Public Papers of the Presidents of the United States: William J. Clinton (1995, Book II) - Message to the Congress Reporting on Sanctions Against the Federal Republic of Yugoslavia (Serbia and Montenegro)

[Public Papers of the Presidents of the United States: William J. Clinton (1995, Book II)]
[July 18, 1995]
[Pages 1101-1105]
[From the U.S. Government Publishing Office www.gpo.gov]

Message to the Congress Reporting on Sanctions Against the Federal
Republic of Yugoslavia (Serbia and Montenegro)
July 18, 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). 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, Jan. 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 U.S. 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-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 U.N. Security Council 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 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.

[[Page 1102]]

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, 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 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 U.S. 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 U.S. 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
Bosnia Serb forces. Finally, any transaction by any U.S. 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. 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. The
Treasury Department had previously published 853 names in the Federal
Register on November 17, 1994 (59 FR 59460), as part of a comprehensive
listing of all blocked persons and specially designated nationals
(``SDNs'') of the FRY (S/M). This list identified individuals

[[Page 1103]]

and entities determined by the Department of the Treasury to be owned or
controlled by or acting for or on behalf of 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). All prohibitions in the Regulations
pertaining to the Government of the FRY (S/M) apply to the entities and
individuals identified. U.S. persons, on notice of the status of such
blocked persons and specially designated nationals, 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.
On February 22, 1995, pursuant to Executive Order 12934 and the
Regulations, Treasury identified 85 individuals as leaders of the
Bosnian Serb forces or civilian authorities in the territories in the
Republic of Bosnia and Herzegovina that they control. Also on February
22, Treasury designated 19 individuals and 23 companies as SDNs of the
FRY (S/M). These designations include FRY (S/M)-connected companies
around the world that are being directed from Cyprus, two Cypriot-owned
firms that have had a central role in helping establish and sustain
sanctions-evading FRY (S/M) front companies in Cyprus, and the head of
the FRY (S/M)'s Central Bank who is also the architect of the FRY (S/M)
economic program.
Additionally, on March 13, 1995, Treasury named 32 firms and eight
individuals that are part of the Karic Brothers' family network of
companies as SDNs of the FRY (S/M). Their enterprises span the globe and
are especially active in former East Bloc countries. These additions and
amendments, published in the Federal Register on April 18, 1995 (60 FR
19448), bring the current total of Blocked Entities and SDNs of the FRY
(S/M) to 938 and the total number of individuals identified as leaders
of the Bosnian Serb military or paramilitary forces or civilian
authorities in the territories in the Republic of Bosnia and Herzegovina
that they control to 85. A copy of the notice 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), involving five ships owned or controlled by FRY (S/M)
entities blocked in various U.S. ports, theblocking 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. The
latter case is currently on appeal to the Second Circuit.
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
Organization for Security and Cooperation in Europe (the ``OSCE'') to
states bordering on Serbia and Montenegro; continued deployment of 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, FAC has
exercised its authority to license certain specific transactions with
respect to the FRY (S/M) that are consistent with U.S. foreign policy
and the Security Council sanctions. During the reporting period, FAC has
issued 109 specific licenses regarding transactions pertaining to the
FRY (S/M) or assets it owns or controls, bringing the total as of April
25, 1995, to 930. 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)-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 U.S.; (4) for limited transactions
related to FRY (S/M) diplomatic representation in Washington and New
York; (5)

[[Page 1104]]

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
U.N. Protection Force; 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 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.
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) based on U.S. assurances that the sale
would comply with four basic conditions, which assure that both U.S. and
U.N. sanctions objectives with respect to the FRY (S/M) are met: (1) the
sale will be for fair market value; (2) the sale will result in a
complete divestiture of any interest of the FRY (S/M) (or of commercial
interests located in or controlled from the FRY (S/M)) in the vessel;
(3) the sale would result in no economic benefit to the FRY (S/M) (or
commercial interests located in or controlled from the FRY (S/M)); and
(4) the net proceeds of the sale (the gross proceeds less the costs of
sale normally paid by the seller) will be placed in a blocked account in
the United States. Negotiations for the sale of the M/V Bar, now blocked
in New Orleans, are underway and are likely to be concluded prior to my
next report.
Other than the M/V Bar, the four remaining Yugoslav-owned vessels
are beneficially owned by Jugooceanija Plovidba of Kotor, Montenegro,
and managed by Milena Ship Management Co. Ltd. in Malta. These vessels
have many unpaid U.S. creditors for services and supplies furnished
during the time they have been blocked in the United States; moreover,
the owner appears to have insufficient resources to provide for the
future upkeep and maintenance needs of these vessels and their crews.
The United States is notifying the UNSC's Serbian Sanctions Committee of
the United States's intention to license some or all of these remaining
four vessels upon the owner's request.
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 entities
and merchant vessels maintained by FAC. The new owners of several
formerly Yugoslav-owned vessels, which have been sold in other
countries, have petitioned FAC to remove those vessels from the list.
FAC, in coordination with the Department of State, is currently
reviewing the sale terms and conditions for those vessels to ascertain
whether they comply with U.N. sanctions objectives and UNSC's Serbian
Sanctions Committee practice.
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 $125.6 million
since the issuance of Executive Order No. 12808, including some $9.3
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 279 submissions have been reviewed by FAC since the last
report, and more than 125 compliance cases are currently open.
6. Since the issuance of Executive Order No. 12810, FAC has worked
closely with the U.S.

[[Page 1105]]

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. There are currently 37 cases under active investigation. Since
the last report, FAC has collected nine civil penalties totaling nearly
$20,000. 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). Three U.S. companies and one air carrier
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) or other
violations of the Regulations.
7. The expenses incurred by the Federal Government in the 6-month
period from November 30, 1994, through May 29, 1995, that are directly
attributable to the authorities conferred by 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,

July 18, 1995.