[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

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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.