[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.