    [Public Papers of the Presidents of the United States: William J. Clinton (1994, Book II)]
    [December 1, 1994]
    [Pages 2132-2136]
    [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 1, 1994

    Dear Mr. Speaker:  (Dear Mr. President:)
        On May 30, 1992, in Executive Order No. 12808, the President
    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 the Republic of
    Bosnia and 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

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    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 United States persons, including their overseas branches.
        Subsequently, Executive Order No. 12810 expanded U.S. actions to
    implement in the United States the United Nations sanctions against the
    FRY (S/M) adopted in United Nations Security Council Resolution (UNSCR)
    757 of May 30, 1992. In addition to reaffirming the blocking of FRY (S/
    M) Government property, this order prohibited 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.
        On January 15, 1993, President Bush issued Executive Order No. 12831
    to implement new sanctions contained in UNSCR 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 United States 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 UNSCR Resolution 820 of
    April 17, 1993. That resolution called on the Bosnian Serbs to accept
    the Vance-Owen peace plan for the Republic of Bosnia and 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 the Republic of Bosnia and Herzegovina
    and the United Nations Protected Areas of Croatia. Effective April 26,
    1993, the order blocked 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 United States persons.
        On October 25, 1994, in view of UNSCR 942 of September 23, 1994, I
    issued Executive Order No. 12934 in order to take additional steps with
    respect to the crisis in the former Yugoslavia. (59 FR 54117, October
    27, 1994.) Executive Order No. 12934 expands the scope of the national
    emergency declared in Executive Order No. 12808 to address the unusual
    and extraordinary threat to the national security, foreign policy, and
    economy of the United States posed by the actions and policies of the
    Bosnian Serb forces and the authorities in the territory that they
    control, including their refusal to accept the proposed territorial
    settlement of the conflict in the Republic of Bosnia and Herzegovina.
        The Executive order blocks all property and interests in property
    that are in the United States, that hereafter come within the United
    States, or that are or hereafter come within the possession or control
    of United States persons (including their overseas branches) of: (1) the
    Bosnian Serb military and paramilitary forces and the authorities in
    areas of the Republic of Bosnia and Herzegovina under the control of
    those forces; (2) any entity, including any commercial, industrial, or
    public utility undertaking, organized or located in those areas of the
    Republic of Bosnia and Herzegovina under the control of Bosnian Serb
    forces; (3) any entity,

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    wherever organized or located, which is owned or controlled directly or
    indirectly by any person in, or resident in, those areas of the Republic
    of Bosnia and Herzegovina under the control of Bosnian Serb forces; and
    (4) any person acting for or on behalf of any person within the scope of
    the above definitions.
        The Executive order also prohibits the provision or exportation of
    services to those areas of the Republic of Bosnia and Herzegovina under
    the control of Bosnian Serb forces, or to any person for the purpose of
    any business carried on in those areas, either from the United States or
    by a United States person. The order also prohibits the entry of any
    U.S.-flagged vessel, other than a U.S. naval vessel, into the riverine
    ports of those areas of the Republic of Bosnia and Herzegovina under the
    control of Bosnian Serb forces. Finally, any transaction by any United
    States person that evades or avoids, or has the purpose of evading or
    avoiding, or attempts to violate any of the prohibitions set forth in
    the order is prohibited. Executive Order No. 12934 became effective at
    11:59 p.m., e.d.t. on October 25, 1994. A copy of the Executive order is
    attached for reference.
        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 subsequent Executive orders 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 (22 U.S.C. 287c).
        3. There have been no amendments to the Federal Republic of
    Yugoslavia (Serbia and Montenegro) Sanctions Regulations (the
    ``Regulations''), 31 C.F.R. Part 585, since the last report. Treasury's
    blocking authority as applied to FRY (S/M) subsidiaries and vessels in
    the United States has been challenged in court. A case involving a
    blocked subsidiary, IPT Company, Inc. v. United States Department of the
    Treasury, No. 92 CIV 5542 (S.D.N.Y.), is pending a decision by the court
    on the Government's motion for a summary judgment.
        4. Over the past 6 months, the Departments of State and Treasury
    have worked closely with European Union (the ``EU'') member states and
    other U.N. member nations to coordinate implementation of the U.N.
    sanctions against the FRY (S/M). This has included visits by assessment
    teams formed under the auspices of the United States, the EU, 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 ongoing
    multilateral meetings by financial sanctions enforcement authorities
    from various countries to coordinate enforcement efforts and to exchange
    technical information.
        5. In accordance with licensing policy and the Regulations, the
    Department of the Treasury's Office of Foreign Assets Control (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 144 specific
    licenses regarding transactions pertaining to the FRY (S/M) or assets it
    owns or controls, bringing the total as of October 25, 1994, to 821.
    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 entities; (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 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, vessel maintenance, and emergency sup-

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    plies for FRY (S/M)-controlled ships blocked in the United States; (8)
    for the removal from the FRY (S/M), or protection within the FRY (S/M),
    of certain property owned and controlled by U.S. entities; (9) to assist
    the United Nations in its relief operations and the activities of the
    UNPROFOR; and (10) for payment from funds outside the United States
    where a third country has licensed the transaction in accordance with
    U.N. sanctions. Pursuant to U.S. regulations implementing UNSCR 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.
        Bank regulators again worked closely with FAC with regard to two
    Serbian banking institutions in New York that were not permitted to
    conduct normal business after June 1, 1992. The banks had been issued
    licenses to maintain a limited staff for audit purposes while full-time
    bank examiners were posted in their offices to ensure that banking
    records were appropriately safeguarded. Subsequent to the issuance of
    Executive Order No. 12846, all licenses previously issued were revoked.
    In order to reduce the drain on blocked assets caused by continuing to
    rent commercial space, FAC has arranged to have the blocked personalty,
    files, and records moved to secure storage. The personalty will be
    liquidated and the net proceeds placed in blocked accounts.
        A similar liquidation involved the motor vessel Bor, a Montenegrin-
    owned, Maltese-flagged vessel, blocked in Norfolk on September 15, 1992.
    The owners of the vessel requested that it be sold in order to provide
    funds for the support of another of their Maltese-flagged vessels, the
    M/V Bar, blocked in the port of New Orleans. The FAC submitted this
    request to the U.N. Sanctions Committee, which approved sale of the Bor
    on March 11, 1994.
        Through a contractor, FAC auctioned the vessel on June 24, 1994, for
    $1.35 million. Prior to authorizing the sale, FAC determined that the
    purchaser of the vessel was neither organized or located in a country
    subject to U.N. or U.S. economic sanctions, nor owned or controlled by
    entities that are organized or located in a country subject to economic
    sanctions, nor owned or controlled by, or acting or purporting to act
    directly or indirectly on behalf of, the government or de facto regime
    of a country subject to economic sanctions.
        The proceeds of sale were deposited into a blocked, interest-bearing
    account in a U.S. financial institution, after certain payments were
    made related to the costs of maintaining the vessel in blocked status
    and the costs of sale. During the 2 years that the Bor was blocked,
    vendors continued to provide provisions and fuel to the vessel despite
    deferred payment due to lack of funds. U.N. Security Council Sanctions
    Committee approval of the sale also provided for Treasury reimbursement
    of auction and other expenses from the proceeds of the sale.
        The previous and new owners of the vessel concluded the transaction
    on July 28, 1994, and the vessel was unblocked and removed from the
    Treasury's list of blocked entities. Arrangements were made for payment
    of wages to the crew and their travel to their port of embarkation.
        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) and to stop prohibited transfers to persons in the
    FRY (S/M). Such interdicted transfers have accounted for $91.5 million
    since the issuance of Executive Order No. 12808, including some $7.3
    million during the past 6 months.
        To ensure compliance with the terms of the licenses that have been
    issued under the program, stringent reporting requirements are imposed.
    More than 292 submissions have been reviewed since the last report and
    more than 193 compliance cases are currently open.
        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 59 cases under active investigation. Since

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    the last report, FAC has collected 31 civil penalties totaling more than
    $141,000. Of these, 24 were paid by U.S. financial institutions for
    violative funds transfers involving the Government of the FRY (S/M),
    persons in the FRY (S/M), or entitles located or organized in or
    controlled from the FRY (S/M). Five U.S. companies, one organization,
    and one law firm have also paid penalties related to exports or
    unlicensed payments to the Government of the FRY (S/M) or persons in the
    FRY (S/M) for trademark registrations.
        As previously reported, FAC has issued a series of General Notices
    announcing the names of entities and individuals determined by the
    Department of the Treasury to be Blocked Entities or Specially
    Designated Nationals (SDNs) of the FRY (S/M). On May 4, 1994, Treasury
    announced the identification of three companies registered in Cyprus as
    FRY (S/M) owned or controlled. Additionally, on September 15, 1994, FAC
    announced that two firms previously named as SDNs of the FRY (S/M), had
    changed their corporate names. The FAC published those name changes.
    These additions and amendments bring the current total of Blocked
    Entities and SDNs of the FRY (S/M) to 853. All prohibitions in the
    Regulations pertaining to the Government of the FRY (S/M) apply to the
    entities and individuals identified. United States persons on notice of
    the status of such blocked persons are prohibited from entering into
    transactions with them, or transactions in which they have an interest,
    unless otherwise exempted or authorized pursuant to the Regulations.
    Copies of these announcements are attached to this report.
        7. The expenses incurred by the Federal Government in the 6-month
    period from May 30 through November 29, 1994, 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 about
    $4 million, most of which represent wage and salary costs of 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 the Republic of Bosnia and Herzegovina by force
    and violence, the actions and policies of the Bosnian Serb military and
    paramilitary forces, and the authorities in the areas of Bosnia and
    Herzegovina under the control of those forces, 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 the conflict through
    implementation of the United Nations Security Council mandate.
        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.