    [Public Papers of the Presidents of the United States: William J. Clinton (1998, Book I)]
    [February 3, 1998]
    [Pages 167-170]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Message to the Congress Reporting on the National Emergency With Respect
    to Iraq
    February 3, 1998

    To the Congress of the United States:
        I hereby report to the Congress on the developments since my last
    report of July 31, 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 (IEEPA), 50 U.S.C. 1703(c).
        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
    contract in 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.
        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 August 2, 1997, through
    February 1, 1998.
        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 President of the Security Council
    received the report prepared by the Secretary General as requested by
    paragraph 13 of UNSCR 986, making UNSCR 986 effective as of 12:01 a.m.
    December 10, 1996.
        On June 4, 1997, the U.N. Security Council adopted UNSCR 1111,
    renewing for another 180 days the authorization for Iraqi petroleum
    sales and purchases of humanitarian aid contained in UNSCR 986 of April
    14, 1995. The Resolution became effective on June 8, 1997. On September
    12, 1997, the Security Council, noting Iraq's decision not to export
    petroleum and petroleum products pursuant to UNSCR 1111 during the
    period June 8 to August 13,

    [[Page 168]]

    1997, and deeply concerned about the resulting humanitarian consequences
    for the Iraqi people, adopted UNSCR 1129. This resolution replaced the
    two 90-day quotas with one 120-day quota and one 60-day quota in order
    to enable Iraq to export its full $2 billion quota of oil within the
    original 180 days of UNSCR 1111. On December 4, 1997, the U.N. Security
    Council adopted UNSCR 1143, renewing for another 180 days, beginning
    December 5, 1997, the authorization for Iraqi petroleum sales and
    humanitarian aid purchases contained in UNSCR 986. As of January 2,
    1998, however, Iraq still had not exported any petroleum under UNSCR
    1143. During the reporting period, imports into the United States under
    this program totaled about 14.2 million barrels, bringing total imports
    since December 10, 1996, to approximately 23.7 million barrels.
        2. There have been two 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. The Regulations
    were amended on August 25, 1997. General reporting, recordkeeping,
    licensing, and other procedural regulations were moved from the
    Regulations to a separate part (31 C.F.R. Part 501) dealing solely with
    such procedural matters (62 Fed. Reg. 45098, August 25, 1997). A copy of
    the amendment is attached.
        On December 30, 1997, the Regulations were amended to remove from
    appendices A and B to 31 C.F.R. chapter V the name of an individual who
    had been determined previously to act for or on behalf of, or to be
    owned or controlled by, the Government of Iraq (62 Fed. Reg. 67729,
    December 30, 1997). A copy of the amendment is attached.
        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 system, 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 from Iraq with United Nations and United States Government
    approval.
        All executory contracts must contain terms requiring that all
    proceeds of oil purchases from the Government of Iraq, including the
    State Oil Marketing Organization, must be placed in the U.N. escrow
    account at Banque Nationale 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 approval by the 661 Committee and
    satisfaction of other conditions established by the United Nations, 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 OFAC to the U.S. Customs
    Service for investigation.
        On July 15, 1995, a jury in the Eastern District of New York
    returned a verdict of not guilty for two defendants charged with the
    attempted exportation and transshipment to Iraq of zirconium ingots in
    violation of IEEPA and the ISR. The two were charged in a Federal
    indictment on July 10, 1995, along with another defendant who entered a
    guilty plea on February 6, 1997.
        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 civil monetary penalties
    totaling more than $1.125 million for violations of IEEPA and the ISR
    relating to the sale and shipment of goods to the Government of Iraq and
    an entity in Iraq. Additional administrative proceedings have been
    initiated and others await commencement.
        4. The Office of Foreign Assets Control has issued hundreds of
    licensing determinations regarding transactions pertaining to Iraq or
    Iraqi assets since August 1990. Specific 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, and food intended for
    humanitarian relief

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    purposes, sales of humanitarian supplies to Iraq under UNSCR 986 and
    1111, diplomatic transactions, 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, 88 specific licenses have been issued,
    most with respect to sales of humanitarian goods.
        Since December 10, 1996, OFAC has issued specific licenses
    authorizing commercial sales of humanitarian goods funded by Iraqi oil
    sales pursuant to UNSCR 986 and 1111 valued at more than $239 million.
    Of that amount, approximately $222 million represents sales of basic
    foodstuffs, $7.9 million for medicines and medical supplies, $8.2
    million for water testing and treatment equipment, and nearly $700,000
    to fund a variety of United Nations activities in Iraq. International
    humanitarian relief in Iraq is coordinated under the direction of the
    United Nations Office of the Humanitarian Coordinator of Iraq. Assisting
    U.N. agencies include the World Food Program, the U.N. Population Fund,
    the U.N. Food and Agriculture Organization, the World Health
    Organization, and UNICEF. As of January 8, 1998, OFAC had authorized
    sales valued at more than $165.8 million worth of humanitarian goods
    during the reporting period beginning August 2, 1997.
        5. The expenses incurred by the Federal Government in the 6-month
    period from August 2, 1997, through February 1, 1998, 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 Adviser), 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. Iraqi compliance with these resolutions is
    necessary before the United States will consider lifting economic
    sanctions. 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. Seven and a half 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 refusal to provide immediate, unconditional, and
    unrestricted access to sites 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 systematic repression of all forms of political
    expression, oppression of minorities, and denial of humanitarian
    assistance. The Government of Iraq has repeatedly said it will not
    comply with UNSCR 688 of April 5, 1991. The Iraqi military routinely
    harasses residents of the north, and has attempted to ``Arabize'' the
    Kurdish, Turkomen, 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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        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 3, 1998.

    Note: This message was released by the Office of the Press Secretary on
    February 4.