    [Public Papers of the Presidents of the United States: William J. Clinton (1996, Book I)]
    [May 30, 1996]
    [Pages 835-838]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Letter to Congressional Leaders Reporting on the National Emergency With
    Respect to the Federal Republic of Yugoslavia (Serbia and Montenegro)
    May 30, 1996

    Dear Mr. Speaker:  (Dear Mr. President:)
        On May 30, 1992, by Executive Order 12808, President Bush declared a
    national emergency to deal with the unusual and extraordinary threat to
    the national security, foreign policy, and economy of the United States
    constituted by the actions and policies of the Governments of Serbia and
    Montenegro, blocking all property and interests in property of those
    Governments. President Bush took additional measures to prohibit trade
    and other transactions with the Federal Republic of Yugoslavia (Serbia
    and Montenegro) by Executive Orders 12810 and 12831, issued on June 5,
    1992, and January 15, 1993, respectively.
        On April 25, 1993, I issued Executive Order 12846, blocking the
    property and interests in property of all commercial, industrial, or
    public utility undertakings or entities organized or located in the
    Federal Republic of Yugoslavia (Serbia and Montenegro) (the ``FRY
    (S&M)''), and prohibiting trade-related transactions by United States
    persons involving those areas of the Republic of Bosnia and Herzegovina
    controlled by the Bosnian Serb forces and the United Nations Protected
    Areas in the Republic of Croatia. On October 25, 1994, because of the
    actions and policies of the Bosnian Serbs, I expanded the scope of the
    national emergency by issuance of Executive Order 12934 to block the
    property of the Bosnian Serb forces and the authorities in the territory
    that they control within the Republic of Bosnia and Herzegovina, as well
    as the property of any entity organized or located in, or controlled by
    any person in, or resident in, those areas.
        On December 27, 1995, I issued Presidential Determination No. 96-7,
    directing the Secretary of the Treasury, inter alia, to suspend the
    application of sanctions imposed on the FRY (S&M) pursuant to the above-
    referenced Executive orders and to continue to block property previously
    blocked until provision is made to address claims or encumbrances,
    including the claims of the other successor states of the former
    Yugoslavia. This sanctions relief, in conformity with United Nations
    Security Council Resolution (``UNSCR'') 1022 of November 22, 1995, was
    an essential factor motivating Serbia and Montenegro's acceptance of the
    General Framework Agreement for Peace in Bosnia and Herzegovina
    initialed by the parties in Dayton, Ohio, on November 21, 1995 (the
    ``Peace Agreement''), and signed in Paris on December 14, 1995. The
    sanctions imposed on the FRY (S&M) and on the United Nations Protected
    Areas in

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    the Republic of Croatia were accordingly suspended prospectively,
    effective January 16, 1996. Sanctions imposed on the Bosnian Serb forces
    and authorities and on the territory that they control within the
    Republic of Bosnia and Herzegovina were subsequently suspended
    prospectively, effective May 13, 1996, in conformity with UNSCR 1022.
        The present report is submitted pursuant to 50 U.S.C. 1641(c) and
    1703(c) and covers the period from November 30, 1995, to May 29, 1996.
    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 12808 of May 30, 1992 (57 FR
    23299) and Executive Order 12934 (59 FR 54117) and to expanded sanctions
    against the FRY (S&M) and the Bosnian Serbs contained in Executive Order
    12810 of June 5, 1992 (57 FR 24347, June 9, 1992), Executive Order 12831
    of January 15, 1993 (58 FR 5253, January 21, 1993), Executive Order
    12846 of April 25, 1993 (58 FR 25771, April 27, 1993), and Executive
    Order 12934 of October 25, 1994 (59 FR 54117, October 27, 1994).
        1. 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 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).
        2. Since the declaration of the national emergency with respect to
    the FRY (S&M) on May 30, 1992, the Office of Foreign Assets Control
    (``FAC'') acting under authority delegated by the Secretary of the
    Treasury has implemented the sanctions imposed under the foregoing
    statutes. Effective January 16, 1996, FAC amended the Federal Republic
    of Yugoslavia (Serbia and Montenegro) and Bosnian Serb-Controlled Areas
    of the Republic of Bosnia and Herzegovina Sanctions Regulations, 31
    C.F.R. Part 585 (the ``Regulations''), to implement in the United States
    provisions of the Peace Agreement and UNSCR 1022 (61 FR 1282, January
    19, 1996). The amended Regulations authorize prospectively all
    transactions with respect to the FRY (S&M) otherwise prohibited.
    Property and interests in property of the FRY (S&M) previously blocked
    within the jurisdiction of the United States remain blocked, in
    conformity with the Peace Agreement and UNSCR 1022, until provision is
    made to address claims or encumbrances, including the claims of the
    other successor states of the former Yugoslavia. A copy of the amended
    Regulations is attached.
        3. Section 2 of UNSCR 1022 of November 22, 1995, provides that
    sanctions remain in force against the Bosnian Serbs until the day after
    the High Representative described in the Peace Agreement or the
    Commander of the International Force deployed in accordance with that
    Agreement has informed the United Nations Security Council via the
    Secretary General that all Bosnian Serb forces had withdrawn behind the
    zones of separation established by the Peace Agreement. Finally, UNSCR
    1022 provides for the reimposition of sanctions against the Bosnian
    Serbs and the FRY (S&M) if either the Bosnian Serbs or the FRY (S&M)
    fail significantly to meet their obligations under the Peace Agreement.
        In light of the Resolution, and the transmittal of the Commander's
    report to the Security Council by the U.N. Secretary General on February
    26, 1996, FAC amended the Regulations effective May 13, 1996, to
    authorize prospectively those transactions previously prohibited with
    respect to the Bosnian Serb forces and authorities; entities organized
    or located in those areas of the Republic of Bosnia and Herzegovina
    under their control; entities owned or controlled directly or indirectly
    by any person in, or resident in, those areas; and any person acting for
    or on behalf of any of the foregoing. United States persons are also
    authorized to engage in transactions involving the areas of the Republic
    of Bosnia and Herzegovina under the control of the Bosnian Serb forces,
    and services may be exported either from the United States or by United
    States persons to those areas. Prop-

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    erty and interests in property previously blocked because of an interest
    of any of the above persons remains blocked (61 FR 24696, May 16, 1996).
    A copy of the amended Regulations is attached.
        4. Over the past 6 months, the Departments of State and the Treasury
    have worked closely with European Union (the ``EU'') member states and
    other U.N. member nations to implement the provisions of UNSCR 1022. In
    the United States, retention of blocking authority pursuant to the
    extension of the national emergency provides a framework for
    administration of an orderly claims settlement. This accords with past
    policy and practice with respect to the suspension of sanctions regimes.
        5. Subsequent to the suspension of sanctions imposed on the FRY
    (S&M), effective January 16, 1996, FAC has issued 20 specific licenses
    regarding transactions pertaining to the FRY (S&M) or assets it owns or
    controls. As of May 14, 1996, specific licenses have been issued (1) to
    authorize the unblocking of certain funds and other financial assets
    previously blocked; (2) for the payment of crews' wages, vessel
    maintenance, and emergency supplies for FRY (S&M)-controlled ships
    blocked in the United States; and (3) to authorize performance of
    certain transactions under presanctions contracts.
        During the past 6 months, FAC has continued to oversee the
    maintenance of blocked accounts and records with respect to: (1)
    liquidated tangible assets and personalty of the 15 blocked U.S.
    subsidiaries of entities organized in the FRY (S&M); (2) the blocked
    personalty, files, and records of the 2 Serbian banking institutions in
    New York previously placed in secure storage; (3) remaining tangible
    property, including real estate; and (4) the 5 Yugoslav-owned vessels
    still blocked in the United States.
        6. Despite the suspension of sanctions imposed on the FRY (S&M), FAC
    has continued to work closely with the U.S. Customs Service and other
    cooperating agencies to investigate alleged violations that occurred
    while sanctions were in force. On January 31, 1996, a Federal grand jury
    in San Jose, California, handed down a three-count indictment against
    the owner of a Santa Clara, California-based electronics firm. The
    indictment charges that the defendant made three separate shipments of
    computer equipment to Macedonia with knowledge that the equipment would
    be transshipped to Serbia.
        Since the last report, FAC has collected eight civil penalties
    totaling nearly $33,000. Of these, three 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 paid a
    penalty related to the unlicensed sale of equipment to a FRY (S&M)
    entity, another for the unauthorized import of goods originating in the
    FRY (S&M). A third company settled a penalty for the performance of a
    contract in the FRY (S&M). A law firm and a company remitted penalties
    relating to unlicensed payments to the Government of the FRY (S&M) for
    intellectual property registrations.
        7. The expenses incurred by the Federal Government in the 6-month
    period from November 30, 1995, through May 29, 1996, 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 $1.3 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. In the last year, substantial progress has been achieved to bring
    about a settlement of the conflict in the former Yugoslavia acceptable
    to the parties. Before agreeing to the sanctions suspension, the United
    States insisted on a credible reimposition mechanism to ensure the full
    implementation of the Peace Agreement. Thus, UNSCR 1022 provides a
    mechanism to reimpose the sanctions if the Federal Republic of
    Yugoslavia or the Bosnian Serb authorities fail significantly to meet
    their obligations under the Peace Agreement. It also provides that
    sanctions will not be terminated until after the first free and fair
    elections occur in the Republic of Bosnia and Herzegovina, as provided
    for in the Peace Agreement, and provided that the Bosnian Serb forces
    have continued to respect the zones of separation as provided in the
    Peace Agreement. The Resolution also contemplates the continued blocking
    of assets potentially subject to conflicting claims and encumbrances
    until provision is made to address them, including

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    claims of the other successor states of the former Yugoslavia.
        The resolution of the crisis and conflict in the former Yugoslavia
    that has resulted from the actions and policies of the Government of the
    Federal Republic of Yugoslavia (Serbia and Montenegro), and of the
    Bosnian Serb forces and the authorities in the territory that they
    control, will not be complete until such time as the Peace Agreement is
    implemented fully and the terms of UNSCR 1022 have been met. Therefore,
    I have continued the national emergency declared on May 30, 1992, as
    expanded in scope on October 25, 1994, and will continue to enforce the
    measures adopted pursuant thereto.
        I shall continue to exercise the powers at my disposal with respect
    to the measures against the Government of the Federal Republic of
    Yugoslavia (Serbia and Montenegro), 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).
            Sincerely,

                                                          William J. Clinton

    Note: Identical letters were sent to Newt Gingrich, Speaker of the House
    of Representatives, and Albert Gore, Jr., President of the Senate.