[Public Papers of the Presidents of the United States: George H. W. Bush (1991, Book I)]
[February 11, 1991]
[Pages 131-133]
[From the U.S. Government Publishing Office www.gpo.gov]



Letter to Congressional Leaders Reporting on the National Emergency With 
Respect to Iraq
February 11, 1991

Dear Mr. Speaker:  (Dear Mr. President:)
    1. On August 2, 1990, in Executive Order No. 12722, I declared a 
national emergency to deal with the threat to the national security and 
foreign policy of the United States caused by Iraq's invasion of Kuwait. 
(55 FR 31803.) In that order, I 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 U.S. person. I also 
prohibited the importation of goods or services of Iraqi origin into the 
United States and the exportation of goods, technology, and services to 
Iraq from the United States. In addition, I prohibited travel-related 
transactions and transportation transactions from or to Iraq and the 
performance of any contract in support of any industrial, commercial, or 
governmental project in Iraq. U.S. persons were also prohibited from 
granting or extending credit or loans to the Government of Iraq.
    At the same time, at the request of the Government of Kuwait, I 
issued Executive Order No. 12723 (55 FR 31805), blocking all property of 
the Government of Kuwait then or thereafter in the United States or in 
the possession or control of a U.S. person.
    Subsequently, on August 9, 1990, I issued Executive Orders Nos. 
12724 and 12725 (55 FR 33089), to ensure that the sanctions imposed by 
the United States were consistent with United Nations Security Council 
Resolution 661 of August 6, 1990. Under these orders, additional steps 
were taken with regard to Iraq, and sanctions were applied to Kuwait as 
well to insure that no benefit to Iraq resulted from the military 
occupation of Kuwait.
    2. The declaration of the national emergency on August 2, 1990, was 
made pursuant to the authority vested in me as President by the 
Constitution and laws of the United States, including the International 
Emergency Economic Powers Act (50 U.S.C. 1701 et seq.), the National 
Emergencies Act (50 U.S.C. 1601 et seq.), and section 301 of title 3 of 
the United States Code. I reported the declaration to the Congress on 
August 3, 1990, pursuant to section 204(b) of the International 
Emergency Economic Powers Act (50 U.S.C. 1703(b)). The additional 
sanctions of August 9, 1990, were imposed pursuant to the authority 
vested in me by the Constitution and laws of the United States, 
including the statutes cited above and the United Nations Participation 
Act (22 U.S.C. 287c). The present report is submitted pursuant to 50 
U.S.C. 1641(c) and 1703(c). This report discusses only Administration 
actions and expenses directly related to the national emergency with 
respect to Iraq declared in Executive Order No. 12722, as implemented 
pursuant to that order and Executive Orders Nos. 12723, 12724, and 
12725.
    3. The Office of Foreign Assets Control of the Department of the 
Treasury (``FAC''), after consultation with other Federal agencies, 
issued the Kuwaiti Assets Control Regulations, 31 C.F.R. Part 570 (55 FR 
49857, November 30, 1990), and the Iraqi Sanc-

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tions Regulations, 31 C.F.R. Part 575 (56 FR 2112, January 18, 1991), to 
implement the prohibitions contained in Executive Orders Nos. 12722-
12725.
    Prior to the issuance of the final regulations, FAC issued a number 
of general licenses to address emergency situations affecting U.S. 
persons and the legitimate Government of Kuwait. Those general licenses 
have been incorporated, as appropriate, into the Kuwaiti Assets Control 
Regulations and the Iraqi Sanctions Regulations as general licenses, 
which permit transactions that would otherwise be prohibited by the 
Executive orders and regulations. U.S. persons, including U.S. financial 
institutions, are authorized to complete certain securities, foreign 
exchange, and similar transactions on behalf of the Government of Kuwait 
that were entered into prior to August 2, 1990. Similarly, certain 
import and export transactions commenced prior to August 2, 1990, were 
allowed to be completed, provided that any payments owed to Iraq or 
Kuwait were paid into a blocked account in a U.S. financial institution. 
The regulations also allow for the investment and reinvestment of 
blocked Kuwaiti and Iraqi assets. Consistent with United Nations 
Security Council Resolutions 661 and 666, the regulations also outline 
licensing procedures permitting the donation to Iraq or Kuwait of food 
in humanitarian circumstances, and of medical supplies, where it is 
demonstrated to FAC that the proposed export transaction meets the 
requirements for exemption under United Nations Security Council 
Resolution 661.
    With this report I am enclosing a copy of the Department of the 
Treasury's Kuwaiti Assets Control Regulations and Iraqi Sanctions 
Regulations.
    4. Worldwide outrage over the invasion of Kuwait by Saddam Hussein 
has resulted in the imposition of sanctions by nearly every country of 
the world. To an extent unprecedented in the history of peacetime 
economic sanctions, the community of nations has worked together to make 
the sanctions effective in isolating Saddam Hussein and in cutting him 
off from the support he needs in order to continue his illegal 
occupation of Kuwait. This cooperation has occurred through the United 
Nations Sanctions Committee, established by United Nations Security 
Council Resolution 661, diplomatic channels, and day-to-day working 
contact among the national authorities responsible for implementing and 
administering the sanctions.
    5. As of January 24, 1991, FAC had issued 158 specific licenses to 
Kuwaiti governmental entities operating assets or direct investments in 
the United States, enabling continued operation and the preservation of 
Kuwaiti government assets in the United States, as well as addressing 
certain expenditures by or on behalf of the Government of Kuwait in 
exile. In addition, 68 specific licenses were issued regulating 
transactions involving the Government of Iraq or its assets. 
Authorizations were granted enabling the Iraqi Embassy to conduct 
diplomatic representation in the United States. Specific licenses were 
also issued to non-Iraqi entities determining or authorizing the 
disposition of pre-embargo imports and exports on the high seas, 
authorizing the payment under confirmed letters of credit for pre-
embargo exports, and permitting the conduct of procedural transactions 
such as the filing of lawsuits and payment for legal representation. In 
all cases involving Iraqi property, steps were taken to ensure that no 
financial benefit accrued to Iraq as a result of a licensing decision. 
In order to ensure compliance with the terms and conditions of licenses, 
reporting requirements have been imposed that are closely monitored. 
Licensed accounts are regularly audited by FAC compliance personnel and 
by deputized auditors from other regulatory agencies. Compliance 
analyses are prepared monthly for major licensed Kuwaiti governmental 
entities.
    6. Upon issuance of Executive Orders Nos. 12722 and 12723 on August 
2, 1990, FAC initiated an intensive effort to identify and enforce the 
blocked status of all property within the United States in which the 
Government of Iraq has an interest. On Sunday, 
August 5, 1990, in a nationwide law enforcement effort coordinated by 
FAC, notices of blocking were served on agents of 
Iraqi Airways, Inc., at four locations--two in New York, one in 
Southfield, Michigan, and one in Los Angeles, California--and all

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operations of Iraqi Airways in the United States were shut down.
    On August 27, 1990, a notice of blocking was served on a company in 
Newbury, Ohio, which had in its possession a scintillation detector 
belonging to the Iraqi Atomic Energy Commission. The detector had been 
sold to the Iraqi government by the firm in February 1990 and returned 
to the United States for repair in July 1990.
    On September 17, 1990, in a law enforcement effort coordinated by 
FAC with assistance from the Federal Bureau of Investigation and the 
Customs Service, a notice of blocking was served and actions were taken 
pursuant thereto at the office of a machine tool distributing company in 
Solon, Ohio. This corporation is a wholly owned subsidiary of an English 
company and was blocked based on information that the English company 
was ultimately owned and controlled by an Iraqi government-controlled 
trading company in Baghdad, Iraq. Enforcement of the blocked status of 
the Ohio company's property, including its bank assets, forced the 
shutdown of the firm.
    FAC is continuing to coordinate enforcement actions and investigate 
reports of violations of the sanctions against Iraq and occupied Kuwait. 
These efforts will continue to ensure that no activities in violation of 
the sanctions are allowed to confer any benefit on Iraq.
    The enforcement efforts of the United States Government complement 
the efforts worldwide to enforce sanctions against Iraq. The United 
States has utilized a wide variety of diplomatic, administrative, and 
enforcement tools to deter circumvention of the global trade and 
financial embargoes established under United Nations Security Council 
resolutions. The enforcement efforts of the United States have been 
augmented through ongoing contacts with the United Nations, the 
Organization of Economic Cooperation and Development, the European 
Community and member states' central banks through the Bank for 
International Settlements, as well as with representatives of individual 
governments.
    7. The expenses incurred by the Federal Government in the 6-month 
period from August 2, 1990, through February 1, 1991, that are directly 
attributable to the exercise of the authorities conferred by the 
declaration of a national emergency with respect to Iraq (including 
sanctions against Iraq and occupied Kuwait) are estimated at 
$1,226,338.80, most of which represents wage and salary costs for 
Federal personnel. Personnel costs were largely centered in the 
Department of the Treasury (particularly in FAC, the U.S. Customs 
Service, Office of the Assistant Secretary for Enforcement, the Office 
of the Assistant Secretary for International Affairs, and the Office of 
the General Counsel), the Department of State, the Federal Reserve 
Board, the National Security Council, the Department of Agriculture, and 
the Department of Transportation.
    8. The invasion of Kuwait and the continuing illegal occupation of 
that country by Saddam Hussein continue to pose an unusual and 
extraordinary threat to the national security and foreign policy of the 
United States. The United States remains committed to a multilateral 
resolution of this crisis through its actions implementing the binding 
decisions of the United Nations Security Council with respect to Iraq 
and Kuwait. I shall continue to exercise the powers at my disposal to 
apply economic sanctions against Iraq and occupied Kuwait as long as 
these measures are appropriate, and will continue to report periodically 
to the Congress on significant developments, pursuant to 50 U.S.C. 
1703(c).
    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.