    [Public Papers of the Presidents of the United States: William J. Clinton (1997, Book II)]
    [July 31, 1997]
    [Pages 1033-1035]
    [From the U.S. Government Publishing Office www.gpo.gov]

    [[Page 1033]]

    Message to the Congress Reporting on the National Emergency With Respect
    to Iraq
    July 31, 1997

    To the Congress of the United States:
        I hereby report to the Congress on the developments since my last
    report of February 10, 1997, concerning the national emergency with
    respect to Iraq that was declared in Executive Order 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).
        This report discusses only matters concerning the national emergency
    with respect to Iraq that was declared in Executive Order 12722 and
    matters relating to Executive Orders 12724 and 12817 (the ``Executive
    Orders''). The report covers events from February 2 through August 1,
    1997.
        Executive Order 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 United States 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
    contracting support of any industrial, commercial, or governmental
    project in Iraq. United States 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 12724, which was issued in order to align the sanctions
    imposed by the United States with United Nations Security Council
    Resolution (UNSCR) 661 of August 6, 1990.
        1. In April 1995, the U.N. Security Council adopted UNSCR 986
    authorizing Iraq to export up to $1 billion in petroleum and petroleum
    products every 90 days for a total of 180 days under U.N. supervision in
    order to finance the purchase of food, medicine, and other humanitarian
    supplies. UNSCR 986 includes arrangements to ensure equitable
    distribution of humanitarian goods purchased with UNSCR 986 oil revenues
    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. On May 20, 1996, a
    memorandum of understanding was concluded between the Secretariat of the
    United Nations and the Government of Iraq agreeing on terms for
    implementing UNSCR 986. On August 8, 1996, the UNSC committee
    established pursuant to UNSCR 661 (``the 661 Committee'') adopted
    procedures to be employed by the 661 Committee in implementation of
    UNSCR 986. On December 9, 1996, the Secretary General released the
    report requested by paragraph 13 of UNSCR 986, making UNSCR 986
    effective as of 12:01 a.m. December 10.
        On June 4, 1997, the U.N. Security Council adopted UNSCR 1111,
    renewing for another 180 days the authorization for Iraqi petroleum
    sales contained in UNSCR 986 of April 14, 1995. The Resolution became
    effective on June 8, 1997. During the reporting period, imports into the
    United States under this program totaled approximately 9.5 million
    barrels.
        2. There have been no amendments to the Iraqi Sanctions Regulations,
    31 C.F.R. Part 575 (the ``ISR'' or the ``Regulations'') administered by
    the Office of Foreign Assets Control (OFAC) of the Department of the
    Treasury during the reporting period.
        As previously reported, the Regulations were amended on December 10,
    1996, to provide a statement of licensing policy regarding specific
    licensing of United States persons seeking to purchase Iraqi-origin
    petroleum and petroleum products from Iraq (61 Fed. Reg. 65312, December
    11, 1996). Statements of licensing policy were also provided regarding
    sales of essential parts and equipment for the Kirkuk-Yumurtalik
    pipeline systems, and sales of humanitarian goods to Iraq, pursuant to
    United Nations approval. A general license was also added to authorize
    dealings in Iraqi-origin petroleum and petroleum products that have been
    exported

    [[Page 1034]]

    from Iraq with the United Nations and United States Government approval.
        All executory contracts must contain terms requiring that all
    proceeds of the oil purchases from the Government of Iraq, including the
    State Oil Marketing Organization, must be placed in the U.N. escrow
    account at Banque National de Paris, New York (the ``986 escrow
    account''), and all Iraqi payments for authorized sales of pipeline
    parts and equipment, humanitarian goods, and incidental transaction
    costs borne by Iraq will, upon arrival by the 661 Committee, be paid or
    payable out of the 986 escrow account.
        3. 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 the Office of Foreign
    Assets Control (OFAC) to the U.S. Customs Service for investigation.
        On July 10, 1995, an indictment was brought against three U.S.
    citizens in the Eastern District of New York for conspiracy in a case
    involving the attempted exportation and transshipment to Iraq of
    zirconium ingots in violation of the IEEPA and the ISR. The intended use
    of the merchandise was the manufacture of cladding for radioactive
    materials to be used in nuclear reactors. The case was the culmination
    of a successful undercover operation conducted by agents of the U.S.
    Customs Service in New York in cooperation with OFAC and the U.S.
    Attorney's Office for the Eastern District of New York. On February 6,
    1997, one of the defendants plead guilty to a 10-count criminal
    indictment including conspiracy to violate the Iraqi Sanctions and the
    IEEPA. The trial of the remaining defendants is ongoing.
        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 OFAC's listing of
    individuals and organizations determined to be Specially Designated
    Nationals (SDNs) of the Government of Iraq.
        Since my last report, OFAC collected four civil monetary penalties
    totaling more than $470,000 for violations of IEEPA and the ISR. The
    violations involved brokerage firms' failure to block assets of an Iraqi
    SDN and effecting certain securities trades with respect thereto.
    Additional administrative proceedings have been initiated and others
    await commencement.
        4. The Office of Foreign Assets Control has issued a total of 700
    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 action against Iraqi governmental entities,
    legal representation of Iraq, and the exportation to Iraq of donated
    medicine, medical supplies, and food intended for humanitarian relief
    purposes, executory contracts pursuant to UNSCR 986, sales of
    humanitarian supplies to Iraq under UNSCR 986, 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, 47 specific
    licenses have been issued.
        5. The expense incurred by the Federal Government in the 6-month
    period from February 2 through August 1, 1997, 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 $1.2 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 Bureau of
    Intelligence and Research, the U.S. Mission to the United Nations, and
    the Office of the Legal Advisor), and the Department of Transportation
    (particularly the U.S. Coast Guard).
        6. 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 relevant 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

    [[Page 1035]]

    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. Seven 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 instructors and refusal of unimpeded access by these
    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 the systematic repression of minorities and
    denial of humanitarian assistance. The Government of Iraq has repeatedly
    said it will not be bound by UNSCR 668. 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.
        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 must 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,

    July 31, 1997.