[Weekly Compilation of Presidential Documents Volume 31, Number 29 (Monday, July 24, 1995)]
[Pages 1250-1255]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Message to the Congress on the Federal Republic of Yugoslavia (Serbia 
and Montenegro)

July 18, 1995

To the Congress of the United States:

    On May 30, 1992, in Executive Order No. 12808, the President 
declared a national emergency to deal with the threat to the national 
security, foreign policy, and economy of the United States arising from 
actions and policies of the Governments of Serbia and Montenegro, acting 
under the name of the Socialist Federal Republic of Yugoslavia or the 
Federal Republic of Yugoslavia, in their involvement in and support for 
groups attempting to seize territory in Croatia and the Republic of 
Bosnia and Herzegovina by force and violence utilizing, in part, the 
forces of the so-called Yugoslav National Army (57 FR 23299, June 2, 
1992). I expanded the national emergency in Executive Order No. 12934 of 
October 25, 1994, to address the actions and policies of the Bosnian 
Serb forces and the authorities in the territory of the Republic of 
Bosnia and Herzegovina that they control.

[[Page 1251]]

The present report is submitted pursuant to 50 U.S.C. 1641(c) and 
1703(c). It discusses Administration actions and expenses directly 
related to the exercise of powers and authorities conferred by the 
declaration of a national emergency in Executive Order No. 12808 and 
Executive Order No. 12934 and to expanded sanctions against the Federal 
Republic of Yugoslavia (Serbia and Montenegro) (the ``FRY (S/M)'') and 
the Bosnian Serbs contained in Executive Order No. 12810 of June 5, 1992 
(57 FR 24347, June 9, 1992), Executive Order No. 12831 of January 15, 
1993 (58 FR 5253, Jan. 21, 1993), Executive Order No. 12846 of April 25, 
1993 (58 FR 25771, April 27, 1993), and Executive Order No. 12934 of 
October 25, 1994 (59 FR 54117, October 27, 1994).
    1. Executive Order No. 12808 blocked all property and interests in 
property of the Governments of Serbia and Montenegro, or held in the 
name of the former Government of the Socialist Federal Republic of 
Yugoslavia or the Government of the Federal Republic of Yugoslavia, then 
or thereafter located in the United States or within the possession or 
control of U.S. persons, including their overseas branches.
    Subsequently, Executive Order No. 12810 expanded U.S. actions to 
implement in the United States the United Nations sanctions against the 
FRY (S/M) adopted in United Nations Security Council (``UNSC'') 
Resolution 757 of May 30, 1992. In addition to reaffirming the blocking 
of FRY (S/M) Government property, this order prohibited transactions 
with respect to the FRY (S/M) involving imports, exports, dealing in 
FRY-origin property, air and sea transportation, contract performance, 
funds transfers, activity promoting importation or exportation or 
dealings in property, and official sports, scientific, technical, or 
other cultural representation of, or sponsorship by, the FRY (S/M) in 
the United States.
    Executive Order No. 12810 exempted from trade restrictions (1) 
transshipments through the FRY (S/M), and (2) activities related to the 
United Nations Protection Force (``UNPROFOR''), the Conference on 
Yugoslavia, or the European Community Monitor Mission.
    On January 15, 1993, President Bush issued Executive Order No. 12831 
to implement new sanctions contained in U.N. Security Council Resolution 
787 of November 16, 1992. The order revoked the exemption for 
transshipments through the FRY (S/M) contained in Executive Order No. 
12810, prohibited transactions within the United States or by a U.S. 
person relating to FRY (S/M) vessels and vessels in which a majority or 
controlling interest is held by a person or entity in, or operating 
from, the FRY (S/M), and stated that all such vessels shall be 
considered as vessels of the FRY (S/M), regardless of the flag under 
which they sail.
    On April 25, 1993, I issued Executive Order No. 12846 to implement 
in the United States the sanctions adopted in UNSC Resolution 820 of 
April 17, 1993. That resolution called on the Bosnian Serbs to accept 
the Vance-Owen peace plan for the Republic of Bosnia and Herzegovina 
and, if they failed to do so by April 26, called on member states to 
take additional measures to tighten the embargo against the FRY (S/M) 
and Serbian controlled areas of the Republic of Bosnia and Herzegovina 
and the United Nations Protected Areas in Croatia. Effective April 26, 
1993, the order blocked all property and interests in property of 
commercial, industrial, or public utility undertakings or entities 
organized or located in the FRY (S/M), including property and interests 
in property of entities (wherever organized or located) owned or 
controlled by such undertakings or entities, that are or thereafter come 
within the possession or control of U.S. persons.
    On October 25, 1994, in view of UNSC Resolution 942 of September 23, 
1994, I issued Executive Order No. 12934 in order to take additional 
steps with respect to the crisis in the former Yugoslavia. (59 FR 54117, 
October 27, 1994.) Executive Order No. 12934 expands the scope of the 
national emergency declared in Executive Order No. 12808 to address the 
unusual and extraordinary threat to the national security, foreign 
policy, and economy of the United States posed by the actions and 
policies of the Bosnian Serb forces and the authorities in the territory 
in the Republic of Bosnia and Herzegovina that they control, including 
their refusal to accept the proposed territorial settlement of the

[[Page 1252]]

conflict in the Republic of Bosnia and Herzegovina.
    The Executive order blocks all property and interests in property 
that are in the United States, that hereafter come within the United 
States, or that are or hereafter come within the possession or control 
of United States persons (including their overseas branches) of: (1) the 
Bosnian Serb military and paramilitary forces and the authorities in 
areas of the Republic of Bosnia and Herzegovina under the control of 
those forces; (2) any entity, including any commercial, industrial, or 
public utility undertaking, organized or located in those areas of the 
Republic of Bosnia and Herzegovina under the control of Bosnian Serb 
forces; (3) any entity, wherever organized or located, which is owned or 
controlled directly or indirectly by any person in, or resident in, 
those areas of the Republic of Bosnia and Herzegovina under the control 
of Bosnian Serb forces; and (4) any person acting for or on behalf of 
any person within the scope of the above definitions.
    The Executive order also prohibits the provision or exportation of 
services to those areas of the Republic of Bosnia and Herzegovina under 
the control of Bosnian Serb forces, or to any person for the purpose of 
any business carried on in those areas, either from the United States or 
by a U.S. person. The order also prohibits the entry of any U.S.-flagged 
vessel, other than a U.S. naval vessel, into the riverine ports of those 
areas of the Republic of Bosnia and Herzegovina under the control of 
Bosnia Serb forces. Finally, any transaction by any U.S. person that 
evades or avoids, or has the purpose of evading or avoiding, or attempts 
to violate any of the prohibitions set forth in the order is prohibited. 
Executive Order No. 12934 became effective at 11:59 p.m., e.d.t., on 
October 25, 1994.
    2. The declaration of the national emergency on May 30, 1992, was 
made pursuant to the authority vested in the President by the 
Constitution and laws of the United States, including the International 
Emergency Economic Powers Act (50 U.S.C. 1701 et seq.), the National 
Emergencies Act (50 U.S.C. 1601 et seq.), and section 301 of title 3 of 
the United States Code. The emergency declaration was reported to the 
Congress on May 30, 1992, pursuant to section 204(b) of the 
International Emergency Economic Powers Act (50 U.S.C. 1703(b)) and the 
expansion of that National Emergency under the same authorities was 
reported to the Congress on October 25, 1994. The additional sanctions 
set forth in related Executive orders were imposed pursuant to the 
authority vested in the President by the Constitution and laws of the 
United States, including the statutes cited above, section 1114 of the 
Federal Aviation Act (49 U.S.C. App. 1514), and section 5 of the United 
Nations Participation Act (22 U.S.C. 287c).
    3. There have been no amendments to the Federal Republic of 
Yugoslavia (Serbia and Montenegro) Sanctions Regulations (the 
``Regulations''), 31 C.F.R. Part 585, since the last report. The 
Treasury Department had previously published 853 names in the Federal 
Register on November 17, 1994 (59 FR 59460), as part of a comprehensive 
listing of all blocked persons and specially designated nationals 
(``SDNs'') of the FRY (S/M). This list identified individuals and 
entities determined by the Department of the Treasury to be owned or 
controlled by or acting for or on behalf of the Government of the FRY 
(S/M), persons in the FRY (S/M), or entities located or organized in or 
controlled from the FRY (S/M). All prohibitions in the Regulations 
pertaining to the Government of the FRY (S/M) apply to the entities and 
individuals identified. U.S. persons, on notice of the status of such 
blocked persons and specially designated nationals, are prohibited from 
entering into transactions with them, or transactions in which they have 
an interest, unless otherwise exempted or authorized pursuant to the 
Regulations.
    On February 22, 1995, pursuant to Executive Order 12934 and the 
Regulations, Treasury identified 85 individuals as leaders of the 
Bosnian Serb forces or civilian authorities in the territories in the 
Republic of Bosnia and Herzegovina that they control. Also on February 
22, Treasury designated 19 individuals and 23 companies as SDNs of the 
FRY (S/M). These designations include FRY (S/M)-connected companies 
around the world that are being directed from Cyprus, two Cypriot-owned 
firms that have had a central role in

[[Page 1253]]

helping establish and sustain sanctions-evading FRY (S/M) front 
companies in Cyprus, and the head of the FRY (S/M)'s Central Bank who is 
also the architect of the FRY (S/M) economic program.
    Additionally, on March 13, 1995, Treasury named 32 firms and eight 
individuals that are part of the Karic Brothers' family network of 
companies as SDNs of the FRY (S/M). Their enterprises span the globe and 
are especially active in former East Bloc countries. These additions and 
amendments, published in the Federal Register on April 18, 1995 (60 FR 
19448), bring the current total of Blocked Entities and SDNs of the FRY 
(S/M) to 938 and the total number of individuals identified as leaders 
of the Bosnian Serb military or paramilitary forces or civilian 
authorities in the territories in the Republic of Bosnia and Herzegovina 
that they control to 85. A copy of the notice is attached.
    Treasury's blocking authority as applied to FRY (S/M) subsidiaries 
and vessels in the United States has been challenged in court. In Milena 
Ship Management Company, Ltd. v. Newcomb, 804 F.Supp. 846, 855, and 859 
(E.D.L.A. 1992) aff'd, 995 F.2d 620 (5th Cir. 1993), cert. denied, 114 
S.Ct. 877 (1994), involving five ships owned or controlled by FRY (S/M) 
entities blocked in various U.S. ports, the blocking authority as 
applied to these vessels was upheld. In IPT Company, Inc. v. United 
States Department of the Treasury, No. 92 CIV 5542 (S.D.N.Y. 1994), the 
district court also upheld the blocking authority as applied to the 
property of a Yugoslav subsidiary located in the United States. The 
latter case is currently on appeal to the Second Circuit.
    4. Over the past 6 months, the Departments of State and Treasury 
have worked closely with European Union (the ``EU'') member states and 
other U.N. member nations to coordinate implementation of the U.N. 
sanctions against the FRY (S/M). This has included visits by assessment 
teams formed under the auspices of the United States, the EU, and the 
Organization for Security and Cooperation in Europe (the ``OSCE'') to 
states bordering on Serbia and Montenegro; continued deployment of OSCE 
sanctions assistance missions (``SAMs'') to Albania, Bulgaria, Croatia, 
the former Yugoslav Republic of Macedonia, Hungary, Romania, and Ukraine 
to assist in monitoring land and Danube River traffic; support for the 
International Conference on the Former Yugoslavia (``ICFY'') monitoring 
missions along the Serbia-Montenegro-Bosnia border; bilateral contacts 
between the United States and other countries for the purpose of 
tightening financial and trade restrictions on the FRY (S/M); and 
ongoing multilateral meetings by financial sanctions enforcement 
authorities from various countries to coordinate enforcement efforts and 
to exchange technical information.
    5. In accordance with licensing policy and the Regulations, FAC has 
exercised its authority to license certain specific transactions with 
respect to the FRY (S/M) that are consistent with U.S. foreign policy 
and the Security Council sanctions. During the reporting period, FAC has 
issued 109 specific licenses regarding transactions pertaining to the 
FRY (S/M) or assets it owns or controls, bringing the total as of April 
25, 1995, to 930. Specific licenses have been issued (1) for payment to 
U.S. or third-country secured creditors, under certain narrowly-defined 
circumstances, for pre-embargo import and export transactions; (2) for 
legal representation or advice to the Government of the FRY (S/M) or FRY 
(S/M)-located or controlled entities; (3) for the liquidation or 
protection of tangible assets of subsidiaries of FRY (S/M)-located or 
controlled firms located in the U.S.; (4) for limited transactions 
related to FRY (S/M) diplomatic representation in Washington and New 
York; (5) for patent, trademark and copyright protection in the FRY (S/
M) not involving payment to the FRY (S/M) Government; (6) for certain 
communications, news media, and travel-related transactions; (7) for the 
payment of crews' wages, vessel maintenance, and emergency supplies for 
FRY (S/M) controlled ships blocked in the United States; (8) for the 
removal from the FRY (S/M), or protection within the FRY (S/M), of 
certain property owned and controlled by U.S. entities; (9) to assist 
the United Nations in its relief operations and the activities of the 
U.N. Protection Force; and (10) for payment from funds outside the 
United States where a third country has licensed the transaction in 
accordance

[[Page 1254]]

with U.N. sanctions. Pursuant to U.S. regulations implementing UNSC 
Resolutions, specific licenses have also been issued to authorize 
exportation of food, medicine, and supplies intended for humanitarian 
purposes in the FRY (S/M).
    During the past 6 months, FAC has continued to oversee the 
liquidation of tangible assets of the 15 U.S. subsidiaries of entities 
organized in the FRY (S/M). Subsequent to the issuance of Executive 
Order No. 12846, all operating licenses issued for these U.S.-located 
Serbian or Montenegrin subsidiaries or joint ventures were revoked, and 
the net proceeds of the liquidation of their assets placed in blocked 
accounts.
    In order to reduce the drain on blocked assets caused by continuing 
to rent commercial space, FAC arranged to have the blocked personalty, 
files, and records of the two Serbian banking institutions in New York 
moved to secure storage. The personalty is being liquidated, with the 
net proceeds placed in blocked accounts.
    Following the sale of the M/V Kapetan Martinovic in January 1995, 
five Yugoslav-owned vessels remain blocked in the United States. 
Approval of the UNSC's Serbian sanctions Committee was sought and 
obtained for the sale of the M/V Kapetan Martinovic (and the M/V Bor, 
which was sold in June 1994) based on U.S. assurances that the sale 
would comply with four basic conditions, which assure that both U.S. and 
U.N. sanctions objectives with respect to the FRY (S/M) are met: (1) the 
sale will be for fair market value; (2) the sale will result in a 
complete divestiture of any interest of the FRY (S/M) (or of commercial 
interests located in or controlled from the FRY (S/M)) in the vessel; 
(3) the sale would result in no economic benefit to the FRY (S/M) (or 
commercial interests located in or controlled from the FRY (S/M)); and 
(4) the net proceeds of the sale (the gross proceeds less the costs of 
sale normally paid by the seller) will be placed in a blocked account in 
the United States. Negotiations for the sale of the M/V Bar, now blocked 
in New Orleans, are underway and are likely to be concluded prior to my 
next report.
    Other than the M/V Bar, the four remaining Yugoslav-owned vessels 
are beneficially owned by Jugooceanija Plovidba of Kotor, Montenegro, 
and managed by Milena Ship Management Co. Ltd. in Malta. These vessels 
have many unpaid U.S. creditors for services and supplies furnished 
during the time they have been blocked in the United States; moreover, 
the owner appears to have insufficient resources to provide for the 
future upkeep and maintenance needs of these vessels and their crews. 
The United States is notifying the UNSC's Serbian Sanctions Committee of 
the United States's intention to license some or all of these remaining 
four vessels upon the owner's request.
    With the FAC-licensed sales of the M/V Kapetan Martinovic and the M/
V Bor, those vessels were removed from the list of blocked FRY entities 
and merchant vessels maintained by FAC. The new owners of several 
formerly Yugoslav-owned vessels, which have been sold in other 
countries, have petitioned FAC to remove those vessels from the list. 
FAC, in coordination with the Department of State, is currently 
reviewing the sale terms and conditions for those vessels to ascertain 
whether they comply with U.N. sanctions objectives and UNSC's Serbian 
Sanctions Committee practice.
    During the past 6 months, U.S. financial institutions have continued 
to block funds transfers in which there is an interest of the Government 
of the FRY (S/M) or an entity or undertaking located in or controlled 
from the FRY (S/M), and to stop prohibited transfers to persons in the 
FRY (S/M). Such interdicted transfers have accounted for $125.6 million 
since the issuance of Executive Order No. 12808, including some $9.3 
million during the past 6 months.
    To ensure compliance with the terms of the licenses that have been 
issued under the program, stringent reporting requirements are imposed. 
More than 279 submissions have been reviewed by FAC since the last 
report, and more than 125 compliance cases are currently open.
    6. Since the issuance of Executive Order No. 12810, FAC has worked 
closely with the U.S. Customs Service to ensure both that prohibited 
imports and exports (including those in which the Government of the FRY 
(S/M) or Bosnian Serb authorities have an interest) are identified and 
interdicted, and that permitted imports and exports move to

[[Page 1255]]

their intended destination without undue delay. Violations and suspected 
violations of the embargo are being investigated and appropriate 
enforcement actions are being taken. There are currently 37 cases under 
active investigation. Since the last report, FAC has collected nine 
civil penalties totaling nearly $20,000. Of these, five were paid by 
U.S. financial institutions for violative funds transfers involving the 
Government of the FRY (S/M), persons in the FRY (S/M), or entities 
located or organized in or controlled from the FRY (S/M). Three U.S. 
companies and one air carrier have also paid penalties related to 
exports or unlicensed payments to the Government of the FRY (S/M) or 
persons in the FRY (S/M) or other violations of the Regulations.
    7. The expenses incurred by the Federal Government in the 6-month 
period from November 30, 1994, through May 29, 1995, that are directly 
attributable to the authorities conferred by the declaration of a 
national emergency with respect to the FRY (S/M) and the Bosnian Serb 
forces and authorities are estimated at about $3.5 million, most of 
which represent wage and salary costs for Federal personnel. Personnel 
costs were largely centered in the Department of the Treasury 
(particularly in FAC and its Chief Counsel's Office, and the U.S. 
Customs Service), the Department of State, the National Security 
Council, the U.S. Coast Guard, and the Department of Commerce.
    8. The actions and policies of the Government of the FRY (S/M), in 
its involvement in and support for groups attempting to seize and hold 
territory in the Republics of Croatia and Bosnia and Herzegovina by 
force and violence, and the actions and policies of the Bosnian Serb 
forces and the authorities in the areas of Bosnia and Herzegovina under 
their control, continue to pose an unusual and extraordinary threat to 
the national security, foreign policy, and economy of the United States. 
The United States remains committed to a multilateral resolution of the 
conflict through implementation of the United Nations Security Council 
resolutions.
    I shall continue to exercise the powers at my disposal to apply 
economic sanctions against the FRY (S/M) and the Bosnian Serb forces, 
civil authorities, and entities, as long as these measures are 
appropriate, and 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,
July 18, 1995.