[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.