    [Public Papers of the Presidents of the United States: William J. Clinton (1998, Book I)]
    [May 26, 1998]
    [Pages 840-842]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Letter to Congressional Leaders Reporting on the National Emergency With
    Respect to Burma
    May 26, 1998

    Dear Mr. Speaker:  (Dear Mr. President:)
        I hereby report to the Congress on developments concerning the
    national emergency with respect to Burma that I declared in Executive
    Order 13047 of May 20, 1997, pursuant to section 570 of the Foreign
    Operations, Export Financing, and Related Programs Appropriations Act,
    1997, Public Law 104-208 (the ``Act'') and

    [[Page 841]]

    the International Emergency Economic Powers Act (IEEPA). This report is
    submitted pursuant to section 204(c) of IEEPA, 50 U.S.C. 1703(c) and
    section 401(c) of the National Emergencies Act, 50 U.S.C. 1641(c). This
    report discusses only matters concerning the national emergency with
    respect to Burma that was declared in Executive Order 13047.
        On May 20, 1997, I issued Executive Order 13047 (62 Fed. Reg. 28301,
    May 22, 1997), effective on May 21, 1997, to declare a national
    emergency with respect to Burma and to prohibit new investment in Burma
    by United States persons, except to the extent provided in regulations,
    orders, directives, or licenses that may be issued in conformity with
    section 570 of the Act. I renewed this order on May 19, 1998. The order
    also prohibits any approval or other facilitation by a United States
    person, wherever located, of a transaction by a foreign person where the
    transaction would constitute new investment in Burma prohibited by the
    order if engaged in by a United States person or within the United
    States. This action was taken in response to the large-scale repression
    of the democratic opposition by the Government of Burma since September
    30, 1996. A copy of the order was transmitted to the Congress on May 20,
    1997.
        By its terms, Executive Order 13047 does not prohibit the entry
    into, performance of, or financing of a contract to sell or purchase
    goods, services, or technology, except: (1) where the entry into such
    contract on or after May 21, 1997, is for the general supervision and
    guarantee of another person's performance of a contract for the economic
    development of resources located in Burma; or (2) where such contract
    provides for payment, in whole or in part, in (i) shares of ownership,
    including an equity interest, in the economic development of resources
    located in Burma; or (ii) participation in royalties, earnings, or
    profits in the economic development of resources located in Burma.
        On May 21, 1998, the Department of the Treasury's Office of Foreign
    Assets Control (OFAC) issued the Burmese Sanctions Regulations (the
    ``BSR'' or the ``Regulations''), 31 C.F.R. Part 537, to implement the
    prohibitions of Executive Order 13047. The Regulations apply to United
    States persons, defined to include U.S. citizens and permanent resident
    aliens wherever they are located, entities organized under U.S. law
    (including their foreign branches), and entities and individuals
    actually located in the United States. The sanctions do not apply
    directly to foreign subsidiaries of U.S. firms, although foreign firms'
    activities may be affected by the restriction on United States persons'
    facilitation of a foreign person's investment transactions in Burma.
        The term ``new investment'' means any of the following activities,
    if such activity is undertaken pursuant to an agreement, or pursuant to
    the exercise of rights under such an agreement, that is entered into
    with the Government of Burma, or a nongovernmental entity in Burma, on
    or after May 21, 1997: (a) The entry into a contract that includes the
    economic development of resources located in Burma; (b) the entry into a
    contract providing for the general supervision and guarantee of another
    person's performance of a contract that includes the economic
    development of resources located in Burma; (c) the purchase of a share
    of ownership, including an equity interest, in the economic development
    of resources located in Burma; or (d) the entry into a contract
    providing for the participation in royalties, earnings, or profits in
    the economic development of resources located in Burma, without regard
    to the form of participation.
        Since the issuance of Executive Order 13047 on May 20, 1997, OFAC,
    acting under authority delegated by the Secretary of the Treasury, has
    implemented sanctions against Burma as imposed by the order. OFAC has
    issued several determinations with respect to transactions provided for
    by agreements and/or rights pursuant to contracts entered into by United
    States persons prior to May 21, 1997. One license was necessary to
    authorize a United States person's disinvestment in Burma, since this
    transaction facilitated a foreign person's investment in Burma.
        On May 21, 1997, OFAC disseminated details of this program to the
    financial, securities, and international trade communities by both
    electronic and conventional media. This included posting notices on the
    Internet, on ten computer bulletin boards, and two fax-on-demand
    services, and providing the material to the U.S. Embassy in Rangoon for
    distribution to U.S. companies operating in Burma.
        In addition, in early July, OFAC sent notification letters to
    approximately 50 U.S. firms with operations in or ties to Burma
    informing them of the restrictions on new investment. The letters
    included copies of Executive Order 13047,

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    provided clarification of several technical issues, and urged firms to
    contact OFAC if they had specific questions on the application of the
    Executive order to their particular circumstances.
        The expenses incurred by the Federal Government in the 6-month
    period from November 20, 1997, through May 19, 1998, that are directly
    attributable to the exercise of powers and authorities conferred by the
    declaration of a national emergency with respect to Burma are estimated
    at approximately $370,000, 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 Office of the Under Secretary for Enforcement, and the
    Office of the General Counsel), and the Department of State
    (particularly the Bureau of Economic and Business Affairs, the Bureau of
    East Asian and Pacific Affairs, and the Office of the Legal Adviser).
        The situation reviewed above continues to present an extraordinary
    and unusual threat to the national security and foreign policy of the
    United States. The declaration of the national emergency with respect to
    Burma contained in Executive Order 13047 in response to the large-scale
    repression of the democratic opposition by the Government of Burma since
    September 30, 1996, reflected the belief that it is in the national
    security and foreign policy interests of the United States to seek an
    end to abuses of human rights in Burma, to support efforts to achieve
    democratic reform that would promote regional peace and stability, and
    to urge effective counter-narcotics policies.
        In the past 6 months, the State Law and Order Restoration Council,
    recently renamed the State Peace and Development Council (SPDC), has
    shown no sign of willingness to cede its hold on absolute power. Since
    refusing to recognize the results of the free and fair 1990 elections in
    which the National League for Democracy won a vast majority of both the
    popular vote and the parliamentary seats, the ruling junta has continued
    to refuse to negotiate with pro-democracy forces and ethnic groups for a
    genuine political settlement to allow a return to the rule of law and
    respect for basic human rights. Burma has taken limited but insufficient
    steps to counter narcotics production and trafficking.
        The net effect of U.S. and international measures to pressure the
    SPDC to end its repression and move toward democratic government has
    been a further decline in investor confidence in Burma and deeper
    stagnation of the Burmese economy. Observers agree that the Burmese
    economy appears to be further weakening and that the government has a
    serious shortage of foreign exchange reserves with which to pay for
    imports. While Burma's economic crisis is largely a result of the SPDC's
    own heavy-handed mismanagement, the SPDC is unlikely to find a way out
    of the crisis unless political developments permit an easing of
    international pressure. I shall continue to exercise the powers at my
    disposal to deal with these problems and will report periodically to the
    Congress on significant developments.
            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.