[Congressional Record Volume 144, Number 124 (Thursday, September 17, 1998)]
[Senate]
[Pages S10515-S10517]
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 158

  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, and in 
Executive Order 13059 of August 19, 1997. 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 (60 Fed. 
Reg. 24757, May 9, 1995) to further respond to the Iranian threat to 
the national security, foreign policy, and economy of the United 
States. The terms of that order and an earlier order imposing an import 
ban on Iranian-origin goods and services (Executive Order 12613 of 
October 29, 1987) were consolidated and clarified in Executive Order 
13059 of August 19. 1997.
  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 U.S. 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.

[[Page S10516]]

  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 Congressional 
leadership by letter dated May 6, 1995.
  2. 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 the Order 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 predomininatly to Iran or 
the Government of Iran; (3) knowing reexportation from a third country 
to Iran or the Government of Iran of certain controlled U.S.-origin 
goods, technology, or services by a person other than a United States 
person; (4) the purchase, sale, transport, swap, brokerage, approval, 
financing, facilitation, guarantee, or other transactions or dealings 
by United States persons, wherever located, related to goods, 
technology, or services for exportation, reexportation, sale or supply, 
directly or indirectly, to 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 terms of the 
Order; and (7) any transaction that evades, avoids, or attempts to 
violate a prohibition under the Order.
  Executive Order 13059 became effective at 12:01 a.m., eastern 
daylight time on August 20, 1997. Because the Order consolidated and 
clarified the provisions of prior orders, Executive Order 12613 and 
paragraph (a), (b), (c), (d) and (f) of section 1 of Executive Order 
12959 were revoked by Executive Order 13059. The revocation of 
corresponding provisions in the prior Executive orders did 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.
  The declaration of national emergency made by Executive Order 12957, 
and renewed each year since, remains in effect and is not affected by 
the Order.
  3. On March 4, 1998, 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.
  4. There have been no amendments to the Iranian Transactions 
Regulations, 31 CFR Part 560 (the ``ITR''), since my report of March 
16, 1998.
  5. 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 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 that were issued authorized certain financial transactions and 
transactions relating to air safety policy. Pursuant to sections 3 and 
4 of Executive Order 12959, Executive Order 13059, and consistent with 
statutory restrictions concerning certain goods and technology, 
including those involved in air safety cases, the Department of the 
Treasury continues to consult with the Departments of State and 
Commerce on these matters.
  Since the issuance of Executive Order 13059, more than 1,500 
transactions involving Iran initially have been ``rejected'' by U.S. 
financial institutions under IEEPA and the ITR. United States banks 
declined to process these transactions in the absence of OFAC 
authorization. Twenty percent of the 1,500 transactions scrutinized by 
OFAC resulted in investigations by OFAC to assure compliance with IEEPA 
and ITR by United States persons.
  Such investigations resulted in 15 referrals for civil penalty 
action, issuance of 5 warning letters, and an additional 52 cases still 
under compliance or legal review prior to final agency action.
  Since my last report, OFAC has collected 20 civil monetary penalties 
totaling more than $110,000 for violations of IEEPA and the ITR related 
to the import or export to Iran of goods and services. Five U.S. 
financial institutions, twelve companies, and three individuals paid 
penalties for these prohibited transactions. Civil penalty action is 
pending against another 45 United States persons for violations of the 
ITR.
  6. On January 22, 1997, an Iranian national resident in Oregon and a 
U.S. citizen were indicted on charges related to the attempted 
exportation to Iran of spare parts for gas turbines and precursor 
agents utilized in the production of nerve gas. The 5-week trial of the 
American citizen defendant, which began in early February 1998, 
resulted in his conviction on all counts. That defendant is awaiting 
sentencing. The other defendant pleaded guilty to one count of criminal 
conspiracy and was sentenced to 21 months in prison.
  On March 24, 1998, a Federal grand jury in Newark, New Jersey, 
returned an indictment against a U.S. national and an Iranian-born 
resident of Singapore for violation of IEEPA and the ITR relating to 
exportation of munitions, helicopters, and weapons systems components 
to Iran. Among the merchandise the defendants conspired to export were 
parts for Phoenix air-to-air missiles used on F-14A fighter jets in 
Iran. Trial is scheduled to begin on October 6, 1998.
  The U.S. Customs Service has continued to effect numerous seizures to 
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.
  7. The expenses incurred by the Federal Government in the 6-month 
period from March 15 through September 14, 1998, that are directly 
attributable to the exercise of powers and authorities conferred by the 
declaration of a national emergency with respect to Iran are reported 
to be approximately $1.7 million, 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).

[[Page S10517]]

  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 Government's 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, 12959, and 13059 continue to 
advance import objectives in promoting the nonproliferation and anti-
terrorism 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 16, 1998.

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