    [Public Papers of the Presidents of the United States: William J. Clinton (1993, Book I)]
    [July 12, 1993]
    [Pages 1066-1068]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Letter to Congressional Leaders on Economic Sanctions Against Libya
    July 12, 1993

    Dear Mr. Speaker:  (Dear Mr. President:)
        I hereby report to the Congress on the developments since the last
    report of December 30, 1992, concerning the national emergency with
    respect to Libya that was declared in Executive Order No. 12543 of
    January 7, 1986. This report is submitted pursuant to section 401(c) of
    the National Emergencies Act, 50 U.S.C. 1641(c); section 204(c) of the
    International Emergency Economic Powers Act (``IEEPA''), 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).
        1. There has been one amendment to the Libyan Sanctions Regulations,
    31 C.F.R. Part 550 (the ``Regulations''), administered by the Office of
    Foreign Assets Control (``FAC'') of the Department of the Treasury,
    since the last report on December 30, 1992. The amendment, published on
    March 10, 1993, 58 Fed. Reg. 13198, added an interpretation of the
    Regulations' prohibition against the exportation of services to Libya
    from the United States, and a general license and statement of licensing
    policy concerning the provision of certain legal services. A copy of the
    amendment is attached to this report.
        The prohibition against exportation of services to Libya contained
    in section 550.202 of the Regulations is interpreted in new section
    550.422. Services (including legal services) are considered to be
    exported to Libya if their benefit is received in Libya and the services
    are performed (1) in the United States; (2) by an entity located in the
    United States, including its overseas branches; or (3) outside the
    United States by an individual U.S. person ordinarily resident in the
    United States. The benefit of services performed anywhere in the world
    on behalf of the Government of Libya, including a controlled entity or
    Specially Designated National of the Government of Libya, is presumed to
    be received in Libya. Legal services performed by U.S. persons outside
    the United States with respect to property interests of the Government
    of Libya are prohibited pursuant to section 550.209, which prohibits
    U.S. persons from dealing in any property (including con-

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    tracts) in which the Government of Libya has an interest. Section
    550.205, which prohibits performance by U.S. persons of any contract in
    support of an industrial or other commercial or governmental project in
    Libya, may also be applicable in these instances. For example, sections
    550.205 and 550.209 of the Regulations, taken together, prohibit U.S.
    persons from representing a foreign entity in contract negotiations,
    contract performance, or arbitration with the Government of Libya. Such
    representation may be authorized only by specific license from FAC.
        New section 550.517 of the Regulations states that the provision of
    legal services to the Government of Libya or to a person in Libya
    generally requires the issuance of a specific license, and that the
    receipt of compensation for such legal services must, in all cases, be
    specifically licensed by FAC. However, the provision of the following
    legal services to the Government of Libya or to a person in Libya (but
    not receipt of compensation for those services) is generally licensed:
    (1) the provision of legal advice and counselling to the Government of
    Libya or to a person in Libya on requirements of and compliance with
    U.S. law, provided that such advice and counselling are not provided to
    facilitate transactions in violation of the Regulations; (2)
    representation of the Government of Libya or of a person in Libya when
    named as a defendant in domestic U.S. legal, arbitration, or
    administrative proceedings; (3) initiation of domestic U.S. legal or
    administrative proceedings in defense of property interests subject to
    U.S. jurisdiction of the Government of Libya that were in existence
    prior to January 8, 1986, or of a person in Libya; (4) representation of
    the Government of Libya or of a person in Libya before any Federal
    agency with respect to the imposition, administration, or enforcement of
    U.S. sanctions against Libya; and (5) provision of legal services in any
    other context in which prevailing U.S. law requires access to legal
    counsel at public expense. The enforcement of any judgment, decree,
    attachment, or lien through execution, garnishment, or other judicial
    process purporting to transfer or otherwise alter or affect a Government
    of Libya property interest is prohibited unless specifically licensed.
        2. During the current 6-month period, FAC made numerous decisions
    with respect to applications for licenses to engage in transactions
    under the Regulations, issuing 60 licensing determinations--both
    approvals and denials. Consistent with FAC's ongoing scrutiny of banking
    transactions, the majority of the determinations (51) concerned requests
    by non-Libyan persons or entities to unblock bank accounts initially
    blocked because of an apparent Libyan interest. Three determinations
    involved license applications for export sales transactions from the
    United States to Libya. Four determinations concerned registration of
    individuals pursuant to a general license authorizing travel to Libya
    for the sole purpose of visiting close family members. Finally, FAC has
    also issued two licenses authorizing U.S. landlords to liquidate the
    personalty of the People's Committee for Libyan Students, with the net
    proceeds from the sale paid into blocked accounts.
        3. During the current 6-month period, FAC has continued to emphasize
    to the international banking community in the United States the
    importance of identifying and blocking payments made by or on behalf of
    Libya. The Office worked closely with the banks to implement new
    interdiction software systems to identify such payments. As a result,
    during the reporting period, more than 44 transactions involving Libya
    have been blocked.
        The proactive compliance programs initiated by FAC have resulted in
    the imposition of substantially fewer civil penalties for banks' failure
    to block payments in which an interest of the Government of Libya
    exists. Since December 30, 1992, FAC has collected $140,000 in civil
    penalties for violations of U.S. sanctions against Libya. Fewer than
    one-third of the violations involved the failure of banks to block funds
    transfers to Libyan-owned or -controlled banks, with the remainder about
    equally divided between violations involving merchandise transshipment
    and illegal representation of the Government of Libya.
        Various enforcement actions carried over from previous reporting
    periods have continued to be aggressively pursued. Several new
    investigations of potentially significant violations of the Libyan
    sanctions have been initiated by FAC and cooperating U.S. law
    enforcement agencies. Many of these cases involved complex conspiracies
    to circumvent the embargo through the use of international diversionary
    shipping routes to and from Libya. For example, during the current
    reporting period, a U.S. citizen was indicted for his employment as a
    manager at a German oil refinery, Holborn Europa Raffinerie GmbH,

    [[Page 1068]]

    which dealt primarily in Libyan crude oil and and in which the
    Government of Libya had acquired a majority ownership interest. In
    addition, a foreign national and two foreign firms for whom that
    individual acted as agent were indicated by a Federal grand jury for
    illegally transshipping agricultural equipment from the United States to
    Libya.
        FAC has worked closely with the Departments of State and Justice to
    identify several U.S. persons who had entered into contracts or other
    agreements with the Government of Libya, or other third-country parties,
    to lobby United States Government officials and to engage in public
    relations work on behalf of the Government of Libya without obtaining
    FAC authorization, in violation of the Regulations. In one such case,
    FAC levied civil penalties totaling $35,000 against three individuals
    who had engaged in such activity.
        In addition, during this reporting period, FAC blocked a foreign
    merchant vessel under the management and control of a Specially
    Designated National of Libya, following the vessel's unauthorized entry
    into a U.S. port. FAC imposed and received a civil penalty in the amount
    of $10,000 from agents of the shipping company prior to authorizing
    release of the vessel and its departure from the U.S. port.
        FAC has continued to pursue its Operation Roadblock initiative,
    issuing an additional 70 warning letters and demands for information
    during the reporting period to persons believed to have travelled to and
    worked in Libya, or made travel-related payments to Libya in violation
    of U.S. law. To date, Operation Roadblock's ongoing investigative
    efforts have resulted in one criminal conviction and several civil
    penalty assessments. In addition, these investigations have yielded
    substantial information concerning alleged criminal violations of the
    embargo by businesses and individuals. FAC is aggressively pursuing its
    investigations of such suspected violators in cooperation with other
    agencies of the United States Government, including the Departments of
    State and Justice, the Treasury Department's Financial Crimes
    Enforcement Network (FinCEN), the Federal Bureau of Investigation, and
    the U.S. Customs Service.
        4. The expenses incurred by the Federal Government in the 6-month
    period from January 7 through July 6, 1993, that are directly
    attributable to the exercise of powers and authorities conferred by the
    declaration of the Libyan national emergency are estimated at
    approximately $2.7 million. Personnel costs were largely centered in the
    Department of the Treasury (particularly in the Office of Foreign Assets
    Control, the Office of the General Counsel, and the U.S. Customs
    Service), the Department of State, and the Department of Commerce.
        5. The policies and actions of the Government of Libya continue to
    pose an unusual and extraordinary threat to the national security and
    foreign policy of the United States. I shall continue to exercise the
    powers at my disposal to apply economic sanctions against Libya fully
    and effectively, so long as those measures are appropriate, and will
    continue to report periodically to the Congress on significant
    developments as required by law.
        Sincerely,

                                                          William J. Clinton

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