[Congressional Record Volume 143, Number 124 (Wednesday, September 17, 1997)]
[House]
[Pages H7454-H7456]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 REPORT ON DEVELOPMENTS CONCERNING CONTINUING NATIONAL EMERGENCY WITH 
    RESPECT TO IRAN--MESSAGE FROM THE PRESIDENT OF THE UNITED STATES

  The SPEAKER pro tempore laid before the House the following message 
from the President of the United States; which was read and, together 
with the accompanying papers, without objection, referred to the 
Committee on International Relations and ordered to be printed.

To the Congress of the United States:
  I hereby report to the Congress on developments concerning the 
national

[[Page H7455]]

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), section 401(c) of the 
National Emergencies Act, 50 U.S.C. 1641(c), 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 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 dealings 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 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, trade transactions that a United States person is 
prohibited from performing; (6) continues the 1987 prohibition on the 
importation into the United States of goods and services of Iranian 
origin; (7) prohibits any transaction by a 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, Kazakhstan, 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 and the President of the Senate by letter dated May 6, 1995.
  2. On March 5, 1997, I renewed for another year the national 
emergency with respect to Iran pursuant to IEEPA. This renewal extended 
the authority for the current comprehensive trade embargo against Iran 
in effect since May 1995. Under these sanctions, virtually all trade 
with Iran is prohibited except for trade in information and 
informational materials and certain other limited exceptions.
  3. On August 19, 1997, I issued Executive Order 13059 in order to 
clarify the steps taken in Executive Order 12957 and Executive Order 
12959, to confirm that the embargo on Iran prohibits all trade and 
investment activities by United States persons, wherever located, and 
to consolidate in one order the various prohibitions previously imposed 
to deal with the national emergency declared on March 15, 1995. A copy 
of Executive Order 13059 was transmitted to the Speaker of the House 
and the President of the Senate by letter dated August 19, 1997.
  The order prohibits (1) the importation into the United States of any 
goods or services of Iranian origin or owned or controlled by the 
Government of Iran except information or informational material; (2) 
the exportation, reexportation, sale, or supply from the United States 
or by a United States person, wherever located, of goods, technology, 
or services to Iran or the Government of Iran, including knowing 
transfers to a third country for direct or indirect supply, 
transshipment, or reexportation to Iran or the Government of Iran, or 
specifically for use in the production, commingling with, or 
incorporation into goods, technology, or services to be supplied, 
transshipped, or reexported exclusively or predominantly to Iran or the 
Government of Iran; (3) reexportation from a third country of 
controlled U.S.-origin goods, technology, or services by a person other 
than a United States person; (4) purchase, sale, transport, swap, 
brokerage, approval, financing, facilitation, guarantee, or other 
transactions or dealings by United States persons, wherever located, 
related to direct or indirect trade with Iran or the Government of Iran 
or to goods or services of Iranian origin or owned or controlled by the 
Government of Iran; (5) new investment by United States persons in Iran 
or in property or entities owned or controlled by the Government of 
Iran; (6) approval, financing, facilitation, or guarantee by a United 
States person of any transaction by a foreign person that a United 
States person would be prohibited from performing under the embargo; 
and (7) any evasion, avoidance, or attempt to violate a prohibition 
under the order.
  Executive Order 13059 became effective at 12:01 a.m., eastern 
daylight time on August 20, 1997. Revocation of corresponding 
provisions in prior Executive orders does not affect the applicability 
of those provisions, or of regulations, licenses, or other 
administrative actions taken pursuant to those provisions, with respect 
to any transaction or violation occurring before the effective date of 
Executive Order 13059. Specific licenses issued pursuant to prior 
Executive orders continue in effect, unless revoked or amended by the 
Secretary of the Treasury. General licenses, regulations, orders, and 
directives issued pursuant to prior orders continue in effect, except 
to the extent inconsistent with Executive Order 13059 or otherwise 
revoked or modified by the Secretary of the Treasury.
  4. The Iranian Transactions Regulations, 31 CFR Part 560 (the 
``ITR''), were amended on April 18, 1997 (62 Fed. Reg. 19670, April 23, 
1997), on July 30, 1997 (62 Fed. Reg. 41851, August 4, 1997), and on 
August 25, 1997 (62 Fed. Reg. 45098, August 25, 1997). In April 1997, 
Section 560.603 was amended to require a United States person to file a 
transaction report as to each foreign affiliate that engages in 
reportable oil-related transactions involving Iran of $1,000,000 or 
more during the calendar quarter.
  In July 1997, sections 560.510(d)(1) and (d)(2) were amended to 
generally license all payments of awards against Iran issued by the 
Iran-U.S. Claims Tribunal in The Hague, irrespective of

[[Page H7456]]

the source of funds for payment, and to generally license 
implementation (except exports or reexports that are subject to export 
license application requirements of Federal agencies other than the 
Department of the Treasury's Office of Foreign Assets Control (OFAC)) 
as well as payment of awards or settlements in cases to which the 
United States Government is a party.
  Sections 560.525(a)(3) and (a)(5)(i) were amended to generally 
license the provision of legal services to initiate and conduct U.S. 
court and other domestic legal proceedings on behalf of persons in Iran 
or the Government of Iran and to initiate proceedings to resolve 
disputes between the Government of Iran or an Iranian national and the 
United States or a United States national, notwithstanding the 
prohibition on exportation of services to Iran. On August 25, 1997, 
general reporting, record keeping, licensing, and other procedural 
regulations were moved from the ITR to a separate part (31 CFR Part 
501) dealing solely with such procedural matters. (62 Fed. Reg. 45098, 
August 25, 1997). A copy of these amendments is attached.
  5. During the current 6-month period, OFAC made numerous decisions 
with respect to applications for licenses to engage in transactions 
under the ITR, and issued 12 licenses. The majority of denials were in 
response to requests to authorize commercial exports to Iran--
particularly of machinery and equipment for various industries--and the 
importation of Iranian-origin goods. The licenses issued authorized 
certain financial transactions, including those relating to disposal of 
U.S.-owned goods located in Iran and extension of, but not payment 
under, standby letters of credit. Pursuant to sections 3 and 4 of 
Executive Order 12959 and consistent with the Iran-Iraq Arms Non-
Proliferation Act of 1992 and other statutory restrictions concerning 
certain goods and technology, including those involved in air-safety 
cases, Treasury continues to consult with the Departments of State and 
Commerce on these matters.
  The U.S. financial community continues to scrutinize transactions 
associated with Iran and to consult with OFAC about their appropriate 
handling. Many of these inquiries have resulted in investigations into 
the activities of U.S. parties and, where appropriate, the initiation 
of enforcement action.
  6. On March 20, 1997, a seven-count indictment was returned by a 
grand jury in the District of Maryland against a U.S. resident and two 
Iranian co-conspirators. The March indictment superseded a two-count 
indictment handed down on February 13, 1997. Each indictment charged 
violations of IEEPA and the ITR involving the attempted exportation 
from the United States to Iran of sophisticated state-of-the-art gas 
chromotographs used in the electric power industry, which were 
prevented from reaching Iran.
  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 my last report on 
March 14, 1997, OFAC has collected four civil monetary penalties 
totaling nearly $22,000. The violations relate to the unlicensed import 
from or export of goods to Iran. Civil penalty action is pending 
against 37 companies, financial institutions, and individuals for 
violations of the Regulations.

  7. The expenses incurred by the Federal Government in the 6-month 
period from March 15 through September 14, 1997, 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 represent 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 Intelligence 
and Research, and the Office of the Legal Adviser), and the Department 
of Commerce (the Bureau of Export Administration and the General 
Counsel's Office).
  8. The situation reviewed above continues to present 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 efforts 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 
shall 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 17, 1997.

                          ____________________