[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.

[[Page 1538]]

    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.

[[Page 1539]]

    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.

[[Page 1540]]