    [Weekly Compilation of Presidential Documents Volume 29, Number 31 (Monday, August 9, 1993)]
    [Pages 1537-1540]
    [Online from the Government Publishing Office, www.gpo.gov]

    <R04>
    Message to the Congress on Iraq

     August 2, 1993

    To the Congress of the United States:

        I hereby report to the Congress on the developments since my last
    report of February 16, 1993, concerning the national emergency with
    respect to Iraq that was declared in Executive Order No. 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).

        Executive Order No. 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 U.S. 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. U.S. 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 No. 12724, which was issued in order to align the
    sanctions imposed by the United States with United Nations Security
    Council Resolution 661 of August 6, 1990.

        Executive Order No. 12817 was issued on October 21, 1992, to
    implement in the United States measures adopted in United Nations
    Security Council Resolution 778 of October 2, 1992. Resolution 778
    requires U.N. member states temporarily to transfer to a U.N. escrow
    account up to $200 million apiece in Iraqi oil sale proceeds paid by
    purchasers after the imposition of U.N. sanctions on Iraq. These funds
    finance Iraq's obligations for U.N. activities with respect to Iraq,
    including expenses to verify Iraqi weapons destruction, and to provide
    humanitarian assistance in Iraq on a nonpartisan basis. A portion of the
    escrowed funds will also fund the activities of the U.N. Compensation
    Commission in Geneva, which will handle claims from victims of the Iraqi
    invasion of Kuwait. The funds placed in the escrow account are to be
    returned, with interest, to the member states that transferred them to
    the United Nations, as funds are received from future sales of Iraqi oil
    authorized by the United Nations Security Council. No member state is
    required to fund more than half of the total contributions to the escrow
    account.

        This report discusses only matters concerning the national emergency
    with respect to Iraq that was declared in Executive Order No. 12722 and
    matters relating to Executive Orders Nos. 12724 and 12817 (the
    ``Executive Orders''). The report covers events from February 2, 1993,
    through August 1, 1993.

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        1. There have been no amendments to the Iraqi Sanctions Regulations
    during the reporting period.

        2. Investigations of possible violations of the Iraqi sanctions
    continue to be pursued and appropriate enforcement actions taken. These
    are intended to deter future activities in violation of the sanctions.
    Additional civil penalty notices were prepared during the reporting
    period for violations of the International Emergency Economic Powers Act
    and Iraqi Sanctions Regulations with respect to transactions involving
    Iraq.

        3. 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 the Office of
    Foreign Assets control's listing of individuals and organizations
    determined to be Specially Designated Nationals of the Government of
    Iraq.

        4. Pursuant to Executive Order No. 12817 implementing United Nations
    Security Council Resolution 778, on October 26, 1992, the Office of
    Foreign Assets Control directed the Federal Reserve Bank of New York to
    establish a blocked account for receipt of certain post-August 6, 1990,
    Iraqi oil sales proceeds, and to hold, invest, and transfer these funds
    as required by the order. On May 18, 1993, following the payment of
    $1,492,537.30 by the Government of the United Kingdom to a special
    United Nations-controlled account, entitled United Nations Security
    Council Resolution 778 Escrow Account, the Federal Reserve Bank of New
    York was directed to transfer a corresponding amount of $1,492,537.30
    from the blocked account it holds to the United Nations-controlled
    account. Future transfers from the blocked Federal Reserve Bank of New
    York account will be made on a matching basis up to the $200 million for
    which the United States is potentially obligated pursuant to United
    Nations Security Council Resolution 778.

        5. Since the last report, there have been developments in two cases
    filed against the Government of Iraq. Another ruling was issued in
    Consarc Corporation v. Iraqi Ministry of Industry and Minerals et al.,
    No. 90-2269 (D.D.C., March 9, 1993), which arose out of a contract for
    the sale of furnaces by plaintiff to the Iraqi Ministry of Industry and
    Minerals, an Iraqi governmental entity. In connection with the contract,
    the Iraqi defendants opened an irrevocable letter of credit with an
    Iraqi bank in favor of Consarc, which was advised by Pittsburgh National
    Bank, with the Bank of New York entering into a confirmed reimbursement
    agreement with the advising bank. Funds were set aside at the Bank of
    New York, in an account of the Iraqi bank, for reimbursement from the
    Bank of New York if Pittsburgh National Bank made a payment to Consarc
    on the letter of credit and sought reimbursement from the Bank of New
    York. Consarc received a down payment from the Iraqi Ministry of
    Industry and Minerals and substantially manufactured the furnaces. No
    goods were shipped prior to imposition of sanctions on August 2, 1990,
    and the United States asserted that the funds on deposit in the Iraqi
    bank's account at the Bank of New York, as well as the furnaces
    manufactured for the Iraqi government or the proceeds of any sale of
    those furnaces to third parties, were blocked. The district court ruled
    on December 29, 1992, that the furnaces or their sales proceeds were
    properly blocked pursuant to the declaration of the national emergency
    and blocking of Iraqi government property interests. However, according
    to the court, due to fraud on the part of the Ministry of Industry and
    Minerals in concluding the sales contract, the funds on deposit in an
    Iraqi bank account at the Bank of New York were not the property of the
    Government of Iraq. The court ordered the Office of Foreign Assets
    Control to unblock these funds, and required Consarc to block the
    proceeds from the sale of one furnace and to hold the remaining furnace
    as blocked property. On January 27, 1993, the Office of Foreign Assets
    Control complied with the court's order and licensed the unblocking of
    $6.4 million plus interest to Consarc. On March 9, 1993, the court
    affirmed its ruling in response to Consarc's motion to clarify the
    December 29 order and the Office of Foreign Assets Control's motion to
    correct the judgment to conform to the December 29 opinion. The Office
    of Foreign Assets Control and Consarc have each appealed the district
    court's ruling.

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        In Brewer v. The Socialist People's Republic of Iraq, No. 91-5325
    (D.C. Cir., 1993) the United States Court of Appeals for the District of
    Columbia Circuit affirmed the district court's ruling denying
    appellant's motion to attach U.S.-located assets of the Government of
    Iraq and its state tourism organization. Following the holding of Dames
    & Moore v. Regan, 453 U.S. 654 (1981), the court upheld the power of the
    President to freeze foreign assets and prevent their attachment by
    private litigants in times of national emergency.

        6. The Office of Foreign Assets Control has issued a total of 391
    specific licenses regarding transactions pertaining to Iraq or Iraqi
    assets since August 1990. Since my last report, 54 specific licenses
    have been issued. Licenses were issued for transactions such as the
    filing of legal actions against Iraqi governmental entities, for legal
    representation of Iraq, and the exportation to Iraq of donated medicine,
    medical supplies, and food intended for humanitarian relief purposes.

        7. The expenses incurred by the Federal Government in the 6-month
    period from February 2, 1993, through August 1, 1993, that are directly
    attributable to the exercise of powers and authorities conferred by the
    declaration of a national emergency with respect to Iraq are estimated
    at about $2.5 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 Assistant 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 East and South Asian Affairs, the Bureau of International
    Organizations, and the Office of the Legal Adviser), and the Department
    of Transportation (particularly the U.S. Coast Guard).

        8. The United States imposed economic sanctions on Iraq in response
    to Iraq's invasion and illegal 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 United Nations Security
    Council resolutions, including those calling for the elimination of
    Iraqi weapons of mass destruction, 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, and the return of Kuwaiti
    assets stolen during Iraq's illegal occupation of Kuwait. The U.N.
    sanctions remain in place; the Unite States will continue to enforce
    those sanctions under domestic authority.

        The Baghdad government continued to violate basic human rights by
    repressing the Iraqi civilian population and depriving it of
    humanitarian assistance. The United Nations Security Council passed
    resolutions that permit Iraq to sell $1.6 billion of oil under U.N.
    auspices to fund the provision of food, medicine, and other humanitarian
    supplies to the people of Iraq. Under the U.N. resolutions, the
    equitable distribution within Iraq of this assistance would be
    supervised and monitored by the United Nations. The Iraqi regime so far
    has refused to accept these resolutions and has thereby chosen to
    perpetuate the suffering of its civilian population. Discussions on
    implementing these resolutions resumed at the United Nations on July 7,
    1993.

        The policies and actions of the Saddam Hussein regime continued 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. Because of Iraq's failure to comply fully with United Nations
    Security Council resolutions, the United States will therefore continue
    to apply economic sanctions to deter Iraq from threatening peace and
    stability in the region, and I will continue to report periodically to
    the Congress on significant developments, pursuant to 50 U.S.C. 1703(c).

                                                William J. Clinton

    The White House,
    August 2, 1993.

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