (5th Cir. 1993), cert. 
denied, 114 S.Ct. 877 (1994), involving five ships owned or controlled 
by FRY (S/M) entities blocked in various U.S. ports, the blocking 
authority as applied to these vessels was upheld. In IPT Company, Inc. 
v. United States Department of the Treasury, No. 92 CIV 5542 (S.D.N.Y. 
1994), the district court also upheld the blocking
 authority as applied to the property of a Yugoslav subsidiary located 
in the United States. The latter case is currently on appeal to the 
Second Circuit.

  4. Over the past 6 months, the Departments of State and Treasury have 
worked closely with European Union (the ``EU'') member states and other 
U.N. member nations to coordinate implementation of the U.N. sanctions 
against the FRY (S/M). This has included visits by assessment teams 
formed under the auspices of the United States, the EU, and the 
Organization for Security and Cooperation in Europe (the ``OSCE'') to 
states bordering on Serbia and Montenegro; continued deployment of OSCE 
sanctions assistance missions (``SAMs'') to Albania, Bulgaria, Croatia, 
the former Yugoslav Republic of Macedonia, Hungary, Romania, and 
Ukraine to assist in monitoring land and Danube River traffic; support 
for the International Conference on the Former Yugoslavia (``ICFY'') 
monitoring missions along the Serbia-Montenegro-Bosnia border; 
bilateral contacts between the United States and other countries for 
the purpose of tightening financial and trade restrictions on the FRY 
(S/M); and ongoing multilateral meetings by financial sanctions 
enforcement authorities from various countries to coordinate 
enforcement efforts and to exchange technical information.
  5. In accordance with licensing policy and the Regulations, FAC has 
exercised its authority to license certain specific transactions with 
respect to the FRY (S/M) that are consistent with U.S. foreign policy 
and the Security Council sanctions. During the reporting period, FAC 
has issued 109 specific licenses regarding transactions pertaining to 
the FRY (S/M) or assets it owns or controls, bringing the total as of 
April 25, 1995, to 930. Specific licenses have been issued (1) for 
payment to U.S. or third-country secured creditors, under certain 
narrowly-defined circumstances, for pre-embargo import and export 
transactions; (2) for legal representation or advice to the Government 
of the FRY (S/M) or FRY (S/M)--located or controlled entities; (3) for 
the liquidation or protection of tangible assets of subsidiaries of FRY 
(S/M)--located or controlled firms located in the U.S.; (4) for limited 
transactions related to FRY (S/M) diplomatic representation in 
Washington and New York; (S) for patent, trademark and copyright 
protection in the FRY (S/M) not involving payment to the FRY (S/M) 
Government; (6) for certain communications, news media, and travel-
related transactions; (7) for the payment of crews' wages, vessel 
maintenance, and emergency supplies for FRY (S/M) controlled ships 
blocked in the United States; (8) for the removal from the FRY (S/M), 
or protection within the FRY (S/M), of certain property owned and 
controlled by U.S. entities; (9) to assist the United Nations in its 
relief operations and the activities of the U.N. Protection Force; and 
(10) for payment from funds outside the United States where a third 
country has licensed the transaction in accordance with U.N. sanctions. 
Pursuant to U.S. regulations implementing UNSC Resolutions, specific 
licenses have also been issued to authorize exportation of food, 
medicine, and supplies intended for humanitarian purposes in the FRY 
(S/M).
  During the past 6 months, FAC has continued to oversee the 
liquidation of tangible assets of the 15 U.S. subsidiaries of entities 
organized in the FRY (S/M). Subsequent to the issuance of Executive 
Order No. 12846, all operating licenses issued for these U.S.-located 
Serbian or Montenegrin subsidiaries or joint ventures were revoked, and 
the net proceeds of the liquidation of their assets placed in blocked 
accounts.
  In order to reduce the drain on blocked assets caused by continuing 
to rent commercial space, FAC arranged to have the blocked personality, 
files, and records of the two Serbian banking institutions in New York 
moved to secure storage. The personality is being liquidated, with the 
net proceeds placed in blocked accounts.
  Following the sale of the M/V Kapetan Martinovic in January 1995, 
five Yugoslav-owned vessels remain blocked in the United States. 
Approval of the UNSC's Serbian sanctions Committee was sought and 
obtained for the sale of the M/V Kapetan Martinovic (and the M/V Bor, 
which was sold in June 1994) based on U.S. assurances that the sale 
would comply with four basic conditions, which assure that both U.S. 
and U.N. sanctions objectives with respect to the FRY (S/M) are met: 
(1) the sale will be for fair market value; (2) the sale will result in 
a complete divestiture of any interest of the FRY (S/M) (or of 
commercial interests located in or controlled from the FRY (S/M) in the 
vessel; (3) the sale would result in no economic benefit to the FRY (S/
M) (or commercial interests located in or controlled from the FRY (S/
M)); and (4) the net proceeds of the sale (the gross proceeds less the 
costs of sale normally paid by the seller) will 

[[Page S 10241]]
be placed in a blocked account in the United States. Negotiations for 
the sale of the M/V Bar, now blocked in New Orleans, are underway and 
are likely to be concluded prior to my next report.
  Other than the M/V Bar, the four remaining Yugoslav-owned vessels are 
beneficially owned by Jugooceanija, Plovidba of Kotor, Montenegro, and 
managed by Milena Ship Management Co. Ltd. in Malta. These vessels have 
many unpaid U.S. creditors for services and supplies furnished during 
the time they have been blocked in the United States; moreover, the 
owner appears to have insufficient resources to provide for the future 
upkeep and maintenance needs of these vessels and their crews. The 
United States is notifying the UNSC's Serbian Sanctions Committee of 
the United States's intention to license some or all of these remaining 
four vessels upon the owner's request.
  With the FAC-licensed sales of the M/V Kapetan Martinovic and the M/V 
Bor, those vessels were removed from the list of blocked FRY entities 
and merchant vessels maintained by FAC. The new owners of several 
formerly Yugoslav-owned vessels, which have been sold in other 
countries, have petitioned FAC to remove those vessels from the list. 
FAC, in coordination with the Department of State, is currently 
reviewing the sale terms and conditions for those vessels to ascertain 
whether they comply with U.N. sanctions objectives and UNSC's Serbian 
Sanctions Committee practice.
  During the past 6 months, U.S. financial institutions have continued 
to block funds transfers in which there is an interest of the 
Government of the FRY (S/M) or an entity or undertaking located in or 
controlled from the FRY (S/M), and to stop prohibited transfers to 
persons in the FRY (S/M). Such interdicted transfers have accounted for 
$125.6 million since the issuance of Executive Order No. 12808, 
including some $9.3 million during the past 6 months.
  To ensure compliance with the terms of the licenses that have been 
issued under the program, stringent reporting requirements are imposed. 
More than 279 submissions have been reviewed by FAC since the last 
report, and more than 125 compliance cases are currently open.
  6. Since the issuance of Executive Order No. 12810, FAC has worked 
closely with the U.S. Customs Service to ensure both that prohibited 
imports and exports (including those in which the Government of the FRY 
(S/M) or Bosnian Serb authorities have an interest) are identified and 
interdicted, and that permitted
 imports and exports move to their intended destination without undue 
delay. Violations and suspected violations of the embargo are being 
investigated and appropriate enforcement actions are being taken. There 
are currently 37 cases under active investigation. Since the last 
report, FAC has collected nine civil penalties totaling nearly $20,000. 
Of these, five were paid by U.S. financial institutions for violative 
funds transfers involving the Government of the FRY (S/M), persons in 
the FRY (S/M), or entities located or organized in or controlled from 
the FRY (S/M). Three U.S. companies and one air carrier have also paid 
penalties related to exports or unlicensed payments to the Government 
of the FRY (S/M) or persons in the FRY (S/M) or other violations of the 
Regulations.

  7. The expenses incurred by the Federal Government in the 6-month 
period from November 30, 1994, through May 29, 1995, that are directly 
attributable to the authorities conferred by the declaration of a 
national emergency with respect to the FRY (S/M) and the Bosnian Serb 
forces and authorities are estimated at about $3.5 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 FAC and its Chief Counsel's Office, and the U.S. 
Customs Service), the Department of State, the National Security 
Council, the U.S. Coast Guard, and the Department of Commerce.
  8. The actions and policies of the Government of the FRY (S/M), in 
its involvement in and support for groups attempting to seize and hold 
territory in the Republics of Croatia and Bosnia and Herzegovina by 
force and violence, and the actions and policies of the Bosnian Serb 
forces and the authorities in the areas of Bosnia and Herzegovina under 
their control, continue to pose an unusual and extraordinary threat to 
the national security, foreign policy, and economy of the United 
States. The United States remains committed to a multilateral 
resolution of the conflict through implementation of the United Nations 
Security Council resolutions.
  I shall continue to exercise the powers at my disposal to apply 
economic sanctions against the FRY (S/M) 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 18, 1995.
  

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