    [Public Papers of the Presidents of the United States: William J. Clinton (1993, Book II)]
    [December 6, 1993]
    [Pages 2134-2138]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Letter to Congressional Leaders Reporting on Sanctions Against the
    Federal Republic of Yugoslavia (Serbia and Montenegro)
    December 6, 1993

    Dear Mr. Speaker:  (Dear Mr. President:)
        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-Herzegovina
    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 other cultural representation
    of, or sponsorship by, 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.

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        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 revoked the exemption
    for transshipments through the FRY (S/M) contained in Executive Order
    No. 12810, prohibited transactions within the United States or by a 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 stated that all such vessels shall be
    considered as vessels of the FRY (S/M), regardless of the flag under
    which they sail.
        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-
    Herzegovina 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 Bosnia-Herzegovina and the
    United Nations Protected Areas in Croatia. Effective April 26, 1993, the
    order blocks all property and interests in property of commercial,
    industrial, or public utility undertakings or entities organized or
    located in the FRY (S/M), including property and interests in property
    of entities (wherever organized or located) owned or controlled by such
    undertakings or entities, that are or thereafter come within the
    possession or control of U.S. persons.
        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 (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 (FAC)
    of the Department of the Treasury, in consultation with the State
    Department and other Federal agencies, has amended the Federal Republic
    of Yugoslavia (Serbia and Montenegro) Sanctions Regulations, 31 CFR Part
    585 (58 FR 35828, July 1, 1993), to implement Executive Order No. 12846.
    A copy of the amendment is enclosed with this report.
        Effective 12:01 a.m. e.d.t., April 26, 1993, Executive Order No.
    12846 blocks all property and interests in property of all commercial,
    industrial, or public utility undertakings or entities organized or
    located in the FRY (S/M), including the property and interest in
    property of entities (wherever organized or located) owned or controlled
    by such undertakings and entities, that are or thereafter come within
    the United States or the possession or control of U.S. persons (amended
    section 585.201). Section 1(a) of Executive Order No. 12846 expressly
    blocks property subject to U.S. jurisdiction of many entities, both U.S.
    and foreign, heretofore blocked pursuant to the regulatory presumption
    of FAC that all entities organized or located in the FRY (S/M), as well
    as entities owned or controlled by them, are controlled directly or
    indirectly by the Government of the FRY (S/M).
        New section 585.215 implements section 1(c) of Executive Order No.
    12846 to provide that, except as otherwise authorized, conveyances and/
    or cargo that comes within the United States and is not otherwise
    subject to blocking, but is suspected of a violation of United Nations
    Security Council resolutions imposing sanctions against the FRY (S/M),
    shall be detained pending investigation and, upon a determination by the
    Secretary of the Treasury or his delegate that a violation has occurred,
    shall be blocked. New section 585.216 of the Regulations implements
    section 1(b) of Executive Order No. 12846 to provide that, except as
    otherwise authorized, all expenses incident to the blocking and
    maintenance of property blocked pursuant to the Regulations shall be
    charged to the owners or operators of such property. Section 585.216
    also provides for the discretionary liquidation of property blocked
    under these sections, with net proceeds placed in a blocked account in
    the name of the property's owner.

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        New section 585.217 provides that no vessel registered in the United
    States or owned or controlled by U.S. persons, other than U.S. naval
    vessels, may enter the territorial waters of the FRY (S/M) without
    specific authorization (Executive Order No. 12846, section 1(d)). New
    section 585.218 prohibits, unless specifically authorized pursuant to
    the statement of licensing policy in new section 585.524, any dealing by
    a U.S. person relating to the unauthorized importation from, exportation
    to, or transshipment through the United Nations Protected Areas in the
    Republic of Croatia and those areas of the Republic of Bosnia-
    Herzegovina under the control of Bosnian Serb forces, and activities
    promoting such trade (Executive Order No. 12846, section 1(e)).
        The prohibitions of Executive Order No. 12846 apply notwithstanding
    any prior contracts, international agreements, licenses or
    authorizations, but may be modified by regulation, order, or license.
    New section 585.419 states that Executive Order No. 12846 does not
    invalidate existing authorizations and licenses issued pursuant to
    Executive orders with respect to the FRY (S/M), unless terminated,
    suspended, or modified by FAC.
        In addition to implementing the provisions of Executive Order No.
    12846, the amended Regulations expand the general license in section
    585.509 to permit certain ``Qualified Transactions,'' in the form of
    debt-for-equity or debt-for-debt swaps in rescheduled commercial debt of
    the former Yugoslavia, where the Yugoslav debt being swapped was
    originally incurred by an entity in Bosnia-Herzegovina, Croatia,
    Macedonia, or Slovenia. These transactions are pursuant to the New
    Financing Agreement for Yugoslavia of September 20, 1988.
        As part of the international effort to tighten economic sanctions
    against Yugoslavia, FAC has issued a series of General Notices listing
    ``Blocked Federal Republic of Yugoslavia (Serbia and Montenegro)
    Entities and Specially Designated Nationals (SDNs).'' Three additional
    General Notices have been issued by FAC since my last report. General
    Notices No. 4, No. 5, and No. 6 announced the names of 349 additional
    entities and five individuals determined by the Department of the
    Treasury to be Blocked Entities or SDNs of the FRY (S/M). General
    Notices No. 4, No. 5, and No. 6 supplement the listings of General
    Notice No. 1 (57 FR 32051, July 20, 1992), General Notice No. 2 (January
    15, 1993), and General Notice No. 3 (March 8, 1993), and bring the
    current total of Blocked Entities and SDNs of the FRY (S/M) to 850.
    Copies of General Notices No. 4, No. 5, and No. 6 are attached.
        Of the two court cases in which the blocking authority was
    challenged as applied to FRY (S/M) subsidiaries and vessels in the
    United States, the Government's position in the case involving the
    blocked vessels was upheld by the Fifth Circuit Court of Appeals.
    Supreme Court review has been requested. The case involving a blocked
    subsidiary remains to be resolved.
        4. Over the past 6 months, the Departments of State and 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 for 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 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 137 specific
    licenses regarding transactions pertaining to the FRY (S/M) or assets it
    owns or controls, bringing the total as of October 15, 1993, to 563.
    Specific licenses have been issued (1) for 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 the liquidation or protection of tangible
    assets of 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 pat-

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    ent, 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 certain 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 Forces. Pursuant to regulations
    implementing United Nations Security Council Resolution No. 757,
    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 oversee the
    liquidation of tangible assets of the 15 U.S. subsidiaries of entities
    organized in the FRY (S/M). Subsequent to the issuance of Executive
    Order No. 12846, all operating licenses issued for these U.S.-located
    Serbian or Montenegrin subsidiaries or joint ventures were revoked, and
    the net proceeds of the liquidation of their assets placed in blocked
    accounts.
        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. The banks had been issued licenses to maintain a limited staff and
    full-time bank examiners had been posted in their offices to ensure that
    banking records are appropriately safeguarded. Subsequent to the
    issuance of Executive Order No. 12846, all licenses previously issued
    were revoked. FAC is currently working with the Federal Reserve Board
    and the New York State Banking Department to resolve outstanding issues
    regarding the banks.
        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) or an entity or undertaking located in or controlled
    from the FRY (S/M). Such transfers have accounted for $36.6 million in
    Yugoslav assets blocked 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.
    Nearly 500 submissions were reviewed since the last report and more than
    180 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 42 cases under active investigation. Civil penalties
    collected from financial institutions for violations involving transfers
    of funds in which the Government of the FRY (S/M) has an interest have
    totaled more than $21,000 to date.
        7. The expenses incurred by the Federal Government in the 6 month
    period from May 31, 1993, through November 29, 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 more
    than $3.9 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-Herzegovina 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 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).

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        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).
        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.