[Weekly Compilation of Presidential Documents Volume 32, Number 6 (Monday, February 12, 1996)]
[Pages 230-233]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Message to the Congress on Iraq

February 9, 1996

To the Congress of the United States:

    I hereby report to the Congress on the developments since my last 
report of August 1, 1995, 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 to transfer to a U.N. escrow account any 
funds (up to $200 million apiece) representing Iraqi oil sale proceeds 
paid by purchasers after the imposition of U.N. sanctions on Iraq, to 
finance Iraq's obligations for U.N. activities with respect to Iraq, 
such as expenses to verify Iraqi weapons destruction, and to provide 
humanitarian assistance in Iraq on a nonpartisan basis. A portion of the 
escrowed funds also funds the activities of the U.N. Compensation 
Commission in Geneva, which handles claims from victims of the Iraqi 
invasion and occupation of Kuwait. Member States also may make voluntary 
contributions to the account. 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 U.N. Security Council. No Member State is 
required to fund more than half of the total transfers or 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 No. 12724 and 12817 (the 
``Executive orders''). The report covers events from August 2, 1995, 
through February 1, 1996.
    1. During the reporting period, there were no amendments to the 
Iraqi Sanctions Regulations.
    2. The Department of the Treasury's Office of Foreign Assets Control 
(FAC) continues its involvement in lawsuits seeking to prevent the 
unauthorized transfer of blocked Iraqi assets. In Consarc Corporation v. 
Iraqi Ministry of Industry and Minerals, No. 94-5390 (D.C. Cir. Dec. 15, 
1995), the U.S. Court of Appeals for the D.C. Circuit issued its second 
opinion in this case, finding in FAC's favor on all issues presented to 
the court. The court ordered the district court judge to direct Consarc 
Corporation to restore the status quo by returning $6.4 million plus 
interest to the blocked Iraqi government account from which it was 
withdrawn after the district court erroneously held that these funds 
were not blocked Iraqi government property. The court also found that 
the unsold furnace manufactured for the Iraqi government and sales 
proceeds of a second furnace were blocked property. Finally, the court 
reversed the district court's ruling that

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Consarc held a specific claim against a blocked Iraqi government account 
for $6.4 million, holding that any claim Consarc had against the 
Government of Iraq was as a general creditor only.
    Investigations of possible violations of the Iraqi sanctions 
continue to be pursued and appropriate enforcement actions taken. 
Several cases from prior reporting periods are continuing and recent 
additional allegations have been referred by FAC to the U.S. Customs 
Service for investigation. Additional FAC 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. One de minimis penalty has been 
collected from an organization for unlicensed exports in violation of 
the prohibitions against transactions involving Iraq. Several other 
penalty proceedings are pending completion.
    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 FAC's listing of 
individuals and organizations determined to be Specially Designated 
Nationals (SDNs) of the Government of Iraq.
    4. Pursuant to Executive Order No. 21817 implementing United Nations 
Security Council Resolution 778, on October 26, 1992, FAC 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 
September 5, 1995, following payments by the Governments of Australia 
($216,360.00), Denmark ($168,985.00), Japan ($4,075,000.00), The 
Netherlands ($4,168,745.47), New Zealand ($67,050.00), Switzerland 
($265,108.20), and by the European Union ($647,463.31), respectively, to 
the 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 
$9,606,711.98 from the blocked account it holds to the United Nations-
controlled account. Similarly, on October 30, 1995, following the 
payment of $1,504,000.00 by the European Community, and payments by the 
Governments of Germany ($355,871.89), The Netherlands ($2,698,348.13), 
Norway ($199,983.00), and the United Kingdom ($2,188,992.67), the 
Federal Reserve Bank of New York was directed to transfer a 
corresponding amount of $6,947,195.69 to the United Nations-controlled 
account. Finally, on December 21, 1995, following the payment of 
$3,062,197.28 by the European Union, and payments by the Governments of 
the Netherlands ($1,922,719.00), Sweden ($4,223,178.20) and the United 
Kingdom ($208,600.44), the Federal Reserve Bank of New York was directed 
to transfer the amount of $8,313,066.13 to the United Nations-controlled 
account. Cumulative transfers from the blocked Federal Reserve Bank of 
New York account since issuance of Executive Order No. 12817 now have 
amounted to $200 million, fully satisfying the U.S. commitment to match 
the payments of other Member States from blocked Iraqi oil payments, and 
its obligation pursuant to United Nations Security Council Resolution 
778.
    5. The Office of Foreign Assets Control has issued a total of 618 
specific licenses regarding transactions pertaining to Iraq or Iraqi 
assets since August 1990. Licenses have been issued for transactions 
such as the filing of legal actions against Iraqi governmental entities, 
legal representation of Iraq, and the exportation to Iraq of donated 
medicine, medical supplies, food intended for humanitarian relief 
purposes, the execution of powers of attorney relating to the 
administration of personal assets and decedents' estates in Iraq and the 
protection of preexistent intellectual property rights in Iraq. Since my 
last report, 28 specific licenses have been issued.
    6. The expenses incurred by the Federal Government in the 6-month 
period from August 2, 1995, through February 1, 1996, that are directly 
attributable to the exercise of powers and authorities conferred by the 
declaration of a national emergency with respect to Iraq are reported to 
be about $1.6 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

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Service, the Office of the Under 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 Eastern 
Affairs, the Bureau of International Organization Affairs, the Bureau of 
Political-Military Affairs, the U.S. Mission to the United Nations, and 
the Office of the Legal Adviser), and the Department of Transportation 
(particularly the U.S. Coast Guard).
    7. The United States imposed economic sanctions on Iraq in response 
to Iraq's illegal invasion and 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. Security Council resolutions on Iraq call for the 
elimination of Iraqi weapons of mass destruction, Iraqi recognition of 
Kuwait, and 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, the return of Kuwaiti assets stolen during Iraq's illegal 
occupation of Kuwait, renunciation of terrorism, an end to internal 
Iraqi repression of its own civilian population, and the facilitation of 
access of international relief organizations to all those in need in all 
parts of Iraq. More than 5 years after the invasion, a pattern of 
defiance persists: a refusal to account for missing Kuwaiti detainees; 
failure to return Kuwaiti property worth millions of dollars, including 
military equipment that was used by Iraq in its movement of troops to 
the Kuwaiti border in October 1994; sponsorship of assassinations in 
Lebanon and in northern Iraq; incomplete declarations to weapons 
inspectors; and ongoing widespread human rights violations. As a result, 
the U.N. sanctions remain in place; the United States will continue to 
enforce those sanctions under domestic authority.
    The Baghdad government continues to violate basic human rights of 
its own citizens through systematic repression of minorities and denial 
of humanitarian assistance. The Government of Iraq has repeatedly said 
it will not be bound by United Nations Security Council Resolution 688. 
For more than 4 years, Baghdad has maintained a blockade of food, 
medicine, and other humanitarian supplies against northern Iraq. The 
Iraqi military routinely harasses residents of the north, and has 
attempted to ``Arabize'' the Kurdish, Turcomen, and Assyrian areas in 
the north. Iraq has not relented in its artillery attacks against 
civilian population centers in the south, or in its burning and draining 
operations in the southern marshes, which have forced thousands to flee 
to neighboring States.
    In April 1995, the U.N. Security Council adopted Resolution 986 
authorizing Iraq to export limited quantities of oil (up to $1 billion 
per quarter) under U.N. supervision in order to finance the purchase of 
food, medicine, and other humanitarian supplies. The resolution includes 
arrangements to ensure equitable distribution of such assistance to all 
the people of Iraq. The resolution also provides for the payment of 
compensation to victims of Iraqi aggression and for the funding of other 
U.N. activities with respect to Iraq. Resolution 986 was carefully 
crafted to address the issues raised by Iraq to justify its refusal to 
implement similar humanitarian resolutions adopted in 1991 (Resolutions 
706 and 712), such as oil export routes and questions of national 
sovereignty. Nevertheless, Iraq refused to implement this humanitarian 
measure. This only reinforces our view that Saddam Hussein is 
unconcerned about the hardships suffered by the Iraqi people.
    The policies and actions of the Saddam Hussein regime continue 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. The U.N. resolutions affirm that the Security Council be 
assured of Iraq's peaceful intentions in judging its compliance with 
sanctions. Because of Iraq's failure to comply fully with these 
resolutions, the United States will continue to apply economic sanctions 
to deter it from threatening peace and stability in the region.
                                            William J. Clinton
The White House,
February 9, 1996.

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