[Congressional Record Volume 143, Number 111 (Thursday, July 31, 1997)]
[Senate]
[Pages S8528-S8530]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




REPORT RELATIVE TO THE NATIONAL EMERGENCY WITH RESPECT TO IRAQ--MESSAGE 
                       FROM THE PRESIDENT--PM 59

  The PRESIDING OFFICER laid before the Senate the following message

[[Page S8529]]

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 February 10, 1997, 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).
  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 February 2 through August 1, 
1997.
  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 contracting 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.
  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 U.N. 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 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.
  On June 4, 1997, the U.N. Security Council adopted UNSCR 1111, 
renewing for another 180 days the authorization for Iraqi petroleum 
sales contained in UNSCR 986 of April 14, 1995. The Resolution became 
effective on June 8, 1997. During the reporting period, imports into 
the United States under this program totaled approximately 9.5 million 
barrels.
  2. There have been no amendments to the Iraqi Sanctions Regulations, 
31 C.F.R. Part 575 (the ``ISR'' or the ``Regulations'') administered by 
the Office of Foreign Assets Control (OFAC) of the Department of the 
Treasury during the reporting period.
  As previously reported, 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 systems, 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 the United Nations and United 
States Government approval.

  All executory contracts must contain terms requiring that all 
proceeds of the oil purchases from the Government of Iraq, including 
the State Oil Marketing Organization, must be placed in the U.N. escrow 
account at Banque National 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 arrival by 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 the Office of Foreign 
Assets Control (OFAC) to the U.S. Customs Service for Investigation.
  On July 10, 1995, an indictment was brought against three U.S. 
citizens in the Eastern District of New York for conspiracy in a case 
involving the attempted exportation and transshipment to Iraq of 
zirconium ingots in violation of the IEEPA and the ISR. The intended 
use of the merchandise was the manufacture of cladding for radioactive 
materials to be used in nuclear reactors. The case was the culmination 
of a successful undercover operation conducted by agents of the U.S. 
Customs Service in New York in cooperation with OFAC and the U.S. 
Attorney's Office for the Eastern District of New York. On February 6, 
1997, one of the defendants pled guilty to a 10-count criminal 
indictment including conspiracy to violate the Iraqi Sanctions and the 
IEEPA. The trial of the remaining defendants is ongoing.
  Investigation also continues 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, OFAC collected four civil monetary penalties 
totaling more than $470,000 for violations of IEEPA and the ISR. The 
violations involved brokerage firms' failure to block assets of an 
Iraqi SDN and effecting certain securities trades with respect thereto. 
Additional administrative proceedings have been initiated and others 
await commencement.
  4. The Office of Foreign Assets Control has issued a total of 700 
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 action 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, executory contracts pursuant to UNSCR 986, sales of 
humanitarian supplies to Iraq under UNSCR 986, 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, 47 specific 
licenses have been issued.
  5. The expense incurred by the Federal Government in the 6-month 
period from February 2 through August 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 $1.2 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 Bureau of Intelligence and Research, the U.S. Mission to 
the United Nations, and the Office of the Legal

[[Page S8530]]

Advisor), and the Department of Transportation (particularly the U.S. 
Coast Guard).

  6. 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. 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. Seven 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 instructors and refusal of 
unimpeded access by these inspectors; 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 the systematic repression of minorities and denial 
of humanitarian assistance. The Government of Iraq has repeatedly said 
it will not be bound by UNSCR 668. 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, July 31, 1997.

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