[Congressional Record Volume 142, Number 126 (Friday, September 13, 1996)]
[Senate]
[Pages S10552-S10553]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




REPORT CONCERNING THE NATIONAL EMERGENCY WITH RESPECT TO IRAN--MESSAGE 
                       FROM THE PRESIDENT--PM 168

  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:
  I hereby report to the Congress on developments concerning the 
national emergency with respect to Iran that was declared in Executive 
Order 12957 of March 15, 1995, and matters relating to the measures in 
that order and in Executive Order 12959 of May 6, 1995. This report is 
submitted pursuant to section 204(c) of the International Emergency 
Economic Powers Act, 50 U.S.C. 1703(c) (IEEPA), and section 505(c) of 
the International Security and Development Cooperation Act of 1985, 22 
U.S.C. 2349aa-9(c). This report discusses only matters concerning the 
national emergency with respect to Iran that was declared in Executive 
Order 12957 and does not deal with those relating to the emergency 
declared on November 14, 1979, in connection with the hostage crisis.
  1. On March 15, 1995, I issued Executive Order 12957 (60 Fed. Reg. 
14615, March 17, 1995) to declare a national emergency with respect to 
Iran pursuant to IEEPA, and to prohibit the financing, management, or 
supervision by United States persons of the development of Iranian 
petroleum resources. This action was in response to actions and 
policies of the Government of Iran, including support for international 
terrorism, efforts to undermine the Middle East peace process, and the 
acquisition of weapons of mass destruction and the means to deliver 
them. A copy of the order was provided to the Speaker of the House of 
Representatives and the President of the Senate by letter dated March 
15, 1995. Following the imposition of these restrictions with regard to 
the development of Iranian petroleum resources, Iran continued to 
engage in activities that represent a threat to the peace and security 
of all nations, including Iran's continuing support for international 
terrorism, its support for acts that undermine the Middle East peace 
process, and its intensified efforts to acquire weapons of mass 
destruction. On May 6, 1995, I issued Executive Order 12959 to further 
respond to the Iranian threat to the national security, foreign policy, 
and economy of the United States.

  Executive Order 12959 (60 Fed. Reg. 24757, May 9, 1995) (1) prohibits 
exportation from the United States to Iran or to the Government of Iran 
of goods, technology, or services; (2) prohibits the reexportation of 
certain U.S. goods and technology to Iran from third countries; (3) 
prohibits transactions such as brokering and other dealing by United 
States persons in goods and services of Iranian origin or owned or 
controlled by the Government of Iran; (4) prohibits new investments by 
United States persons in Iran or in property owned or controlled by the 
Government of Iran; (5) prohibits U.S. companies and other United 
States persons

[[Page S10553]]

from approving, facilitating, or financing performance by a foreign 
subsidiary or other entity owned or controlled by a United States 
person of certain reexport, investment, and certain trade transactions 
that a United States person is prohibited from performing; (6) continue 
the 1987 prohibition on the importation into the United States of goods 
and services of Iranian origin; (7) prohibits any transaction by any 
United States person or within the United States that evades or avoids 
or attempts to violate any prohibition of the order; and (8) allowed 
U.S. companies a 30-day period in which to perform trade transactions 
pursuant to contracts predating the Executive order.
  At the time of signing Executive Order 12959, I directed the 
Secretary of the Treasury to authorize through specific licensing 
certain transactions, including transactions by United States persons 
related to the Iran-United States Claims Tribunal in The Hague, 
established pursuant to the Algiers Accords, and related to other 
international obligations and United States Government functions, and 
transactions related to the export of agricultural commodities pursuant 
to preexisting contracts consistent with section 5712(c) of title 7, 
United States Code. I also directed the Secretary of the Treasury in 
consultation with the Secretary of State, to consider authorizing 
United States persons through specific licensing to participate in 
market-based swaps of crude oil from the Caspian Sea area for Iranian 
crude oil in support of energy projects in Azerbaijan, Kazakstan, and 
Turkmenistan.
  Executive Order 12959 revoked sections 1 and 2 of Executive Order 
12613 of October 29, 1987, and sections 1 and 2 of Executive Order 
12957 of March 15, 1995, to the extent they are inconsistent with it. A 
copy of Executive Order 12959 was transmitted to the Speaker of the 
House of Representatives and the President of the Senate by letters 
dated May 6, 1995.
  2. On March 8, 1996, I renewed for another year the national 
emergency with respect to Iran pursuant to IEEPA. This renewal extended 
the current comprehensive trade embargo against Iran in effect since 
May 1995. Under these sanctions, virtually all trade with Iran is 
prohibited except for information and informational materials and 
certain other limited exceptions.
  3. There were no amendments to the Iranian Transactions Regulations, 
31 CFR Part 560 (the ``ITR'') during the reporting period.
  4. During the current 6-month period, the Department of the 
Treasury's Office of Foreign Assets Control (OFAC) made numerous 
decisions with respect to applications for licenses to engage in 
transactions under the ITR, and issued 24 licenses. The majority of 
denials were in response to requests to authorize commercial exports to 
Iran and the importation of Iranian-origin goods. The majority of the 
licenses issued authorized the completion of commodity ``string 
transactions'' entered into by United States parties with respect to 
foreign commodities and having no knowledge or control over the Iranian 
interest in the contracts; the export and reexport of goods, services, 
and technology essential to ensure the safety of civil aviation and 
safe operation of certain commercial passenger aircraft in Iran; 
licenses relating to Iranian participation in the 1996 Atlanta Olympic 
and Paralympic Games; the importation of Iranian-origin artwork for 
public exhibition; and certain humanitarian imports and exports. In 
light of statutory restrictions applicable to goods and technology 
involved in the air safety cases, the Department of the Treasury 
continues to consult and coordinate with the Departments of State and 
Commerce on these matters, consistent with section 4 of Executive Order 
12959.

  In consultation with the Board of Governors of the Federal Reserve 
System and bank regulators in New York and California, OFAC revoked the 
licenses of all Iranian banking agencies in the United States. State 
regulators then required them to convert to Representative Office 
status. There are now no Iranian banks authorized to conduct banking 
business in the United States. Activities have been restricted to 
``limited representation,'' allowing only research and coordination 
with U.S. holders of affiliate correspondent accounts.
  Bank Saderat, Iran's New York Representative Office, was nominated by 
the Central Bank of Iran to act as its agent for procedures outlined in 
the ``Airbus'' settlement at The Hague. Accordingly, Bank Saderat was 
separately licensed by OFAC for the limited purpose of collecting 
information for the Central Bank of Iran about U.S. commercial claims 
against Iranian banks. The information will be forwarded to and cleared 
by Iranian and State Department officials and used in making 
independent determinations as to which claims can be paid from a 
special escrow account established at the Federal Reserve Bank of New 
York.
  The U.S. financial community continues to interdict transactions 
associated with Iran and to consult with OFAC about their appropriate 
handling. During this reporting period, OFAC took decisive action to 
prevent the U.S. clearing of third country dollar travelers checks sold 
by Iranian banks.
  5. The U.S. Customs Service has continued to effect numerous seizures 
of Iranian-origin merchandise, primarily carpets, for violation of the 
import prohibitions of the ITR. Various enforcement actions carried 
over from previous reporting periods are continuing and new reports of 
violations are being aggressively pursued. Since March 11, 1996, OFAC 
has collected two civil penalties totaling $6,000. The violations 
underlying these collections involve unlicensed exports to Iran. Civil 
penalty action is pending against 12 U.S. companies and financial 
institutions for violations of the Regulations.
  6. The expenses incurred by the Federal Government in the 6-month 
period from March 15 through September 14, 1996, that are directly 
attributable to the exercise of powers and authorities conferred by the 
declaration of a national emergency with respect to Iran are 
approximately $850,000, most of which represents wage and salary costs 
for Federal personnel. Personnel costs were largely centered in the 
Department of the Treasury (particularly in 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 Political-
Military Affairs, and the Office of the Legal Adviser), and the 
Department of Commerce (the Bureau of Export Administration and the 
General Counsels Office).
  7. The situation reviewed above continues to involve important 
diplomatic, financial, and legal interests of the United States and its 
nationals and presents an extraordinary and unusual threat to the 
national security, foreign policy, and economy of the United States. 
The declaration of the national emergency with respect to Iran 
contained in Executive Order 12957 and the comprehensive economic 
sanctions imposed by Executive Order 12959 underscore the United States 
Government opposition to the actions and policies of the Government of 
Iran, particularly its support of international terrorism and its 
effort to acquire weapons of mass destruction and the means to deliver 
them. The Iranian Transactions Regulations issued pursuant to Executive 
Orders 12957 and 12959 continue to advance important objectives in 
promoting the nonproliferation and antiterrorism policies of the United 
States. I will exercise the powers at my disposal to deal with these 
problems and will report periodically to the Congress on significant 
developments.
                                                  William J. Clinton.  
  The White House, September 13, 1996.

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