[Weekly Compilation of Presidential Documents Volume 32, Number 20 (Monday, May 20, 1996)]
[Pages 870-873]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Message to the Congress on Iran

May 16, 1996

To the Congress of the United States:

    I hereby report to the Congress on developments since the last 
Presidential report of November 28, 1995, concerning the national 
emergency with respect to Iran that was declared in Executive Order No. 
12170 of November 14, 1979. This report is submitted pursuant to section 
204 of the International Emergency Economic Powers Act, 50 U.S.C. 
1703(c). This report covers events through March 1, 1996. My last 
report, dated November 28, 1995, covered events through September 29, 
1995.
    1. Effective March 1, 1996, the Department of the Treasury's Office 
of Foreign Assets Control (``FAC'') amended the Iranian Assets Control 
Regulations, 31 CFR Part 535

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(``IACR''), to reflect changes in the status of litigation brought by 
Iran against close relatives of the former Shah of Iran seeking the 
return of property alleged to belong to Iran (61 Fed. Reg. 8216, March 
4, 1996). In 1991, Shams Pahlavi, sister of the former Shah of Iran, was 
identified in section 535.217(b) of the IACR as a person whose assets 
were blocked based on proof of service upon her in litigation of the 
type described in section 535.217(a). Pursuant to that provision, all 
property and assets located in the United States within the possession 
or control of Shams Pahlavi were blocked until all pertinent litigation 
against her was finally terminated. Because the litigation has been 
finally terminated, reference to Shams Pahlavi has been deleted from 
section 535.217(b). A copy of the amendment is attached to this report.
    2. The Iran-U.S. Claims Tribunal, established at The Hague pursuant 
to the Algiers Accords, continues to make progress in arbitrating the 
claims before it. Since my last report, the Tribunal has rendered one 
award, bringing the total number to 567. The majority of those awards 
have been in favor of U.S. claimants. As of March 1996, the value of 
awards to successful U.S. claimants from the Security Account held by 
the NV Settlement Bank was $2,376,010,041.91.
    In February 1996, Iran deposited funds into the Security Account, 
established by the Algiers Accords to ensure payment of awards to 
successful U.S. claimants for the first time since October 8, 1992. The 
Account was credited $15 million on February 22, 1996. However, the 
Account has remained continuously below the $500 million balance 
required by the Algiers Accords since November 5, 1992. As of March 1, 
1996, the total amount in the Security Account was $195,370,127.71, and 
the total amount in the Interest Account was $37,055,050.92.
    Therefore, the United States continues to pursue Case A/28, filed in 
September 1993, to require Iran to meet its obligations under the 
Algiers Accords to replenish the Security Account. Iran filed its 
Statement of Defense in that case on August 30, 1995. The United States 
filed a Reply on December 4, 1995. Iran is scheduled to file its 
Rejoinder on June 4, 1996.
    3. The Department of State continues to present other United States 
Government claims against Iran and to respond to claims brought against 
the United States by Iran, in coordination with concerned government 
agencies.
    In November 1995, Iran filed its latest Response concerning the 
United States Request to Dismiss Certain Claims from Case B/61. The 
United States had filed its Request to Dismiss in August 1995 as part of 
its consolidated submission on the merits. Iran had previously filed its 
initial response in July 1995, and the United States filed a reply in 
August 1995. Case B/61 involves a claim by Iran for compensation with 
respect to primarily military equipment that Iran alleges it did not 
receive. Iran had sought to purchase or repair the equipment pursuant to 
commercial contracts with more than 50 private American companies. Iran 
alleges that it suffered direct losses and consequential damages in 
excess of $2 billion in total because of the United States Government 
refusal to allow the export of the equipment after January 19, 1981, in 
alleged contravention of the Algiers Accords. Iran's November 1995 
filing failed to show why the Tribunal should not dismiss immediately 
certain duplicative or otherwise improperly pleaded claims from Case B/
61.
    In December 1995, the Department of State represented the United 
States in hearings before the Tribunal on two government-to-government 
claims. In the first, Chamber Two heard oral arguments in Case B/36, the 
U.S. claim against Iran for its failure to honor debt obligations 
created by the sale of military surplus property to Iran shortly after 
the Second World War. In the second, also before Chamber Two, the 
Department of State presented the U.S. defense in Case B/58, Iran's 
claim that the United States is liable for damage caused to the Iranian 
State Railways during the Second World War.
    In January 1996, in Case B/1 (Claims 2 & 3), Iran filed its Rebuttal 
Memorial Concerning Responsibility for Termination Costs, along with 20 
volumes of exhibits and affidavits. In this briefing stream, the 
Tribunal is asked to decide whether Iran or the United States is liable 
for the costs arising from the termination of the U.S.-Iran For- 

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eign Military Sales program after Iran's default and its subsequent 
seizure of the U.S. embassy in Tehran in 1979. The United States is 
currently preparing a comprehensive response to Iran's brief.
    In February 1996, the Departments of State and Justice represented 
the United States in a hearing before the full Tribunal in a government-
to-government claim filed by Iran. Case A/27 is an interpretive dispute 
in which Iran claims that the United States is liable under the Algiers 
Accords for Tribunal awards issued in favor of Iran against U.S. 
nationals. The United States maintains that its obligation under the 
Algiers Accords is satisfied by the availability of domestic judicial 
procedures through which Iran can enforce awards in its favor.
    Also in February 1996, Iran and the United States settled Iran's 
claims against the United States filed before the International Court of 
Justice concerning the July 3, 1988, downing of Iran Air 655 and certain 
of Iran's claims against the United States field before the Iran-United 
States Tribunal concerning certain banking matters. The cases in 
question were dismissed from the International Court of Justice and the 
Iran-United States Tribunal on February 22, 1996. The settlement, inter 
alia, fulfills President Reagan's 1988 offer to make ex gratia payments 
to the survivors of the victims of the Iran Air shootdown. The survivors 
of each victim of the Iran Air shootdown will be paid $300,000 (for 
wage-earning victims) or $150,000 (for non-wage-earning victims). For 
this purpose, $61 million was deposited with the Union Bank of 
Switzerland in Zurich in an account jointly held by the New York Federal 
Reserve Bank, acting as fiscal agent of the United States, and Bank 
Markazi, the central bank of Iran. Of an additional $70 million in the 
settlement package, $15 million was deposited in the Security Account 
established as part of the Algiers Accords. The remaining $55 million 
was deposited in an account at the New York Federal Reserve Bank, from 
which funds can be drawn only (1) for deposits into the Security Account 
used to pay Tribunal awards to American claimants or for the payment of 
Iran's share of the operating expenses of the Tribunal, or (2) to pay 
debts incurred before the date of settlement and owed by Iranian banks 
to U.S. nationals. Under the terms of the settlement, no money will be 
paid to the Government of Iran.
    4. Since my last report, the Tribunal has issued one important award 
in favor of a U.S. national considered a dual U.S.-Iranian national by 
the Tribunal. On November 7, 1995, Chamber Three issued a significant 
decision in Claim No. 213, Dadras Int'l and Per-Am Construction Corp. v. 
The Islamic Republic of Iran, awarding a dual national claimant $3.1 
million plus interest for architectural work performed for an Iranian 
government agency developing a housing complex outside Tehran, Iran.
    The Tribunal held hearings in four large private claims. On October 
23-27, 1995, Chamber One held a hearing in Claim No. 432, Brown & Root, 
Inc. v. The Iranian Navy, involving contract amounts owned in connection 
with the construction of the Iranian Navy Chahbahar and Bandar Projects 
in Iran. On January 18-19, 1996, Chamber One held a second hearing in 
claim Nos. 842, 843, and 844, Vera Aryeh, et al. v. The Islamic Republic 
of Iran, in which allegations of fraud and forgery were considered. 
Finally, the United States Government filed a Memorial on the 
Application of the Treaty of Amity to Dual United States-Iranian 
Nationals in three private claims before the Tribunal: Claim No. 485, 
Riahi v. The Islamic Republic of Iran, in Chamber One on January 29, 
1996; Claim No. 953, Hakim v. The Islamic Republic of Iran, in Chamber 
Two on February 27, 1996; and Claim 266, Aryeh, et al. v. The Islamic 
Republic of Iran, in Chamber Three on February 29, 1996. The Memorial 
argues that a good faith interpretation of the ordinary meaning of the 
1955 Treaty of Amity leads to the conclusion that it protects all 
persons deemed to be U.S. nationals under U.S. laws when they undertake 
activities in Iran, regardless of whether they also possess another 
nationality.
    5. The situation reviewed above continues to implicate important 
diplomatic, financial, and legal interests of the United States and its 
nationals and presents an unusual challenge to the national security and 
foreign policy of the United States. The Iranian Assets Control 
Regulations issued pursuant to Exec- 

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utive Order No. 12170 continue to play an important role in structuring 
our relationship with Iran and in enabling the United States to 
implement properly the Algiers Accords. I shall continue to exercise the 
powers at my disposal to deal with these problems and will continue to 
report periodically to the Congress on significant developments.
                                            William J. Clinton
The White House,
May 16, 1996.