    [Public Papers of the Presidents of the United States: William J. Clinton (1996, Book I)]
    [February 9, 1996]
    [Pages 202-205]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Message to the Congress Reporting on the National Emergency With Respect
    to Iraq
    February 9, 1996

    To the Congress of the United States:
        I hereby report to the Congress on the developments since my last
    report of August 1, 1995, concerning the national emergency with respect
    to Iraq that was declared in Executive Order No. 12722 of August 2,
    1990. This report is submitted pursuant to section 401(c) of the
    National Emergencies Act, 50 U.S.C. 1641(c), and section 204(c) of the
    International Emergency Economic Powers Act, 50 U.S.C. 1703(c).
        Executive Order No. 12722 ordered the immediate blocking of all
    property and interests in property of the Government of Iraq (including
    the Central Bank of Iraq) then or thereafter located in the United
    States or within the possession or control of a U.S. person. That order
    also prohibited the importation into the United States of goods and
    services of Iraqi origin, as well as the exportation of goods, services,
    and technology from the United States to Iraq. The order prohibited
    travel-related transactions to or from Iraq and the performance of any
    contract in support of any industrial, commercial, or governmental
    project in Iraq. U.S. persons were also prohibited from granting or
    extending credit or loans to the Government of Iraq.
        The foregoing prohibitions (as well as the blocking of Government of
    Iraq property) were continued and augmented on August 9, 1990, by
    Executive Order No. 12724, which was issued in order to align the
    sanctions imposed by the United States with United Nations Security
    Council Resolution 661 of August 6, 1990.
        Executive Order No. 12817 was issued on October 21, 1992, to
    implement in the United States measures adopted in United Nations Se-

    [[Page 203]]

    curity Council Resolution 778 of October 2, 1992. Resolution 778
    requires U.N. Member States to transfer to a U.N. escrow account any
    funds (up to $200 million apiece) representing Iraqi oil sale proceeds
    paid by purchasers after the imposition of U.N. sanctions on Iraq, to
    finance Iraq's obligations for U.N. activities with respect to Iraq,
    such as expenses to verify Iraqi weapons destruction, and to provide
    humanitarian assistance in Iraq on a nonpartisan basis. A portion of the
    escrowed funds also funds the activities of the U.N. Compensation
    Commission in Geneva, which handles claims from victims of the Iraqi
    invasion and occupation of Kuwait. Member States also may make voluntary
    contributions to the account. The funds placed in the escrow account are
    to be returned, with interest, to the Member States that transferred
    them to the United Nations, as funds are received from future sales of
    Iraqi oil authorized by the U.N. Security Council. No Member State is
    required to fund more than half of the total transfers or contributions
    to the escrow account.
        This report discusses only matters concerning the national emergency
    with respect to Iraq that was declared in Executive Order No. 12722 and
    matters relating to Executive Orders No. 12724 and 12817 (the
    ``Executive orders''). The report covers events from August 2, 1995,
    through February 1, 1996.
        1. During the reporting period, there were no amendments to the
    Iraqi Sanctions Regulations.
        2. The Department of the Treasury's Office of Foreign Assets Control
    (FAC) continues its involvement in lawsuits seeking to prevent the
    unauthorized transfer of blocked Iraqi assets. In Consarc Corporation v.
    Iraqi Ministry of Industry and Minerals, No. 94-5390 (D.C. Cir. Dec. 15,
    1995), the U.S. Court of Appeals for the D.C. Circuit issued its second
    opinion in this case, finding in FAC's favor on all issues presented to
    the court. The court ordered the district court judge to direct Consarc
    Corporation to restore the status quo by returning $6.4 million plus
    interest to the blocked Iraqi government account from which it was
    withdrawn after the district court erroneously held that these funds
    were not blocked Iraqi government property. The court also found that
    the unsold furnace manufactured for the Iraqi government and sales
    proceeds of a second furnace were blocked property. Finally, the court
    reversed the district court's ruling that Consarc held a specific claim
    against a blocked Iraqi government account for $6.4 million, holding
    that any claim Consarc had against the Government of Iraq was as a
    general creditor only.
        Investigations of possible violations of the Iraqi sanctions
    continue to be pursued and appropriate enforcement actions taken.
    Several cases from prior reporting periods are continuing and recent
    additional allegations have been referred by FAC to the U.S. Customs
    Service for investigation. Additional FAC civil penalty notices were
    prepared during the reporting period for violations of the International
    Emergency Economic Powers Act and Iraqi Sanctions Regulations with
    respect to transactions involving Iraq. One de minimis penalty has been
    collected from an organization for unlicensed exports in violation of
    the prohibitions against transactions involving Iraq. Several other
    penalty proceedings are pending completion.
        3. Investigation also continues into the roles played by various
    individuals and firms outside Iraq in the Iraqi government procurement
    network. These investigations may lead to additions to FAC's listing of
    individuals and organizations determined to be Specially Designated
    Nationals (SDNs) of the Government of Iraq.
        4. Pursuant to Executive Order No. 21817 implementing United Nations
    Security Council Resolution 778, on October 26, 1992, FAC directed the
    Federal Reserve Bank of New York to establish a blocked account for
    receipt of certain post-August 6, 1990, Iraqi oil sales proceeds, and to
    hold, invest, and transfer these funds as required by the order. On
    September 5, 1995, following payments by the Governments of Australia
    ($216,360.00), Denmark ($168,985.00), Japan ($4,075,000.00), The
    Netherlands ($4,168,745.47), New Zealand ($67,050.00), Switzerland
    ($265,108.20), and by the European Union ($647,463.31), respectively, to
    the special United Nations-controlled account, entitled ``United Nations
    Security Council Resolution 778 Escrow Account,'' the Federal Reserve
    Bank of New York was directed to transfer a corresponding amount of
    $9,606,711.98 from the blocked account it holds to the United Nations-
    controlled account. Similarly, on October 30, 1995, following the
    payment of $1,504,000.00 by the European Community, and payments by the
    Governments of Germany ($355,871.89), The Netherlands ($2,698,348.13),
    Norway ($199,983.00), and the United Kingdom ($2,188,992.67), the
    Federal

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    Reserve Bank of New York was directed to transfer a corresponding amount
    of $6,947,195.69 to the United Nations-controlled account. Finally, on
    December 21, 1995, following the payment of $3,062,197.28 by the
    European Union, and payments by the Governments of the Netherlands
    ($1,922,719.00), Sweden ($4,223,178.20) and the United Kingdom
    ($208,600.44), the Federal Reserve Bank of New York was directed to
    transfer the amount of $8,313,066.13 to the United Nations-controlled
    account. Cumulative transfers from the blocked Federal Reserve Bank of
    New York account since issuance of Executive Order No. 12817 now have
    amounted to $200 million, fully satisfying the U.S. commitment to match
    the payments of other Member States from blocked Iraqi oil payments, and
    its obligation pursuant to United Nations Security Council Resolution
    778.
        5. The Office of Foreign Assets Control has issued a total of 618
    specific licenses regarding transactions pertaining to Iraq or Iraqi
    assets since August 1990. Licenses have been issued for transactions
    such as the filing of legal actions against Iraqi governmental entities,
    legal representation of Iraq, and the exportation to Iraq of donated
    medicine, medical supplies, food intended for humanitarian relief
    purposes, the execution of powers of attorney relating to the
    administration of personal assets and decedents' estates in Iraq and the
    protection of preexistent intellectual property rights in Iraq. Since my
    last report, 28 specific licenses have been issued.
        6. The expenses incurred by the Federal Government in the 6-month
    period from August 2, 1995, through February 1, 1996, that are directly
    attributable to the exercise of powers and authorities conferred by the
    declaration of a national emergency with respect to Iraq are reported to
    be about $1.6 million, most of which represents wage and salary costs
    for Federal personnel. Personnel costs were largely centered in the
    Department of the Treasury (particularly in the Office of Foreign Assets
    Control, the U.S. Customs Service, the Office of the Under Secretary for
    Enforcement, and the Office of the General Counsel), the Department of
    State (particularly the Bureau of Economic and Business Affairs, the
    Bureau of Near Eastern Affairs, the Bureau of International Organization
    Affairs, the Bureau of Political-Military Affairs, the U.S. Mission to
    the United Nations, and the Office of the Legal Adviser), and the
    Department of Transportation (particularly the U.S. Coast Guard).
        7. The United States imposed economic sanctions on Iraq in response
    to Iraq's illegal invasion and occupation of Kuwait, a clear act of
    brutal aggression. The United States, together with the international
    community, is maintaining economic sanctions against Iraq because the
    Iraqi regime has failed to comply fully with United Nations Security
    Council resolutions. Security Council resolutions on Iraq call for the
    elimination of Iraqi weapons of mass destruction, Iraqi recognition of
    Kuwait, and the inviolability of the Iraq-Kuwait boundary, the release
    of Kuwaiti and other third-country nationals, compensation for victims
    of Iraqi aggression, long-term monitoring of weapons of mass destruction
    capabilities, the return of Kuwaiti assets stolen during Iraq's illegal
    occupation of Kuwait, renunciation of terrorism, an end to internal
    Iraqi repression of its own civilian population, and the facilitation of
    access of international relief organizations to all those in need in all
    parts of Iraq. More than 5 years after the invasion, a pattern of
    defiance persists: a refusal to account for missing Kuwaiti detainees;
    failure to return Kuwaiti property worth millions of dollars, including
    military equipment that was used by Iraq in its movement of troops to
    the Kuwaiti border in October 1994; sponsorship of assassinations in
    Lebanon and in northern Iraq; incomplete declarations to weapons
    inspectors; and ongoing widespread human rights violations. As a result,
    the U.N. sanctions remain in place; the United States will continue to
    enforce those sanctions under domestic authority.
        The Baghdad government continues to violate basic human rights of
    its own citizens through systematic repression of minorities and denial
    of humanitarian assistance. The Government of Iraq has repeatedly said
    it will not be bound by United Nations Security Council Resolution 688.
    For more than 4 years, Baghdad has maintained a blockade of food,
    medicine, and other humanitarian supplies against northern Iraq. The
    Iraqi military routinely harasses residents of the north, and has
    attempted to ``Arabize'' the Kurdish, Turcomen, and Assyrian areas in
    the north. Iraq has not relented in its artillery attacks against
    civilian population centers in the south, or in its burning and draining
    operations in the southern marshes, which have forced thousands to flee
    to neighboring States.

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        In April 1995, the U.N. Security Council adopted Resolution 986
    authorizing Iraq to export limited quantities of oil (up to $1 billion
    per quarter) under U.N. supervision in order to finance the purchase of
    food, medicine, and other humanitarian supplies. The resolution includes
    arrangements to ensure equitable distribution of such assistance to all
    the people of Iraq. The resolution also provides for the payment of
    compensation to victims of Iraqi aggression and for the funding of other
    U.N. activities with respect to Iraq. Resolution 986 was carefully
    crafted to address the issues raised by Iraq to justify its refusal to
    implement similar humanitarian resolutions adopted in 1991 (Resolutions
    706 and 712), such as oil export routes and questions of national
    sovereignty. Nevertheless, Iraq refused to implement this humanitarian
    measure. This only reinforces our view that Saddam Hussein is
    unconcerned about the hardships suffered by the Iraqi people.
        The policies and actions of the Saddam Hussein regime continue to
    pose an unusual and extraordinary threat to the national security and
    foreign policy of the United States, as well as to regional peace and
    security. The U.N. resolutions affirm that the Security Council be
    assured of Iraq's peaceful intentions in judging its compliance with
    sanctions. Because of Iraq's failure to comply fully with these
    resolutions, the United States will continue to apply economic sanctions
    to deter it from threatening peace and stability in the region.

                                                          William J. Clinton

    The White House,

    February 9, 1996.