[Congressional Record Volume 143, Number 16 (Monday, February 10, 1997)]
[Senate]
[Pages S1188-S1189]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




[[Page S1188]]



 REPORT CONCERNING THE NATIONAL EMERGENCY WITH IRAQ--MESSAGE FROM THE 
                            PRESIDENT--PM 11

  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 the developments since my last 
report of August 14, 1996, 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).
  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 United States 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.
  Executive Order 12817 was issued on October 21, 1992, to implement in 
the United States measures adopted in UNSCR 778 of October 2, 1992. 
UNSCR 778 requires U.N. Member States to transfer to a U.N. escrow 
account any funds (up to $200 million apiece) representing Iraqi oil 
sale proceeds paid by purchasers after the imposition of U.N. sanctions 
on Iraq, to finance Iraq's obligations for U.N. activities with respect 
to Iraq, such as expenses to verify Iraqi weapons destruction, and to 
provide humanitarian assistance in Iraq on a nonpartisan basis. A 
portion of the escrowed funds also finances the activities of the U.N. 
Compensation Commission in Geneva, which handles claims from victims of 
the Iraqi invasion and occupation of Kuwait. Member States also may 
make voluntary contributions to the account. The funds placed in the 
escrow account are to be returned, with interest, to the Member States 
that transferred them to the United Nations, as funds are received from 
future sales of Iraqi oil authorized by the U.N. Security Council. No 
Member State is required to fund more than half of the total transfers 
or contributions to the escrow account.
  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, 1996 through 
February 1, 1997.
  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 per quarter for 6 months under U.N. supervision in order to 
finance the purchase of food, medicine, and other humanitarian 
supplies. This arrangement may be renewed by the Security Council for 
additional 6-month periods. 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 UNSC 
committee established pursuant to UNSCR 661 (``the 661 Committee'') 
adopted procedures to be employed by the 661 Committee in 
implementation of UNSCR 986. On December 9, 1996, the Secretary General 
released the report requested by paragraph 13 of UNSCR 986, making 
UNSCR 986 effective as of 12:01 a.m. December 10.
  2. During the reporting period, there have been three 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. The Regulations were amended 
on August 22, 1996, to add the Antiterrorism and Effective Death 
Penalty Act of 1996 (Public Law 104-132; 110 Stat. 1214-1319 (the 
``Antiterrorism Act'')) as an authority for the Regulations (61. Fed. 
Reg. 43460, August 23, 1996). Section 321 of the Antiterrorism Act (18 
U.S.C. 2332d), which I signed into law on April 24, 1996, makes it a 
criminal offense for United States persons, except as provided in 
regulations issued by the Secretary of the Treasury in consultation 
with the Secretary of State, to engage in financial transactions with 
the governments of countries designated under section 6(j) of the 
Export Administration Act (50 U.S.C. App. 2405) as supporting 
international terrorism. United States persons who engage in such 
transactions are subject to criminal fines under title 18, United 
States Code, imprisonment for up to 10 years, or both. Because the 
Regulations already prohibited such transactions, with minor exceptions 
for transactions such as donations of humanitarian aid, no substantive 
change to the prohibitions of the Regulations was necessary. This 
amendment also notes the criminal penalties that may be imposed for 
violations of the Antiterrorism Act and implementing regulations. A 
copy of the amendment is attached.
  The Regulations were amended on October 21, 1996 (61 Fed. Reg. 54936, 
October 23, 1996), to implement section 4 of the Federal Civil 
Penalties Inflation Adjustment Act of 1990, as amended by the Debt 
Collection Improvement Act of 1996, by adjusting for inflation the 
amount of the civil monetary penalties that may be assessed under the 
Regulations. The Regulations, as amended, increase the maximum civil 
monetary penalty provided by law from $250,000 to $275,000 per 
violation.
  The amended Regulations also reflect an amendment to 18 U.S.C. 1001 
contained in section 330016(1)(L) of Public Law 103-322; 108 Stat. 
2147. The amendment notes the availability of higher criminal fines 
pursuant to the formulas set forth in 18 U.S.C. 3571. A copy of the 
amendment is attached.
  The Regulations were amended on December 10, 1996, to provide a 
statement of licensing policy regarding specific licensing of United 
States persons seeking to purchase Iraqi-origin petroleum and petroleum 
products from Iraq (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 that have been exported 
from Iraq with United Nations and United States Government approval. 
The rule also added definitions and made technical amendments. A copy 
of the amendment is attached.
  All executory contracts must contain terms requiring that all 
proceeds of oil purchases from the Government of Iraq, including the 
State Oil Marketing Organization must 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 UNSC committee 
established pursuant to the 661 Committee, be paid or payable out of 
the 986 Escrow Account.
  3. Investigations of possible violations of the Iraqi sanctions 
continue to be pursued and appropriate enforcement actions taken. 
Several cases from prior reporting periods are continuing and recent 
additional allegations have been referred by OFAC to the U.S. Customs 
Service for investigation. Several OFAC civil penalty proceedings are 
pending. Investigation also continues

[[Page S1189]]

into 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.
  Since my last report, three civil monetary penalties totaling 
$102,250 have been collected from one financial institution and two 
individuals for violation of the prohibitions against transactions with 
Iraq. Additional administrative procedures have been initiated and 
others await commencement.
  4. Pursuant to Executive Order 12817 implementing UNSCR 778, on 
October 26, 1992, OFAC directed the Federal Reserve Bank of New York to 
establish a blocked account for receipt of certain post-August 6, 1990, 
Iraqi oil sales proceeds, and to hold, invest, and transfer these funds 
as required by the Order. On December 13, 1996, OFAC directed the 
Federal Reserve Bank of New York to transfer the interest accrued on 
the blocked account to the U.N. escrow account established pursuant to 
UNSCR 778, to match contributions in excess of $30 million by other 
countries.
  5. The Office of Foreign Assets Control has issued a total of 653 
specific licenses regarding transactions pertaining to Iraq or Iraqi 
assets since August 1990. Licenses have been issued for transactions 
such as the filing of legal actions against Iraqi governmental 
entities, legal representation of Iraq, and the exportation to Iraq of 
donated medicine, medical supplies, and food intended for humanitarian 
relief purposes, 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 my last report, 23 specific licenses have been issued.
  6. The expenses incurred by the Federal Government in the 6-month 
period from August 2, 1996, through February 1, 1997, 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 $1 million, 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 
International Organization Affairs, the Bureau of Political-Military 
Affairs, 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).
  7. 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 United Nations Security 
Council resolutions. 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 of international relief organizations to all 
those in need in all parts of Iraq. Six 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; incomplete 
declarations to weapons inspectors and refusal of unimpeded access; and 
ongoing widespread human rights violations. As a result, the U.N. 
sanctions remain in place; 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 minorities and denial of 
humanitarian assistance. The Government of Iraq has repeatedly said it 
will not be bound by UNSCR 688. The Iraqi military routinely harasses 
residents of the north, and has attempted to ``Arabize'' the Kurdish, 
Turcomen, and Assyrian areas in the north. Iraq has not relented in its 
artillery attacks against civilian population centers in the south, or 
in its burning and draining operations in the southern marshes, which 
have forced thousands to flee to neighboring states.
  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 U.N. resolutions affirm that the Security Council must be 
assured of Iraq's peaceful intentions in judging its compliance with 
sanctions. 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.
                                                  William J. Clinton.  
  The White House, February 10, 1997.

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