[Congressional Record Volume 144, Number 6 (Wednesday, February 4, 1998)]
[Senate]
[Pages S376-S378]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




REPORT CONCERNING THE NATIONAL EMERGENCY WITH RESPECT TO IRAQ--MESSAGE 
                       FROM THE PRESIDENT--PM 92

  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 July 31, 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 (IEEPA), 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.
  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, 1997, through 
February 1, 1998.
  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 President of the 
Security Council received the report prepared by the Secretary General 
as requested by paragraph 13 of UNSCR 986, making UNSCR 986 effective 
as of 12:01 a.m. December 10, 1996.

  On June 4, 1997, the U.N. Security Council adopted UNSCR 1111, 
renewing for another 180 days the authorization for Iraqi petroleum 
sales and purchases of humanitarian aid contained in UNSCR 986 of April 
14, 1995. The Resolution became effective on June 8, 1997. On September 
12, 1997, the Security Council, noting Iraq's decision not to

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export petroleum and petroleum products pursuant to UNSCR 1111 during 
the period June 8 to August 13, 1997, and deeply concerned about the 
resulting humanitarian consequences for the Iraqi people, adopted UNSCR 
1129. This resolution replaced the two 90-day quotas with one 120-day 
quota and one 60-day quota in order to enable Iraq to export its full 
$2 billion quota of oil within the original 180 days of UNSCR 1111. On 
December 4, 1997, the U.N. Security Council adopted UNSCR 1143, 
renewing for another 180 days, beginning December 5, 1997, the 
authorization for Iraqi petroleum sales and humanitarian aid purchases 
contained in UNSCR 986. As of January 2, 1998, however, Iraq still had 
not exported any petroleum under UNSCR 1143. During the reporting 
period, imports into the United States under this program totaled about 
14.2 million barrels, bringing total imports since December 10, 1996, 
to approximately 23.7 million barrels.
  2. There have been two 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. The Regulations were amended on 
August 25, 1997. General reporting, recordkeeping, licensing, and other 
procedural regulations were moved from the Regulations to a separate 
part (31 C.F.R. Part 501) dealing solely with such procedural matters 
(62 Fed. Reg. 45098, August 25, 1997). A copy of the amendment is 
attached.
  On December 30, 1997, the Regulations were amended to remove from 
appendices A and B to 31 C.F.R. chapter V the name of an individual who 
had been determined previously to act for or on behalf of, or to be 
owned or controlled by, the Government of Iraq (62 Fed. Reg. 67729, 
December 30, 1997). A copy of the amendment is attached.
  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 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.
  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 661 Committee and 
satisfaction of other conditions established by the United Nations, 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.
  On July 15, 1995, a jury in the Eastern District of New York returned 
a verdict of not guilty for two defendants charged with the attempted 
exportation and transshipment to Iraq of zirconium ingots in violation 
of IEEPA and the ISR. The two were charged in a Federal indictment on 
July 10, 1995, along with another defendant who entered a guilty plea 
on February 6, 1997.
  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 civil monetary penalties 
totaling more than $1.125 million for violations of IEEPA and the ISR 
relating to the sale and shipment of goods to the Government of Iraq 
and an entity in Iraq. Additional administrative proceedings have been 
initiated and others await commencement.
  4. The Office of Foreign Assets Control has issued hundreds of 
licensing determinations regarding transactions pertaining to Iraq or 
Iraqi assets since August 1990. Specific 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, sales of humanitarian 
supplies to Iraq under UNSCR 986 and 1111, diplomatic transactions, 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, 
88 specific licenses have been issued, most with respect to sales of 
humanitarian goods.
  Since December 10, 1996, OFAC has issued specific licenses 
authorizing commercial sales of humanitarian goods funded by Iraqi oil 
sales pursuant to UNSCR 986 and 1111 valued at more than $239 million. 
Of that amount, approximately $222 million represents sales of basic 
foodstuffs, $7.9 million for medicines and medical supplies, $8.2 
million for water testing and treatment equipment, and nearly $700,000 
to fund a variety of United Nations activities in Iraq. International 
humanitarian relief in Iraq is coordinated under the direction of the 
United Nations Office of the Humanitarian Coordinator of Iraq. 
Assisting U.N. agencies include the World Food Program, the U.N. 
Population Fund, the U.N. Food and Agriculture Organization, the World 
Health Organization, and UNICEF. As of January 8, 1998, OFAC had 
authorized sales valued at more than $165.8 million worth of 
humanitarian goods during the reporting period beginning August 2, 
1997.
  5. The expenses incurred by the Federal Government in the 6-month 
period from August 2, 1997, through February 1, 1998, 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 Adviser), 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. Iraqi compliance with these resolutions 
is necessary before the United States will consider lifting economic 
sanctions. 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 and a half 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

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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 to provide 
immediate, unconditional, and unrestricted access to sites 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 systematic repression of all forms of political 
expression, oppression of minorities, and denial of humanitarian 
assistance. The Government of Iraq has repeatedly said it will not 
comply with UNSCR 688 of April 5, 1991. The Iraqi military routinely 
harasses residents of the north, and has attempted to ``Arabize'' the 
Kurdish, Turkomen, 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 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 3, 1998.

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