    [Public Papers of the Presidents of the United States: William J. Clinton (1995, Book II)]
    [December 8, 1995]
    [Pages 1862-1865]
    [From the U.S. Government Publishing Office www.gpo.gov]

    [[Page 1862]]

    Message to the Congress Reporting on Sanctions Against the Federal
    Republic of Yugoslavia (Serbia and Montenegro)
    December 8, 1995

    To the Congress of the United States:
        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). I expanded the national emergency in Executive Order No. 12934 of
    October 25, 1994, to address the actions and policies of the Bosnian
    Serb forces and the authorities in the territory of the Republic of
    Bosnia and Herzegovina that they control.
        The present report is submitted pursuant to 50 U.S.C. 1641(c) and
    1703(c) and covers the period from May 30, 1995, to November 29, 1995.
    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 Executive Order No.
    12934 and to expanded sanctions against the Federal Republic of
    Yugoslavia (Serbia and Montenegro) (the ``FRY (S&M)'') and the Bosnian
    Serbs 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), Executive Order No. 12846 of April 25, 1993
    (58 FR 25771, April 27, 1993), and Executive Order No. 12934 of October
    25, 1994 (59 FR 54117, October 27, 1994).
        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 (UNSC) Resolution
    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
    (S&M)-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 UNSC Resolution 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 25, 1993, I issued Executive Order No. 12846 to implement
    in the United States the sanctions adopted in UNSC 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, 1993, called on member states
    to take additional measures to tighten the embargo against the FRY (S&M)
    and Serbian-controlled areas

    [[Page 1863]]

    of the Republic of Bosnia and Herzegovina and the United Nations
    Protected Areas in 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 UNSC Resolution 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
    in the Republic of Bosnia and Herzegovina 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, 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.
        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)) and the
    expansion of that national emergency under the same authorities was
    reported to the Congress on October 25, 1994. The additional sanctions
    set forth in related 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. Effective June 30, 1995, the Federal Republic of Yugoslavia
    (Serbia and Montenegro) Sanctions Regulations, 31 C.F.R. Part 585 (the
    ``Regulations''), were amended to implement Executive Order No. 12934
    (60 FR 34144, June 30, 1995). The name of the Regulations was changed to
    reflect the expansion of the national emergency to the Bosnian Serbs,
    and now reads ``Federal Republic of Yugoslavia (Serbia & Montenegro) and
    Bosnian Serb-Controlled Areas of the Republic of Bosnia and Herzegovina
    Sanctions Regulations.'' A copy of the amended Regulations is attached.
        Treasury's blocking authority as applied to FRY (S&M) subsidiaries
    and vessels in the United States has been challenged in court. In Milena
    Ship Management Company, Ltd. v. Newcomb., 804 F. Supp. 846, 855, and
    859 (E.D.L.A. 1992) aff'd, 995 F. 2d 620 (5th Cir. 1993), cert. denied,
    114 S. Ct. 877 (1994), in-

    [[Page 1864]]

    volving five ships owned or controlled by FRY (S&M) entities blocked in
    various U.S. ports, the blocking authority as applied to these vessels
    was upheld. In IPT Company, Inc. v. United States Department of the
    Treasury, No. 92 CIV 5542 (S.D.N.Y. 1994), the district court also
    upheld the blocking authority as applied to the property of a Yugoslav
    subsidiary located in the United States, and the case was subsequently
    settled.
        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 continued deployment
    of Organization for Security and Cooperation in Europe (OSCE) 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; support for the
    International Conference on the Former Yugoslavia (ICFY) monitoring
    missions along the Serbia-Montenegro-Bosnia border; 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
    Office of Foreign Assets Control (FAC) has exercised its authority to
    license certain specific transactions with respect to the FRY (S&M),
    which are consistent with U.S. foreign policy and the Security Council
    sanctions. During the reporting period, FAC has issued 90 specific
    licenses regarding transactions pertaining to the FRY (S&M) or assets it
    owns or controls, bringing the total specific licenses issued as of
    October 13, 1995, to 1,020. Specific licenses have been issued: (1) for
    payment to U.S. or third country secured creditors, under certain
    narrowly defined circumstances, for preembargo import and export
    transactions; (2) for legal representation or advice to the Government
    of the FRY (S&M) or FRY (S&M)-located or controlled entities; (3) for
    the liquidation or protection of tangible assets of subsidiaries of FRY
    (S&M)-located or controlled firms located in the United States; (4) for
    limited transactions related to FRY (S&M) diplomatic representation in
    Washington and New York; (5) for patent, trademark, and copyright
    protection 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 supplies 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 UNSC Resolutions, 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 period, FAC addressed the status of the unallocated debt
    of the former Yugoslavia by authorizing nonblocked U.S. creditors under
    the New Financing Agreement for Yugoslavia (Blocked Debt) to exchange a
    portion of the Blocked Debt for new debt (bonds) issued by the Republic
    of Slovenia. The completion of this exchange will mark the transfer to
    Slovenia of sole liability for a portion of the face value of the $4.2
    billion unallocated debt of the FRY (S&M) for which Slovenia, prior to
    the authorized exchange, was jointly and severally liable. The exchange
    will relieve Slovenia of the joint and several liability for the
    remaining unallocated FRY (S&M) debt and pave the way for its entry into
    international capital markets.
        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.
        In order to reduce the drain on blocked assets caused by continuing
    to rent commercial space, FAC arranged to have the blocked personalty,
    files, and records of the two Serbian banking institutions in New York
    moved to secure storage. The personalty is being liquidated, with the
    net proceeds placed in blocked accounts.

    [[Page 1865]]

        Following the sale of the M/V Kapetan Martinovic in January 1995,
    five Yugoslav-owned vessels remain blocked in the United States.
    Approval of the UNSC's Serbian Sanctions Committee was sought and
    obtained for the sale of the M/V Kapetan Martinovic (and the M/V Bor,
    which was sold in June 1994).
        With the FAC-licensed sales of the M/V Kapetan Martinovic and the M/
    V Bor, those vessels were removed from the list of blocked FRY (S&M)
    entities and merchant vessels maintained by FAC. As of October 12, 1995,
    five additional vessels have been removed from the list of blocked FRY
    (S&M) entities and merchant vessels maintained by FAC as a result of
    sales conditions that effectively extinguished any FRY (S&M) interest:
    the M/V Blue Star, M/V Budva, M/V Bulk Star, M/V Hanuman, and M/V
    Sumadija. The new owners of several other formerly Yugoslav-owned
    vessels, which have been sold in other countries, have petitioned FAC to
    remove those vessels from the list.
        During the past 6 months, U.S. financial institutions have continued
    to block funds transfers in which there is a possible 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). The value of transfers blocked has amounted to
    $137.5 million since the issuance of Executive Order No. 12808,
    including some $13.9 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 318 submissions have been reviewed by FAC since the last
    report, and more than 130 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) or Bosnian Serb authorities have 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. Numerous investigations carried
    over from the prior reporting period are continuing. Since the last
    report, FAC has collected 10 civil penalties totaling more than $27,000.
    Of these, five 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 entities located or organized in or controlled from
    the FRY (S&M). One U.S. company and one air carrier have also paid
    penalties related to unlicensed payments to the Government of the FRY
    (S&M) or other violations of the Regulations. Two companies and one law
    firm have also remitted penalties for their failure to follow the
    conditions of FAC licenses.
        7. The expenses incurred by the Federal Government in the 6-month
    period from May 30, 1995, through November 29, 1995, that are directly
    attributable to the declaration of a national emergency with respect to
    the FRY (S&M) and the Bosnian Serb forces and authorities are estimated
    at about $3.5 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 the Republics of Croatia and Bosnia and Herzegovina by
    force and violence, and the actions and policies of the Bosnian Serb
    forces and the authorities in the areas of Bosnia and Herzegovina under
    their control, 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
    resolutions.
        I shall continue to exercise the powers at my disposal to apply
    economic sanctions against the FRY (S&M) and the Bosnian Serb forces,
    civil authorities, and entities, 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,

    December 8, 1995.