    [Public Papers of the Presidents of the United States: George H. W. Bush (1991, Book I)]
    [May 30, 1991]
    [Pages 584-586]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Letter to Congressional Leaders Reporting on the National Emergency With
    Respect to Iran
    May 30, 1991

    Dear Mr. Speaker:  (Dear Mr. President:)
        I hereby report to the Congress on developments since my last report
    of November 29, 1990, concerning the national emergency with respect to
    Iran that was declared in Executive Order No. 12170 of November 14,
    1979, and matters relating to Executive Order No. 12613 of October 29,
    1987. This report is submitted pursuant to section 204(c) of the
    International Emergency Economic Powers Act, 50 U.S.C. 1703(c), and
    section 505(c) of the International Security and Development Cooperation
    Act of 1985, 22 U.S.C. 2349aa-9(c). This report covers events through
    March 31, 1991, including those that occurred since my last report dated
    November 29, 1990. That report covered events through September 30,
    1990.
        1. Since my last report, both the Iranian Transactions Regulations
    (``ITRs''), 31 CFR Part 560, and the Iranian Assets Control Regulations
    (``IACRs''), 31 CFR Part 535, have been amended. Copies of these
    amendments are attached. The ITRs were amended on March 15, 1991, 56 FR
    11100, to permit the issuance of specific licenses authorizing the case-
    by-case importation of Iranian oil in situations where the import
    transaction is in resolution of an outstanding claim against Iran before
    the Iran-United States Claims Tribunal in The Hague or otherwise results
    in the payment of the full proceeds from the sale of the Iranian oil
    into the Tribunal's Security Account. Permitting the importation of
    Iranian oil under these conditions is intended to promote the settlement
    of certain claims pending before the Tribunal and to replenish the
    Security Account from which monetary claims are paid to the U.S.
    claimant.
        The IACRs were amended on February 15, 1991, 56 FR 6546, to comply
    with an arbitral award issued by the Tribunal which found that the
    United States Government

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    had violated the Algiers Accords by licensing various U.S. account
    parties to open blocked reserve accounts on their books to cover amounts
    demanded by an Iranian beneficiary under a standby letter of credit
    (``SLC''). Under section 535.568, these accounts were permitted to be
    held by account parties in lieu of payment of the SLC amounts by the
    issuing or confirming U.S. bank into a blocked account and the
    reimbursement of the bank by the account party. Under this amendment,
    the transfer of funds contained in blocked reserve accounts by SLC
    account parties is no longer restricted unless the account parties can
    demonstrate that they qualify for one of three limited exceptions.
        2. The great majority of import licensing activity under the ITRs
    involved the importation of nonfungible Iranian-origin goods,
    principally carpets, that were located outside Iran prior to the
    imposition of the embargo and that did not result in any payment or
    benefit accruing to Iran after the effective date of the embargo.
        During the reporting period, 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 ITRs. The
    Office of Foreign Assets Control and U.S. Customs Service investigations
    of these violations have resulted in forfeiture actions and the
    imposition of civil monetary penalties amounting to $821,477. Numerous
    additional forfeiture and civil penalty actions are under review.
        On November 16, 1990, a guilty plea was entered in United States v.
    Iron Gate Products, which involved the smuggling of Iranian-origin
    caviar into the United States. In addition to having merchandise valued
    at $850,000 forfeited to the United States Government, the defendant
    also agreed to pay more than $30,000 in cold storage costs incurred by
    the U.S. Customs Service during the course of the investigation.
        3. The Tribunal continues to make progress in arbitrating the
    various claims before it. Since my last report, the Tribunal has
    rendered 18 awards, for a total of 507 awards. Of that total, 349 have
    been awards in favor of American claimants: of these, 214 were awards on
    agreed terms, authorizing and approving payment of settlements
    negotiated by the parties, and 135 were decisions adjudicated on the
    merits. The Tribunal has issued 34 decisions dismissing claims on the
    merits and 76 decisions dismissing claims for jurisdictional reasons. Of
    the 48 remaining awards, two were withdrawn, and 46 were in favor of
    Iranian claimants. As of March 31, 1991, awards to successful American
    claimants from the Security Account held by the NV Settlement Bank stood
    at $2,023,506,655.53.
        As of March 31, 1991, the Security Account has fallen below the
    required balance of $500 million 34 times. Iran has periodically
    replenished the account, as required by the Algiers Accords, by
    transferring funds from the separate account held by the NV Settlement
    Bank in which interest on the Security Account is deposited. Iran has
    also replenished the account twice when it was not required to do so by
    the Accords. Iran has not, however, replenished the Security Account to
    the required balance of $500 million since the last report. Discussions
    are underway with Iran to rectify this deficiency. As of March 31, 1991,
    the total amount of the Security Account was $252,838,236.81, and the
    total amount in the interest account was $14,331,443.56. The aggregate
    amount that has been transferred from the interest account to the
    Security Account is $832,872,986.47.
        4. The Tribunal continues to make progress in the arbitration of
    claims of U.S. nationals for $250,000 or more. Over 80 percent of the
    nonbank claims have now been disposed of through adjudication,
    settlement, or voluntary withdrawal, leaving 118 such claims on the
    docket. The largest of the large claims, the progress of which has been
    slowed by their complexity, are finally being resolved, sometimes with
    sizeable damage awards to the U.S. claimant. ARCO, for example, settled
    its case against the Iranian National Oil Company for a payment of $9
    million. Since the last report, 15 large claims have been decided.
        5. As anticipated by the May 13, 1990, agreement settling the claims
    of U.S. nationals against Iran for less than $250,000, the Foreign
    Claims Settlement Commission (FCSC) has undertaken to review 3,112

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    claims. The FCSC issued its first awards in April 1991 and is expected
    to complete its adjudication of these claims by September 1993.
        6. In coordination with concerned Government agencies, the
    Department of State continues to present United States Government claims
    against Iran, as well as responses by the United States Government to
    claims brought against it by Iran. Since the last report, the Department
    has filed pleadings in five government-to-government claims.
        7. Since my last report, one additional bank syndicate has completed
    negotiations with bank Markazi Jomhouri Islami Iran (``Bank Markazi,''
    Iran's central bank). After this settlement is finalized, only two
    syndicates will remain with claims against Dollar Account No. 1 at the
    Federal Reserve Bank of New York.
        8. The situation reviewed above continues to implicate important
    diplomatic, financial, and legal interests of the United States and its
    nationals and presents an unusual challenge to the national security and
    foreign policy of the United States. The IACRs issued pursuant to
    Executive Order No. 12170 continue to play an important role in
    structuring our relationship with Iran and in enabling the United States
    to implement properly the Algiers Accords. Similarly, the ITRs issued
    pursuant to Executive Order No. 12613 continue to advance important
    objectives in combatting international terrorism. I shall continue to
    exercise the powers at my disposal to deal with these problems and will
    continue to report periodically to the Congress on significant
    developments.
        Sincerely,

                                                                 George Bush

                        Note: Identical letters were sent to Thomas S.
                            Foley, Speaker of the House of Representatives,
                            and Dan Quayle, President of the Senate.