[Public Papers of the Presidents of the United States: George H. W. Bush (1992, Book I)]
[February 11, 1992]
[Pages 229-231]
[From the U.S. Government Publishing Office www.gpo.gov]



[[Page 229]]

Message to the Congress Reporting on the National Emergency With Respect 
to Iraq

February 11, 1992
To the Congress of the United States:
    I hereby report to the Congress on the developments since my last 
report of July 26, 1991, concerning the national emergency with respect 
to Iraq that was declared in Executive Order No. 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 No. 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 U.S. person. In that 
order, I 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. I prohibited 
travel-related transactions and transportation transactions to or from 
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.
    The foregoing prohibitions (as well as the blocking of Government of 
Iraq property) were continued and augmented on August 9, 1990, by 
Executive Order No. 12724 that I issued in order to align the sanctions 
imposed by the United States with United Nations Security Council 
Resolution 661 of August 6, 1990.
    1. Since my last report, important and rapid progress has been made 
in establishing the framework for processing U.S. and other nations' 
claims against Iraq for damages arising from its unlawful invasion and 
occupation of Kuwait. The Governing Council of the U.N. Compensation 
Commission has adopted criteria for various categories of claims, 
including small and large claims of individuals, claims of corporations, 
and claims of government and international organizations (including 
environmental damage and natural resource depletion claims). In 
addition, the Governing Council agreed to begin expedited consideration 
of claims of individuals for up to $100,000 as of July 1, 1992, and set 
July 1, 1993, as the deadline for filing this category of claims with 
the Commission.
    In a claims census conducted by the Treasury Department's Office of 
Foreign Assets Control (FAC) during the first quarter of 1991 pursuant 
to section 575.605 of the Iraqi Sanctions Regulations, 31 CFR Part 575 
(``ISR''), reports of claims from approximately 1,100 U.S. nationals 
were received. Included were claims for items such as personal property 
looted or destroyed in Kuwait, loans or other obligations on which Iraq 
has defaulted, and lost future business or concession rights. Inasmuch 
as these claims have not been submitted to a formal claims resolution 
body, much less adjudicated, their actual aggregate value is not known.
    2. FAC has issued 199 specific licenses (51 since my last report) 
regarding transactions pertaining to Iraq or Iraqi assets. Specific 
licenses were issued for payment to U.S. or third-country creditors of 
Iraq, under certain narrowly defined circumstances, for pre-embargo 
import and export transactions. Additionally, licenses were issued for 
conducting procedural transactions such as the filing of legal actions 
and for legal representation. Pursuant to United Nations Security 
Council Resolutions 661, 666, and 687, specific licenses were also 
issued to authorize the exportation to Iraq of donated medicine, medical 
supplies, and food intended for humanitarian relief purposes.
    To ensure compliance with the terms of the licenses that have been 
issued, stringent 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. FAC

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compliance personnel have also worked closely with both State and 
Federal bank regulatory and law enforcement agencies in conducting 
special audits of Iraqi accounts subject to the ISR.
    3. Various enforcement actions discussed in previous reports 
continue to be pursued, and additional investigations of possible 
violations of the Iraqi sanctions have been initiated. These are 
intended to deter future activities in violation of the sanctions. 
Additional civil penalty notices were issued during the reporting period 
for violations of the IEEPA and ISR with respect to attempted 
transactions involving Iraq, and substantial penalties were collected.
    After investigation by FAC and the U.S. Customs Service, a Virginia 
corporation and its export director were convicted in U.S. District 
Court for conspiracy and violations of the ISR. Investigation revealed 
that the corporation and its export director continued to engage in 
activities that were in violation of the Executive orders and the ISR 
after August 2, 1990. The corporation and its export director performed 
contracts in support of a government industrial project in Iraq, and 
engaged in prohibited transactions relating to travel by a U.S. person 
to Iraq. After conviction, the corporation was fined $50,000 and the 
export director sentenced to 5 months' incarceration, 5 months' 
supervised work release, and 2 years of supervised release administered 
by the Department of Justice.
    4. The various firms and individuals outside of Iraq in Saddam 
Hussein's procurement network continue to be investigated for possible 
inclusion in the FAC listing of individuals and organizations determined 
to be Specially Designated Nationals (``SDN's'') of the Government of 
Iraq. In practice, an Iraqi SDN is a representative, agent, 
intermediary, or front (whether open or covert) of the Iraqi Government 
that is located outside of Iraq. Iraqi SDN's are Saddam Hussein's 
principal instruments for doing business in third countries, and doing 
business with them is the same as doing business with Saddam Hussein 
himself.
    Since the Iraqi government tends to operate its international fronts 
as interlocking networks of third-world countries and key individuals, 
the SDN program is an important tool in disrupting Saddam Hussein's 
nuclear, military, and technological acquisitions efforts. The impact is 
considerable: all assets with U.S. jurisdiction of parties found to be 
Iraqi SDN's are blocked; all economic transactions with SDN's by U.S. 
persons are prohibited; and the SDN individual or organization is 
exposed.
    5. The expenses incurred by the Federal Government in the 6-month 
period from August 2, 1991, through February 1, 1992, that are directly 
attributable to the exercise of powers and authorities conferred by the 
declaration of a national emergency with respect to Iraq are estimated 
at $2,992,210, 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, the 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 (particularly in 
the Bureau of Economic and Business Affairs and the Office of the Legal 
Adviser), and the Department of Commerce (particularly in the Bureau of 
Export Administration and the Office of the General Counsel).
    6. The United States imposed economic sanctions on Iraq in response 
to Iraq's invasion and illegal 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 binding United Nations 
Security Council resolutions calling for the elimination of Iraqi 
weapons of mass destruction, an end to the repression of the Iraqi 
civilian population, the release of Kuwaiti and other prisoners, and the 
return of Kuwaiti assets stolen during its illegal occupation of Kuwait. 
The U.N. sanctions remain in place; the United States will continue to 
enforce those sanctions.
    The Saddam Hussein regime continues to violate basic human rights by 
repressing the Iraqi civilian population and depriving it of 
humanitarian assistance. The United Nations Security Council passed 
resolutions that permit Iraq to sell $1.6 billion of oil under 
U.N. auspices to fund the provision of

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food, medicine, and other humanitarian supplies to the people of Iraq. 
Under the U.N. resolutions, the equitable distribution within Iraq of 
this assistance would be supervised and monitored by the United Nations 
and other international organizations. The Iraqi regime has refused to 
accept these resolutions and has thereby continued to perpetuate the 
suffering of its civilian population.
    The regime of Saddam Hussein continues 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 United 
States will therefore continue to apply economic sanctions to deter Iraq 
from threatening peace and stability in the region, and I will continue 
to report periodically to the Congress on significant developments, 
pursuant to 50 U.S.C. 1703(c).

                                                             George Bush

The White House,
February 11, 1992.