[Weekly Compilation of Presidential Documents Volume 29, Number 28 (Monday, July 19, 1993)]
[Pages 1323-1325]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Letter to Congressional Leaders on Economic Sanctions Against Libya

 July 12, 1993

Dear Mr. Speaker:  (Dear Mr. President:)

    I hereby report to the Congress on the developments since the last 
report of December 30, 1992, concerning the national emergency with 
respect to Libya that was declared in Executive Order No. 12543 of 
January 7, 1986. This report is submitted pursuant to section 401(c) of 
the National Emergencies Act, 50 U.S.C. 1641(c); section 204(c) of the 
International Emergency Economic Powers Act (``IEEPA''), 50 U.S.C. 
1703(c); and section 505(c) of the International Security and 
Development Cooperation Act of 1985, 22 U.S.C. 2349aa-9(c).
    1. There has been one amendment to the Libyan Sanctions Regulations, 
31 C.F.R. Part 550 (the ``Regulations''), administered by the Office of 
Foreign Assets Control (``FAC'') of the Department of the Treasury, 
since the last report on December 30, 1992. The amendment, published on 
March 10, 1993, 58 Fed. Reg. 13198, added an interpretation of the 
Regulations' prohibition against the exportation of services to Libya 
from the United States, and a general license and statement of licensing 
policy concerning the provision of certain legal services. A copy of the 
amendment is attached to this report.
    The prohibition against exportation of services to Libya contained 
in section 550.202 of the Regulations is interpreted in new section 
550.422. Services (including legal services) are considered to be 
exported to Libya if their benefit is received in Libya and the services 
are performed (1) in the United States; (2) by an entity located in the 
United States, including its overseas branches; or (3) outside the 
United States by an individual U.S. person ordinarily resident in the 
United States. The benefit of services performed anywhere in the world 
on behalf of the Government of Libya, including a controlled entity or 
Specially Designated National of the Government of Libya, is presumed to 
be received in Libya. Legal services performed by U.S. persons outside 
the United States with respect to property interests of the Government 
of Libya are prohibited pursuant to section 550.209, which prohibits 
U.S. persons from dealing in any property (including contracts) in which 
the Government of Libya has an interest. Section 550.205, which 
prohibits performance by U.S. persons of any contract in support of an 
industrial or other commercial or governmental project in Libya, may 
also be applicable in these instances. For example, sections 550.205 and 
550.209 of the Regulations, taken together, prohibit U.S. persons from 
representing a foreign entity in contract negotiations, contract 
performance, or arbitration with the Government of Libya. Such 
representation may be authorized only by specific license from FAC.
    New section 550.517 of the Regulations states that the provision of 
legal services to the Government of Libya or to a person in

[[Page 1324]]

Libya generally requires the issuance of a specific license, and that 
the receipt of compensation for such legal services must, in all cases, 
be specifically licensed by FAC. However, the provision of the following 
legal services to the Government of Libya or to a person in Libya (but 
not receipt of compensation for those services) is generally licensed: 
(1) the provision of legal advice and counselling to the Government of 
Libya or to a person in Libya on requirements of and compliance with 
U.S. law, provided that such advice and counselling are not provided to 
facilitate transactions in violation of the Regulations; (2) 
representation of the Government of Libya or of a person in Libya when 
named as a defendant in domestic U.S. legal, arbitration, or 
administrative proceedings; (3) initiation of domestic U.S. legal or 
administrative proceedings in defense of property interests subject to 
U.S. jurisdiction of the Government of Libya that were in existence 
prior to January 8, 1986, or of a person in Libya; (4) representation of 
the Government of Libya or of a person in Libya before any Federal 
agency with respect to the imposition, administration, or enforcement of 
U.S. sanctions against Libya; and (5) provision of legal services in any 
other context in which prevailing U.S. law requires access to legal 
counsel at public expense. The enforcement of any judgment, decree, 
attachment, or lien through execution, garnishment, or other judicial 
process purporting to transfer or otherwise alter or affect a Government 
of Libya property interest is prohibited unless specifically licensed.
    2. During the current 6-month period, FAC made numerous decisions 
with respect to applications for licenses to engage in transactions 
under the Regulations, issuing 60 licensing determinations--both 
approvals and denials. Consistent with FAC's ongoing scrutiny of banking 
transactions, the majority of the determinations (51) concerned requests 
by non-Libyan persons or entities to unblock bank accounts initially 
blocked because of an apparent Libyan interest. Three determinations 
involved license applications for export sales transactions from the 
United States to Libya. Four determinations concerned registration of 
individuals pursuant to a general license authorizing travel to Libya 
for the sole purpose of visiting close family members. Finally, FAC has 
also issued two licenses authorizing U.S. landlords to liquidate the 
personalty of the People's Committee for Libyan Students, with the net 
proceeds from the sale paid into blocked accounts.
    3. During the current 6-month period, FAC has continued to emphasize 
to the international banking community in the United States the 
importance of identifying and blocking payments made by or on behalf of 
Libya. The Office worked closely with the banks to implement new 
interdiction software systems to identify such payments. As a result, 
during the reporting period, more than 44 transactions involving Libya 
have been blocked.
    The proactive compliance programs initiated by FAC have resulted in 
the imposition of substantially fewer civil penalties for banks' failure 
to block payments in which an interest of the Government of Libya 
exists. Since December 30, 1992, FAC has collected $140,000 in civil 
penalties for violations of U.S. sanctions against Libya. Fewer than 
one-third of the violations involved the failure of banks to block funds 
transfers to Libyan-owned or -controlled banks, with the remainder about 
equally divided between violations involving merchandise transshipment 
and illegal representation of the Government of Libya.
    Various enforcement actions carried over from previous reporting 
periods have continued to be aggressively pursued. Several new 
investigations of potentially significant violations of the Libyan 
sanctions have been initiated by FAC and cooperating U.S. law 
enforcement agencies. Many of these cases involved complex conspiracies 
to circumvent the embargo through the use of international diversionary 
shipping routes to and from Libya. For example, during the current 
reporting period, a U.S. citizen was indicted for his employment as a 
manager at a German oil refinery, Holborn Europa Raffinerie GmbH, which 
dealt primarily in Libyan crude oil and and in which the Government of 
Libya had acquired a majority ownership interest. In addition, a foreign 
national and two foreign firms for whom that individual acted as agent 
were indicated by a Federal grand jury for illegally transshipping 
agricul- 

[[Page 1325]]

tural equipment from the United States to Libya.
    FAC has worked closely with the Departments of State and Justice to 
identify several U.S. persons who had entered into contracts or other 
agreements with the Government of Libya, or other third-country parties, 
to lobby United States Government officials and to engage in public 
relations work on behalf of the Government of Libya without obtaining 
FAC authorization, in violation of the Regulations. In one such case, 
FAC levied civil penalties totaling $35,000 against three individuals 
who had engaged in such activity.
    In addition, during this reporting period, FAC blocked a foreign 
merchant vessel under the management and control of a Specially 
Designated National of Libya, following the vessel's unauthorized entry 
into a U.S. port. FAC imposed and received a civil penalty in the amount 
of $10,000 from agents of the shipping company prior to authorizing 
release of the vessel and its departure from the U.S. port.
    FAC has continued to pursue its Operation Roadblock initiative, 
issuing an additional 70 warning letters and demands for information 
during the reporting period to persons believed to have travelled to and 
worked in Libya, or made travel-related payments to Libya in violation 
of U.S. law. To date, Operation Roadblock's ongoing investigative 
efforts have resulted in one criminal conviction and several civil 
penalty assessments. In addition, these investigations have yielded 
substantial information concerning alleged criminal violations of the 
embargo by businesses and individuals. FAC is aggressively pursuing its 
investigations of such suspected violators in cooperation with other 
agencies of the United States Government, including the Departments of 
State and Justice, the Treasury Department's Financial Crimes 
Enforcement Network (FinCEN), the Federal Bureau of Investigation, and 
the U.S. Customs Service.
    4. The expenses incurred by the Federal Government in the 6-month 
period from January 7 through July 6, 1993, that are directly 
attributable to the exercise of powers and authorities conferred by the 
declaration of the Libyan national emergency are estimated at 
approximately $2.7 million. Personnel costs were largely centered in the 
Department of the Treasury (particularly in the Office of Foreign Assets 
Control, the Office of the General Counsel, and the U.S. Customs 
Service), the Department of State, and the Department of Commerce.
    5. The policies and actions of the Government of Libya continue to 
pose an unusual and extraordinary threat to the national security and 
foreign policy of the United States. I shall continue to exercise the 
powers at my disposal to apply economic sanctions against Libya fully 
and effectively, so long as those measures are appropriate, and will 
continue to report periodically to the Congress on significant 
developments as required by law.
    Sincerely,
                                            William J. Clinton

Note: Identical letters were sent to Thomas S. Foley, Speaker of the 
House of Representatives, and Albert Gore, Jr., President of the Senate.