    [Public Papers of the Presidents of the United States: William J. Clinton (1993, Book I)]
    [May 25, 1993]
    [Pages 735-739]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Message to the Congress Reporting on the Federal Republic of Yugoslavia
    (Serbia and Montenegro)
    May 25, 1993

    To the Congress of the United States:
        On May 30, 1992, in Executive Order No. 12808, President Bush
    declared a national emergency to deal with the threat to the national
    security, foreign policy, and economy of the United States arising from
    actions and policies of the Governments of Serbia and Montenegro, acting
    under the name of the Socialist Federal Republic of Yugoslavia or the
    Federal Republic of Yugoslavia, in their involvement in and support for
    groups attempting to seize territory in Croatia and Bosnia-Hercegovina
    by force and violence utilizing, in part, the forces of the so-called
    Yugoslav National Army (57 FR 23299, June 2, 1992). The present report
    is submitted pursuant to 50 U.S.C. 1641(c) and 1703(c). It discusses
    Administration actions and expenses directly related to the exercise of
    powers and authorities conferred by the declaration of a national
    emergency in Executive Order No. 12808 and to expanded sanctions against
    the Federal Republic of Yugoslavia (Serbia and Montenegro) (the ``FRY
    (S/M)'') contained in Executive Order No. 12810 of June 5, 1992 (57 FR
    24347, June 9, 1992), Executive Order No. 12831 of January 15, 1993 (58
    FR 5253, January 21, 1993), and Executive Order No. 12846 of April 26,
    1993 (58 FR 25771, April 27, 1993).
        1. Executive Order No. 12808 blocked all property and interests in
    property of the Governments of Serbia and Montenegro, or held in the
    name of the former Government of the Socialist Federal Republic of
    Yugoslavia or the Government of the Federal Republic of Yugoslavia, then
    or thereafter located in the United States or within the possession or
    control of U.S. persons, including their overseas branches.
        Subsequently, Executive Order No. 12810 expanded U.S. actions to
    implement in the United States the U.N. sanctions against the FRY (S/M)
    adopted in United Nations Security Council Resolution No. 757 of May 30,
    1992. In addition to reaffirming the blocking of FRY (S/M) Government
    property, this order prohibits transactions with respect to the FRY (S/
    M) involving imports, exports, dealing in FRY-origin property, air and
    sea transportation, contract performance, funds transfers, activity
    promoting importation or exportation or dealings in property, and
    official sports, scientific, technical, or cultural representation of
    the FRY (S/M) in the United States.
        Executive Order No. 12810 exempted from trade restrictions (1)
    transshipments through the FRY (S/M), and (2) activities related to the
    United Nations Protection Force (``UNPROFOR''), the Conference on
    Yugoslavia, or the European Community Monitor Mission.
        On January 15, 1993, President Bush issued Executive Order No. 12831
    to implement new sanctions contained in United Nations Security Council
    Resolution No. 787 of November 16, 1992. The order revokes the exemption
    for transshipments through the FRY (S/M) contained in Executive Order
    No. 12810; prohibits transactions within the United States or by a

    [[Page 736]]

    U.S. person relating to FRY (S/M) vessels and vessels in which a
    majority or controlling interest is held by a person or entity in, or
    operating from, the FRY (S/M), and states that all such vessels shall be
    considered as vessels of the FRY (S/M), regardless of the flag under
    which they sail. Executive Order No. 12831 also delegates discretionary
    authority to the Secretary of the Treasury, in consultation with the
    Secretary of State, to prohibit trade and financial transactions
    involving any areas of the former Socialist Federal Republic of
    Yugoslavia as to which there is inadequate assurance that such
    transactions will not be diverted to the benefit of the FRY (S/M).
        On April 26, 1993, I issued Executive Order No. 12846 to implement
    in the United States the sanctions adopted in United Nations Security
    Council Resolution No. 820 of April 17, 1993. That resolution called on
    the Bosnian Serbs to accept the Vance-Owen peace plan for Bosnia-
    Hercegovina and, if they failed to do so by April 26, called on member
    states to take additional measures to tighten the embargo against the
    FRY (S/M) and Serbian-controlled areas of Croatia and Bosnia-
    Hercegovina.
        Effective 12:01 a.m. e.d.t., April 26, 1993, Executive Order 12846:
    (1) blocks all property and interests in property of businesses
    organized or located in the FRY (S/M), including the property of their
    U.S. and other foreign subsidiaries, that are in or later come within
    the United States or the possession or control of U.S. persons,
    including their overseas branches; (2) confirms the charging to the
    owners or operators of property blocked under this order or Executive
    Orders No. 12808, No. 12810, or No. 12831 all expenses incident to the
    blocking and maintenance of such property, requires that such expenses
    be satisfied from sources other than blocked funds, and permits such
    property to be sold and the proceeds (after payment of expenses) placed
    in a blocked account; (3) orders (a) the detention pending investigation
    of all nonblocked vessels, aircraft, freight vehicles, rolling stock,
    and cargo within the United States suspected of violating United Nations
    Security Council Resolutions No. 713, No. 757, No. 787, or No. 820, and
    (b) the blocking of such conveyances or cargo if a violation is
    determined to have been committed, and permits the liquidation of such
    blocked conveyances or cargo and the placing of the proceeds into a
    blocked account; (4) prohibits any vessel registered in the United
    States, or owned or controlled by U.S. persons, other than U.S. naval
    vessels, from entering the territorial waters of the FRY (S/M); and (5)
    prohibits U.S. persons from engaging in any transactions relating to the
    shipment of goods to, from, or through United Nations Protected Areas in
    the Republic of Croatia and areas in the Republic of Bosnia-Hercegovina
    under the control of Bosnian Serb forces.
        Executive Order No. 12846 authorizes the Secretary of the Treasury
    in consultation with the Secretary of State to take such actions, and to
    employ all powers granted to me by the authorities cited above, as may
    be necessary to carry out the purposes of that order. The sanctions
    imposed in the order do not invalidate existing licenses or
    authorizations issued pursuant to Executive Orders No. 12808, No. 12810,
    or No. 12831 except as those licenses and authorizations may thereafter
    be terminated, suspended, or modified by the issuing Federal agencies,
    but otherwise the sanctions apply notwithstanding any preexisting
    contracts, international agreements, licenses, or authorizations.
        2. The declaration of the national emergency on May 30, 1992, was
    made pursuant to the authority vested in the 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. The emergency declaration was reported to the
    Congress on May 30, 1992, pursuant to section 204(b) of the
    International Emergency Economic Powers Act (50 U.S.C. 1703(b)). The
    additional sanctions set forth in Executive Orders No. 12810, No. 12831,
    and No. 12846 were imposed pursuant to the authority vested in the
    President by the Constitution and laws of the United States, including
    the statutes cited above, section 1114 of the Federal Aviation Act of
    1958, as amended (49 U.S.C. App. 1514), and section 5 of the United
    Nations Participation Act of 1945, as amended (22 U.S.C. 287c).
        3. Since the last report, the Office of Foreign Assets Control of
    the Department of the Treasury (``FAC''), in consultation with the
    Department of State and other Federal agencies, issued the Federal
    Republic of Yugoslavia (Serbia and Montenegro) Sanctions Regulations, 31
    C.F.R. Part 585 (58 FR 13199, March 10, 1993--the ``Regulations''), to
    implement the prohibitions contained in Executive Orders No. 12808, No.

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    12810, and No. 12831. A copy of the Regulations is enclosed with this
    report. The seven general licenses discussed in the last report were
    incorporated into the Regulations. The Regulations contain general
    licenses for certain transactions incident to: the receipt or
    transmission of mail and informational materials and for
    telecommunications transmissions between the United States and the FRY
    (S/M); the importation and exportation of diplomatic pouches; certain
    transfers of funds or other financial or economic resources for the
    benefit of individuals located in the FRY (S/M); the importation and
    exportation of household and personal effects of persons arriving from
    or departing to the FRY (S/M); transactions related to nonbusiness
    travel by U.S. persons to, from, and within the FRY (S/M); and
    transactions involving secondary-market trading in debt obligations
    originally incurred by banks organized in Slovenia, Croatia, Bosnia-
    Hercegovina, and Macedonia.
        On January 15, 1993, FAC issued General Notice No. 2, entitled
    ``Notification of Status of Yugoslav Entities.'' A copy of the notice is
    attached. The list is composed of government, financial, and commercial
    entities organized in Serbia or Montenegro and a number of foreign
    subsidiaries of such entities. The list is illustrative of entities
    covered by FAC's presumption, stated in the notice, that all entities
    organized or located in Serbia or Montenegro, as well as their foreign
    branches and subsidiaries, are controlled by the Government of the FRY
    (S/M) and thus subject to the blocking provisions of the Executive
    orders. General Notice No. 2, which includes more than 400 entities,
    expands and incorporates the list of 284 entities identified in General
    Notice No. 1 (57 FR 32051, July 20, 1992), noted in the previous report.
        As part of a U.S.-led allied effort to tighten economic sanctions
    against Yugoslavia, on March 11, 1993, FAC named 25 maritime firms and
    55 ships controlled by these firms as ``Specially Designated Nationals''
    (``SDNs'') of Yugoslavia. A copy of General Notice No. 3 is attached.
    These shipping firms and the vessels they own, manage, or operate by
    using foreign front companies, changing vessel names, and reflagging
    ships, are presumed to be owned or controlled by or to be acting on
    behalf of the Government of the FRY (S/M). In addition, pursuant to
    Executive Order No. 12846, the property within U.S. jurisdiction of
    these firms is blocked as direct or indirect property interests of firms
    organized or located in the FRY (S/M).
        The FRY (S/M) has continued to operate its maritime fleet and trade
    in violation of the international economic sanctions mandated by United
    Nations Security Council Resolutions No. 757 and No. 787. Operations and
    activities by Yugoslav front companies, or SDNs, enable the Government
    of the FRY (S/M) to circumvent the international trade embargo. The
    effect of FAC's SDN designation is to identify agents and property of
    the Government of the FRY (S/M), and property of entities organized or
    located in the FRY (S/M), and thus to extend the applicability of the
    regulatory prohibitions governing transactions with the Government of
    the FRY (S/M) and its nationals by U.S. persons to these designated
    individuals and entities wherever located, irrespective of nationality
    or registration. U.S. persons are prohibited from engaging in any
    transaction involving property in which an SDN has an interest, which
    includes all financial and trade transactions. All SDN property within
    the jurisdiction of the United States (including financial assets in
    U.S. bank branches overseas) is blocked.
        The two court cases in which the blocking authority was challenged
    as applied to FRY (S/M) subsidiaries and vessels in the United States
    remain pending at this time. In one case, the plaintiffs have challenged
    the application of Executive Order No. 12846, and the challenge remains
    to be resolved. The other case is presently pending before a U.S. Court
    of Appeals.
        4. Over the past 6 months, the Departments of State and the Treasury
    have worked closely with European Community (the ``EC'') member states
    and other U.N. member nations to coordinate implementation of the
    sanctions against the FRY (S/M). This has included visits by assessment
    teams formed under the auspices of the United States, the EC, and the
    Conference for Security and Cooperation in Europe (the ``CSCE'') to
    states bordering on Serbia and Montenegro; deployment of CSCE sanctions
    assistance missions (``SAMS'') to Albania, Bulgaria, Croatia, the Former
    Yugoslav Republic of Macedonia, Hungary, Romania, and Ukraine to assist
    in monitoring land and Danube River traffic; bilateral contacts between
    the United States and other countries with the purpose of tightening
    financial and trade restrictions on the FRY (S/M); and establishment of
    a mechanism to coordinate enforcement efforts and to exchange

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    technical information.
        5. In accordance with licensing policy and the Regulations, FAC has
    exercised its authority to license certain specific transactions with
    respect to the FRY (S/M) that are consistent with the Security Council
    sanctions. During the reporting period, FAC has issued 163 specific
    licenses regarding transactions pertaining to the FRY (S/M) or assets it
    owns or controls, bringing the total as of April 30, 1993, to 426.
    Specific licenses have been issued for (1) payment to U.S. or third-
    country secured creditors, under certain narrowly defined circumstances,
    for pre-embargo import and export transactions; (2) for legal
    representation or advice to the Government of the FRY (S/M) or FRY (S/
    M)-controlled clients; (3) for restricted and closely monitored
    operations by subsidiaries of FRY (S/M)-controlled firms located in the
    United States; (4) for limited FRY (S/M) diplomatic representation in
    Washington and New York; (5) for patent, trademark and copyright
    protection, and maintenance transactions in the FRY (S/M) not involving
    payment to the FRY (S/M) Government; (6) for certain communications,
    news media, and travel-related transactions; (7) for the payment of
    crews' wages and vessel maintenance of FRY (S/M)-controlled ships
    blocked in the United States; (8) for the removal from the FRY (S/M) of
    manufactured property owned and controlled by U.S. entities; and (9) to
    assist the United Nations in its relief operations and the activities of
    the U.N. Protection Force. Pursuant to United Nations Security Council
    Resolutions No. 757 and No. 760, specific licenses have also been issued
    to authorize exportation of food, medicine, and supplies intended for
    humanitarian purposes in the FRY (S/M).
        During the past 6 months, FAC has continued to closely monitor 15
    U.S. subsidiaries of entities organized in the FRY (S/M) that were
    blocked as entities owned or controlled by the Government of the FRY (S/
    M). Treasury agents performed on-site audits and reviewed numerous
    reports submitted by the blocked subsidiaries. Subsequent to the
    issuance of Executive Order No. 12846, operating licenses issued for
    U.S.-located Serbian or Montenegrin subsidiaries or joint ventures were
    revoked and the U.S. entities closed for business.
        The Board of Governors of the Federal Reserve Board and the New York
    State Banking Department again worked closely with FAC with regard to
    two Serbian banking institutions in New York that were closed on June 1,
    1992. Full-time bank examiners continue to be posted in their offices to
    ensure that banking records are appropriately safeguarded.
        During the past 6 months, U.S. financial institutions have continued
    to block funds transfers in which there is an interest of the Government
    of the FRY (S/M). Such transfers have accounted for an additional $24.5
    million in blocked Yugoslav assets since the issuance of Executive Order
    No. 12808.
        To ensure compliance with the terms of the licenses that have been
    issued under the program, stringent reporting requirements are imposed.
    Some 350 submissions were reviewed since the last report, and more than
    150 compliance cases are currently open. In addition, licensed bank
    accounts are regularly audited by FAC compliance personnel and by
    cooperating auditors from other regulatory agencies.
        6. Since the issuance of Executive Order No. 12810, FAC has worked
    closely with the U.S. Customs Service to ensure both that prohibited
    imports and exports (including those in which the Government of the FRY
    (S/M) has an interest) are identified and interdicted, and that
    permitted imports and exports move to their intended destination without
    undue delay. Violations and suspected violations of the embargo are
    being investigated, and appropriate enforcement actions are being taken.
    There are currently 39 cases under active investigation.
        7. The expenses incurred by the Federal Government in the 6-month
    period from December 1, 1992, through May 30, 1993, that are directly
    attributable to the authorities conferred by the declaration of a
    national emergency with respect to the FRY (S/M) are estimated at $2.9
    million, most of which represent wage and salary costs for Federal
    personnel. Personnel costs were largely centered in the Department of
    the Treasury (particularly in FAC and its Chief Counsel's Office and the
    U.S. Customs Service), the Department of State, the National Security
    Council, the U.S. Coast Guard, and the Department of Commerce.
        8. The actions and policies of the Government of the FRY (S/M), in
    its involvement in and support for groups attempting to seize and hold
    territory in Croatia and Bosnia-Hercegovina by force and violence,
    continue to pose an unusual and extraordinary threat to the national
    security, foreign policy, and economy of the United States. The United
    States remains committed

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    to a multilateral resolution of this crisis through its actions
    implementing the binding resolutions of the United Nations Security
    Council with respect to the FRY (S/M). I shall continue to exercise the
    powers at my disposal to apply economic sanctions against the FRY (S/M)
    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).

                                                          William J. Clinton

    The White House,
    May 25, 1993.