[Congressional Record Volume 141, Number 196 (Monday, December 11, 1995)]
[Senate]
[Pages S18360-S18362]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 REPORT ON BOSNIAN SERB SANCTIONS--MESSAGE FROM THE PRESIDENT RECEIVED 
              DURING THE ADJOURNMENT OF THE SENATE--PM 101

  Under the authority for the order of the Senate of January 4, 1995, 
the Secretary of the Senate on December 8, 1995, received a 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) and covers the period from May 30, 1995, to November 29, 1995. 
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, January 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 United States 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 
(S&M)-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 UNSC 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 United States 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, 1993, 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 United States 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 

[[Page S18361]]
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 United States 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 Bosnian Serb forces. Finally, any transaction by any 
United States 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 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 
reproted 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. Effective June 30, 1995, the Federal Republic of Yugoslavia 
(Serbia and Montenegro) Sanctions Regulations, 31 C.F.R. Part 585 (the 
``Regulations''), were amended to implement Executive Order No. 12934 
(60 FR 34144, June 30, 1995). The name of the Regulations was changed 
to reflect the expansion of the national emergency to the Bosnian 
Serbs, and now reads ``Federal Republic of Yugoslavia (Serbia & 
Montenegro) and Bosnian Serb-Controlled Areas of the Republic of Bosnia 
and Herzegovina Sanctions Regulations.'' A copy of the amended 
Regulations 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, 
and the case was subsequently settled.
  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 continued deployment of 
Organization for Security and Cooperation in Europe (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, the 
Office of Foreign Assets Control (FAC) has exercised its authority to 
license certain specific transactions with respect to the FRY (S&M), 
which are consistent with U.S. foreign policy and the Security Council 
sanctions. During the reporting period, FAC has issued 90 specific 
licenses regarding transactions pertaining to the FRY (S&M) or assets 
to owns or controls, bringing the total specific licenses issued as of 
October 13, 1995, to 1,020. Specific licenses have been issued: (1) for 
payment to U.S. or third country secured creditors, under certain 
narrowly defined circumstances, for preembargo 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 United States; (4) for 
limited transactions related to FRY (S&M) diplomatic representation in 
Washington and New York; (5) 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 UNPROFOR; 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 period, FAC addressed the status of the unallocated debt 
of the former Yugoslavia by authorizing nonblocked U.S. creditors under 
the New Financing Agreement for Yugoslavia (Blocked Debt) to exchange a 
portion of the Blocked Debt for new debt (bonds) issued by the Republic 
of Slovenia. The completion of this exchange will mark the transfer to 
Slovenia of sole liability for a portion of the face value of the $4.2 
billion unallocated debt of the FRY (S&M) for which Slovenia, prior to 
the authorized exchange, was jointly and severally liable. The exchange 
will relieve Slovenia of the joint and several liability for the 
remaining unallocated FRY (S&M) debt and pave the way for its entry 
into international capital markets.
  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 
new 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).
  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 (S&M) 
entities and merchant vessels maintained by FAC. As of October 12, 
1995, five additional vessels have been removed from the list of 
blocked FRY (S&M) entities and merchant vessels maintained by FAC as a 
result of sales conditions that effectively extinguished any FRY (S&M) 
interest: the M/V Blue Star, M/V Budva, M/V Bulk Star, M/V Hanuman, and 
M/V Sumadija. The new owners of several other formerly Yugoslav-owned 
vessels, which have been sold in other countries, have petitioned 

[[Page S18362]]
FAC to remove those vessels from the list.
  During the past 6 months, U.S. financial institutions have continued 
to block funds transfers in which there is a possible 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). The value of transfers blocked has amounted 
to $137.5 million since the issuance of Executive Order No. 12808, 
including some $13.9 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 318 submissions have been reviewed by FAC since the last 
report, and more than 130 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. Numerous investigations carried 
over from the prior reporting period are continuing. Since the last 
report, FAC has collected 10 civil penalties totaling more than 
$27,000. 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). One U.S. company and one air carrier 
have also paid penalties related to unlicensed payments to the 
Government of the FRY (S&M) or other violations of the Regulations. Two 
companies and one law firm have also remitted penalties for their 
failure to follow the conditions of FAC licenses.

  7. The expenses incurred by the Federal Government in the 6-month 
period from May 30, 1995, through November 29, 1995, 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 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 polices 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, December 8, 1995.

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