    [Public Papers of the Presidents of the United States: William J. Clinton (1997, Book II)]
    [September 17, 1997]
    [Pages 1186-1189]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Message to the Congress Reporting on the National Emergency With Respect
    to Iran
    September 17, 1997

    To the Congress of the United States:
        I hereby report to the Congress on developments concerning the
    national emergency with respect to Iran that was declared in Executive
    Order 12957 of March 15, 1995, and matters relating to the measures in
    that order and in

    [[Page 1187]]

    Executive Order 12959 of May 6, 1995. This report is submitted pursuant
    to section 204(c) of the International Emergency Economic Powers Act, 50
    U.S.C. 1703(c) (IEEPA), section 401(c) of the National Emergencies Act,
    50 U.S.C. 1641(c), and section 505(c) of the International Security and
    Development Cooperation Act of 1985, 22 U.S.C. 2349aa-9(c). This report
    discusses only matters concerning the national emergency with respect to
    Iran that was declared in Executive Order 12957 and does not deal with
    those relating to the emergency declared on November 14, 1979, in
    connection with the hostage crisis.
        1. On March 15, 1995, I issued Executive Order 12957 (60 Fed. Reg.
    14615, March 17, 1995) to declare a national emergency with respect to
    Iran pursuant to IEEPA, and to prohibit the financing, management, or
    supervision by United States persons of the development of Iranian
    petroleum resources. This action was in response to actions and policies
    of the Government of Iran, including support for international
    terrorism, efforts to undermine the Middle East peace process, and the
    acquisition of weapons of mass destruction and the means to deliver
    them. A copy of the order was provided to the Speaker of the House and
    the President of the Senate by letter dated March 15, 1995.
        Following the imposition of these restrictions with regard to the
    development of Iranian petroleum resources, Iran continued to engage in
    activities that represent a threat to the peace and security of all
    nations, including Iran's continuing support for international
    terrorism, its support for acts that undermine the Middle East peace
    process, and its intensified efforts to acquire weapons of mass
    destruction. On May 6, 1995, I issued Executive Order 12959 to further
    respond to the Iranian threat to the national security, foreign policy,
    and economy of the United States.
        Executive Order 12959 (60 Fed. Reg. 24757, May 9, 1995) (1)
    prohibits exportation from the United States to Iran or to the
    Government of Iran of goods, technology, or services; (2) prohibits the
    reexportation of certain U.S. goods and technology to Iran from third
    countries; (3) prohibits dealings by United States persons in goods and
    services of Iranian origin or owned or controlled by the Government of
    Iran; (4) prohibits new investments by United States persons in Iran or
    in property owned or controlled by the Government of Iran; (5) prohibits
    U.S. companies and other United States persons from approving,
    facilitating, or financing performance by a foreign subsidiary or other
    entity owned or controlled by a United States person of certain
    reexport, investment, and trade transactions that a United States person
    is prohibited from performing; (6) continues the 1987 prohibition on the
    importation into the United States of goods and services of Iranian
    origin; (7) prohibits any transaction by a United States person or
    within the United States that evades or avoids or attempts to violate
    any prohibition of the order; and (8) allowed U.S. companies a 30-day
    period in which to perform trade transactions pursuant to contracts
    predating the Executive order.
        At the time of signing Executive Order 12959, I directed the
    Secretary of the Treasury to authorize, through specific licensing,
    certain transactions, including transactions by United States persons
    related to the Iran-United States Claims Tribunal in The Hague,
    established pursuant to the Algiers Accords, and related to other
    international obligations and United States Government functions, and
    transactions related to the export of agricultural commodities pursuant
    to preexisting contracts consistent with section 5712(c) of title 7,
    United States Code. I also directed the Secretary of the Treasury, in
    consultation with the Secretary of State, to consider authorizing United
    States persons through specific licensing to participate in market-based
    swaps of crude oil from the Caspian Sea area for Iranian crude oil in
    support of energy projects in Azerbaijan, Kazakhstan, and Turkmenistan.
        Executive Order 12959 revoked sections 1 and 2 of Executive Order
    12613 of October 29, 1987, and sections 1 and 2 of Executive Order 12957
    of March 15, 1995, to the extent they are inconsistent with it. A copy
    of Executive Order 12959 was transmitted to the Speaker of the House and
    the President of the Senate by letter dated May 6, 1995.
        2. On March 5, 1997, I renewed for another year the national
    emergency with respect to Iran pursuant to IEEPA. This renewal extended
    the authority for the current comprehensive trade embargo against Iran
    in effect since May 1995. Under these sanctions, virtually all trade
    with Iran is prohibited except for trade in information and
    informational materials and certain other limited exceptions.

    [[Page 1188]]

        3. On August 19, 1997, I issued Executive Order 13059 in order to
    clarify the steps taken in Executive Order 12957 and Executive Order
    12959, to confirm that the embargo on Iran prohibits all trade and
    investment activities by United States persons, wherever located, and to
    consolidate in one order the various prohibitions previously imposed to
    deal with the national emergency declared on March 15, 1995. A copy of
    Executive Order 13059 was transmitted to the Speaker of the House and
    the President of the Senate by letter dated August 19, 1997.
        The order prohibits (1) the importation into the United States of
    any goods or services of Iranian origin or owned or controlled by the
    Government of Iran except information or informational material; (2) the
    exportation, reexportation, sale, or supply from the United States or by
    a United States person, wherever located, of goods, technology, or
    services to Iran or the Government of Iran, including knowing transfers
    to a third country for direct or indirect supply, transshipment, or
    reexportation to Iran or the Government of Iran, or specifically for use
    in the production, commingling with, or incorporation into goods,
    technology, or services to be supplied, transshipped, or reexported
    exclusively or predominantly to Iran or the Government of Iran; (3)
    reexportation from a third country of controlled U.S.-origin goods,
    technology, or services by a person other than a United States person;
    (4) purchase, sale, transport, swap, brokerage, approval, financing,
    facilitation, guarantee, or other transactions or dealings by United
    States persons, wherever located, related to direct or indirect trade
    with Iran or the Government of Iran or to goods or services of Iranian
    origin or owned or controlled by the Government of Iran; (5) new
    investment by United States persons in Iran or in property or entities
    owned or controlled by the Government of Iran; (6) approval, financing,
    facilitation, or guarantee by a United States person of any transaction
    by a foreign person that a United States person would be prohibited from
    performing under the embargo; and (7) any evasion, avoidance, or attempt
    to violate a prohibition under the order.
        Executive Order 13059 became effective at 12:01 a.m., eastern
    daylight time on August 20, 1997. Revocation of corresponding provisions
    in prior Executive orders does not affect the applicability of those
    provisions, or of regulations, licenses, or other administrative actions
    taken pursuant to those provisions, with respect to any transaction or
    violation occurring before the effective date of Executive Order 13059.
    Specific licenses issued pursuant to prior Executive orders continue in
    effect, unless revoked or amended by the Secretary of the Treasury.
    General licenses, regulations, orders, and directives issued pursuant to
    prior orders continue in effect, except to the extent inconsistent with
    Executive Order 13059 or otherwise revoked or modified by the Secretary
    of the Treasury.
        4. The Iranian Transactions Regulations, 31 CFR Part 560 (the
    ``ITR''), were amended on April 18, 1997 (62 Fed. Reg. 19670, April 23,
    1997), on July 30, 1997 (62 Fed. Reg. 41851, August 4, 1997), and on
    August 25, 1997 (62 Fed. Reg. 45098, August 25, 1997). In April 1997,
    Section 560.603 was amended to require a United States person to file a
    transaction report as to each foreign affiliate that engages in
    reportable oil-related transactions involving Iran of $1,000,000 or more
    during the calendar quarter.
        In July 1997, sections 560.510(d)(1) and (d)(2) were amended to
    generally license all payments of awards against Iran issued by the
    Iran-U.S. Claims Tribunal in The Hague, irrespective of the source of
    funds for payment, and to generally license implementation (except
    exports or reexports that are subject to export license application
    requirements of Federal agencies other than the Department of the
    Treasury's Office of Foreign Assets Control (OFAC)) as well as payment
    of awards or settlements in cases to which the United States Government
    is a party.
        Sections 560.525(a)(3) and (a)(5)(i) were amended to generally
    license the provision of legal services to initiate and conduct U.S.
    court and other domestic legal proceedings on behalf of persons in Iran
    or the Government of Iran and to initiate proceedings to resolve
    disputes between the Government of Iran or an Iranian national and the
    United States or a United States national, notwithstanding the
    prohibition on exportation of services to Iran. On August 25, 1997,
    general reporting, record keeping, licensing, and other procedural
    regulations were moved from the ITR to a separate part (31 CFR Part 501)
    dealing solely with such procedural matters. (62 Fed. Reg. 45098, August
    25, 1997). A copy of these amendments is attached.
        5. During the current 6-month period, OFAC made numerous decisions
    with respect to applications for licenses to engage in transactions

    [[Page 1189]]

    under the ITR, and issued 12 licenses. The majority of denials were in
    response to requests to authorize commercial exports to Iran--
    particularly of machinery and equipment for various industries--and the
    importation of Iranian-origin goods. The licenses issued authorized
    certain financial transactions, including those relating to disposal of
    U.S.-owned goods located in Iran and extension of, but not payment
    under, standby letters of credit. Pursuant to sections 3 and 4 of
    Executive Order 12959 and consistent with the Iran-Iraq Arms Non-
    Proliferation Act of 1992 and other statutory restrictions concerning
    certain goods and technology, including those involved in air-safety
    cases, Treasury continues to consult with the Departments of State and
    Commerce on these matters.
        The U.S. financial community continues to scrutinize transactions
    associated with Iran and to consult with OFAC about their appropriate
    handling. Many of these inquiries have resulted in investigations into
    the activities of U.S. parties and, where appropriate, the initiation of
    enforcement action.
        6. On March 20, 1997, a seven-count indictment was returned by a
    grand jury in the District of Maryland against a U.S. resident and two
    Iranian co-conspirators. The March indictment superseded a two-count
    indictment handed down on February 13, 1997. Each indictment charged
    violations of IEEPA and the ITR involving the attempted exportation from
    the United States to Iran of sophisticated state-of-the-art gas
    chromatographs used in the electric power industry, which were prevented
    from reaching Iran.
        The U.S. Customs Service has continued to effect numerous seizures
    of Iranian-origin merchandise, primarily carpets, for violation of the
    import prohibitions of the ITR. Various enforcement actions carried over
    from previous reporting periods are continuing and new reports of
    violations are being aggressively pursued. Since my last report on March
    14, 1997, OFAC has collected four civil monetary penalties totaling
    nearly $22,000. The violations relate to the unlicensed import from or
    export of goods to Iran. Civil penalty action is pending against 37
    companies, financial institutions, and individuals for violations of the
    Regulations.
        7. The expenses incurred by the Federal Government in the 6-month
    period from March 15 through September 14, 1997, that are directly
    attributable to the exercise of powers and authorities conferred by the
    declaration of a national emergency with respect to Iran are
    approximately $850,000, most of which represent 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 Intelligence and Research,
    and the Office of the Legal Adviser), and the Department of Commerce
    (the Bureau of Export Administration and the General Counsel's Office).
        8. The situation reviewed above continues to present an
    extraordinary and unusual threat to the national security, foreign
    policy, and economy of the United States. The declaration of the
    national emergency with respect to Iran contained in Executive Order
    12957 and the comprehensive economic sanctions imposed by Executive
    Order 12959 underscore the United States Government opposition to the
    actions and policies of the Government of Iran, particularly its support
    of international terrorism and its efforts to acquire weapons of mass
    destruction and the means to deliver them. The Iranian Transactions
    Regulations issued pursuant to Executive Orders 12957 and 12959 continue
    to advance important objectives in promoting the nonproliferation and
    antiterrorism policies of the United States. I shall exercise the powers
    at my disposal to deal with these problems and will report periodically
    to the Congress on significant developments.

                                                          William J. Clinton

    The White House,

    September 17, 1997.