    [Public Papers of the Presidents of the United States: William J. Clinton (1996, Book I)]
    [May 16, 1996]
    [Pages 756-758]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Message to the Congress Reporting on the National Emergency With Respect
    to Iran
    May 16, 1996

    To the Congress of the United States:
        I hereby report to the Congress on developments since the last
    Presidential report of November 28, 1995, concerning the national
    emergency with respect to Iran that was declared in Executive Order No.
    12170 of November 14, 1979. This report is submitted pursuant to section
    204 of the International Emergency Economic Powers Act, 50 U.S.C.
    1703(c). This report covers events through March 1, 1996. My last
    report, dated November 28, 1995, covered events through September 29,
    1995.
        1. Effective March 1, 1996, the Department of the Treasury's Office
    of Foreign Assets Control (``FAC'') amended the Iranian Assets Control
    Regulations, 31 CFR Part 535 (``IACR''), to reflect changes in the
    status of litigation brought by Iran against close relatives of the
    former Shah of Iran seeking the return of property alleged to belong to
    Iran (61 Fed. Reg. 8216, March 4, 1996). In 1991, Shams Pahlavi, sister
    of the former Shah of Iran, was identified in section 535.217(b) of the
    IACR as a person whose assets were blocked based on proof of service
    upon her in litigation of the type described in section 535.217(a).
    Pursuant to that provision, all property and assets located in the
    United States within the possession or control of Shams Pahlavi were
    blocked until all pertinent litigation against her was finally
    terminated. Because the litigation has been finally terminated,
    reference to Shams Pahlavi has been deleted from section 535.217(b). A
    copy of the amendment is attached to this report.
        2. The Iran-U.S. Claims Tribunal, established at The Hague pursuant
    to the Algiers Accords, continues to make progress in arbitrating the
    claims before it. Since my last report, the Tribunal has rendered one
    award, bringing the total number to 567. The majority of those awards
    have been in favor of U.S. claimants. As of March 1996, the value of
    awards to successful U.S. claimants from the Security Account held by
    the NV Settlement Bank was $2,376,010,041.91.
        In February 1996, Iran deposited funds into the Security Account,
    established by the Algiers Accords to ensure payment of awards to
    successful U.S. claimants for the first time since October 8, 1992. The
    Account was credited $15 million on February 22, 1996. However, the
    Account has remained continuously below the $500 million balance
    required by the Algiers Accords since November 5, 1992. As of March 1,
    1996, the total amount in the Security Account was $195,370,127.71, and
    the total amount in the Interest Account was $37,055,050.92.
        Therefore, the United States continues to pursue Case A/28, filed in
    September 1993, to require Iran to meet its obligations under the
    Algiers Accords to replenish the Security Account. Iran filed its
    Statement of Defense in that case on August 30, 1995. The United States
    filed a Reply on December 4, 1995. Iran is scheduled to file its
    Rejoinder on June 4, 1996.
        3. The Department of State continues to present other United States
    Government claims against Iran and to respond to claims brought against
    the United States by Iran, in coordination with concerned government
    agencies.
        In November 1995, Iran filed its latest Response concerning the
    United States Request to Dismiss Certain Claims from Case B/61. The
    United States had filed its Request to Dismiss in August 1995 as part of
    its consolidated submission on the merits. Iran had previously filed its
    initial response in July 1995, and the United States filed a reply in
    August 1995. Case B/

    [[Page 757]]

    61 involves a claim by Iran for compensation with respect to primarily
    military equipment that Iran alleges it did not receive. Iran had sought
    to purchase or repair the equipment pursuant to commercial contracts
    with more than 50 private American companies. Iran alleges that it
    suffered direct losses and consequential damages in excess of $2 billion
    in total because of the United States Government refusal to allow the
    export of the equipment after January 19, 1981, in alleged contravention
    of the Algiers Accords. Iran's November 1995 filing failed to show why
    the Tribunal should not dismiss immediately certain duplicative or
    otherwise improperly pleaded claims from Case B/61.
        In December 1995, the Department of State represented the United
    States in hearings before the Tribunal on two government-to-government
    claims. In the first, Chamber Two heard oral arguments in Case B/36, the
    U.S. claim against Iran for its failure to honor debt obligations
    created by the sale of military surplus property to Iran shortly after
    the Second World War. In the second, also before Chamber Two, the
    Department of State presented the U.S. defense in Case B/58, Iran's
    claim that the United States is liable for damage caused to the Iranian
    State Railways during the Second World War.
        In January 1996, in Case B/1 (Claims 2 & 3), Iran filed its Rebuttal
    Memorial Concerning Responsibility for Termination Costs, along with 20
    volumes of exhibits and affidavits. In this briefing stream, the
    Tribunal is asked to decide whether Iran or the United States is liable
    for the costs arising from the termination of the U.S.-Iran Foreign
    Military Sales program after Iran's default and its subsequent seizure
    of the U.S. embassy in Tehran in 1979. The United States is currently
    preparing a comprehensive response to Iran's brief.
        In February 1996, the Departments of State and Justice represented
    the United States in a hearing before the full Tribunal in a government-
    to-government claim filed by Iran. Case A/27 is an interpretive dispute
    in which Iran claims that the United States is liable under the Algiers
    Accords for Tribunal awards issued in favor of Iran against U.S.
    nationals. The United States maintains that its obligation under the
    Algiers Accords is satisfied by the availability of domestic judicial
    procedures through which Iran can enforce awards in its favor.
        Also in February 1996, Iran and the United States settled Iran's
    claims against the United States filed before the International Court of
    Justice concerning the July 3, 1988, downing of Iran Air 655 and certain
    of Iran's claims against the United States field before the Iran-United
    States Tribunal concerning certain banking matters. The cases in
    question were dismissed from the International Court of Justice and the
    Iran-United States Tribunal on February 22, 1996. The settlement, inter
    alia, fulfills President Reagan's 1988 offer to make ex gratia payments
    to the survivors of the victims of the Iran Air shootdown. The survivors
    of each victim of the Iran Air shootdown will be paid $300,000 (for
    wage-earning victims) or $150,000 (for non-wage-earning victims). For
    this purpose, $61 million was deposited with the Union Bank of
    Switzerland in Zurich in an account jointly held by the New York Federal
    Reserve Bank, acting as fiscal agent of the United States, and Bank
    Markazi, the central bank of Iran. Of an additional $70 million in the
    settlement package, $15 million was deposited in the Security Account
    established as part of the Algiers Accords. The remaining $55 million
    was deposited in an account at the New York Federal Reserve Bank, from
    which funds can be drawn only (1) for deposits into the Security Account
    used to pay Tribunal awards to American claimants or for the payment of
    Iran's share of the operating expenses of the Tribunal, or (2) to pay
    debts incurred before the date of settlement and owed by Iranian banks
    to U.S. nationals. Under the terms of the settlement, no money will be
    paid to the Government of Iran.
        4. Since my last report, the Tribunal has issued one important award
    in favor of a U.S. national considered a dual U.S.-Iranian national by
    the Tribunal. On November 7, 1995, Chamber Three issued a significant
    decision in Claim No. 213, Dadras Int'l and Per-Am Construction Corp. v.
    The Islamic Republic of Iran, awarding a dual national claimant $3.1
    million plus interest for architectural work performed for an Iranian
    government agency developing a housing complex outside Tehran, Iran.
        The Tribunal held hearings in four large private claims. On October
    23-27, 1995, Chamber One held a hearing in Claim No. 432, Brown & Root,
    Inc. v. The Iranian Navy, involving contract amounts owned in connection
    with the construction of the Iranian Navy Chahbahar and Bandar Projects
    in Iran. On January 18-19, 1996, Chamber One held a second hearing in
    claim Nos. 842, 843, and 844, Vera Aryeh, et

    [[Page 758]]

    al. v. The Islamic Republic of Iran, in which allegations of fraud and
    forgery were considered. Finally, the United States Government filed a
    Memorial on the Application of the Treaty of Amity to Dual United
    States-Iranian Nationals in three private claims before the Tribunal:
    Claim No. 485, Riahi v. The Islamic Republic of Iran, in Chamber One on
    January 29, 1996; Claim No. 953, Hakim v. The Islamic Republic of Iran,
    in Chamber Two on February 27, 1996; and Claim 266, Aryeh, et al. v. The
    Islamic Republic of Iran, in Chamber Three on February 29, 1996. The
    Memorial argues that a good faith interpretation of the ordinary meaning
    of the 1955 Treaty of Amity leads to the conclusion that it protects all
    persons deemed to be U.S. nationals under U.S. laws when they undertake
    activities in Iran, regardless of whether they also possess another
    nationality.
        5. The situation reviewed above continues to implicate important
    diplomatic, financial, and legal interests of the United States and its
    nationals and presents an unusual challenge to the national security and
    foreign policy of the United States. The Iranian Assets Control
    Regulations issued pursuant to Executive Order No. 12170 continue to
    play an important role in structuring our relationship with Iran and in
    enabling the United States to implement properly the Algiers Accords. I
    shall continue to exercise the powers at my disposal to deal with these
    problems and will continue to report periodically to the Congress on
    significant developments.

                                                          William J. Clinton

    The White House,

    May 16, 1996.