[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.