[Weekly Compilation of Presidential Documents Volume 32, Number 22 (Monday, June 3, 1996)]
[Pages 966-969]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Letter to Congressional Leaders Reporting on the Federal Republic of 
Yugoslavia (Serbia and Montenegro)

May 30, 1995

Dear Mr. Speaker:  (Dear Mr. President:)

    On May 30, 1992, by Executive Order 12808, President Bush declared a 
national emergency to deal with the unusual and extraordinary threat to 
the national security, foreign policy, and economy of the United States 
constituted by the actions and policies of the Governments of Serbia and 
Montenegro, blocking all property and interests in property of those 
Governments. President Bush took additional measures to prohibit trade 
and other transactions with the Federal Republic of Yugoslavia (Serbia 
and Montenegro) by Executive Orders 12810 and 12831, issued on June 5, 
1992, and January 15, 1993, respectively.
    On April 25, 1993, I issued Executive Order 12846, blocking the 
property and interests in property of all commercial, industrial, or 
public utility undertakings or entities organized or located in the 
Federal Republic of Yugoslavia (Serbia and Montenegro) (the ``FRY 
(S&M)''), and prohibiting trade-related transactions by United States 
persons involving those areas of the Republic of Bosnia and Herzegovina 
controlled by the Bosnian Serb forces and the United Nations Protected 
Areas in the Republic of Croatia. On October 25, 1994, because of the 
actions and policies of the Bosnian Serbs, I expanded the scope of the 
national emergency by issuance of Executive Order 12934 to block the 
property of the Bosnian Serb forces and the authorities in the territory 
that they control within the Republic of Bosnia and Herzegovina, as well 
as the property of any entity organized or located in, or controlled by 
any person in, or resident in, those areas.
    On December 27, 1995, I issued Presidential Determination No. 96-7, 
directing the Secretary of the Treasury, inter alia, to suspend the 
application of sanctions imposed on the FRY (S&M) pursuant to the above-
referenced Executive orders and to continue to block property previously 
blocked until provision is made to address claims or encumbrances, 
including the claims of the other successor states of the former 
Yugoslavia. This sanctions relief, in conformity with United Nations 
Security Council Resolution (``UNSCR'') 1022 of November 22, 1995, was 
an essential factor motivating Serbia and Montenegro's acceptance of the 
General Framework Agreement for Peace in Bosnia and Herzegovina 
initialed by the parties in Dayton, Ohio, on November 21, 1995 (the 
``Peace Agreement''), and signed in Paris on December 14, 1995. The 
sanctions imposed on the FRY (S&M) and on the United Nations Protected 
Areas in the Republic of Croatia were accordingly suspended 
prospectively, effective January 16, 1996. Sanctions imposed on the 
Bosnian Serb forces and authorities and on the territory that they 
control within the Republic of Bosnia and Herzegovina were subsequently 
suspended prospectively, effective May 13, 1996, in conformity with 
UNSCR 1022.
    The present report is submitted pursuant to 50 U.S.C. 1641(c) and 
1703(c) and covers the period from November 30, 1995, to May 29, 1996. 
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 12808 of May 30, 1992 (57 FR 
23299) and Executive Order 12934 (59 FR 54117) and to expanded sanctions 
against the FRY (S&M) and the Bosnian Serbs contained in Executive Order 
12810 of June 5, 1992 (57 FR 24347, June 9, 1992), Executive Order 12831 
of January 15, 1993 (58 FR 5253, January 21, 1993), Executive Order 
12846 of April 25, 1993 (58 FR 25771, April 27, 1993), and Executive 
Order 12934 of October 25, 1994 (59 FR 54117, October 27, 1994).
    1. 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 pursuant to section 204(b) of the International Emergency 
Economic Powers Act (50 U.S.C. 1703(b)) and the expansion of that

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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).
    2. Since the declaration of the national emergency with respect to 
the FRY (S&M) on May 30, 1992, the Office of Foreign Assets Control 
(``FAC'') acting under authority delegated by the Secretary of the 
Treasury has implemented the sanctions imposed under the foregoing 
statutes. Effective January 16, 1996, FAC amended the Federal Republic 
of Yugoslavia (Serbia and Montenegro) and Bosnian Serb-Controlled Areas 
of the Republic of Bosnia and Herzegovina Sanctions Regulations, 31 
C.F.R. Part 585 (the ``Regulations''), to implement in the United States 
provisions of the Peace Agreement and UNSCR 1022 (61 FR 1282, January 
19, 1996). The amended Regulations authorize prospectively all 
transactions with respect to the FRY (S&M) otherwise prohibited. 
Property and interests in property of the FRY (S&M) previously blocked 
within the jurisdiction of the United States remain blocked, in 
conformity with the Peace Agreement and UNSCR 1022, until provision is 
made to address claims or encumbrances, including the claims of the 
other successor states of the former Yugoslavia. A copy of the amended 
Regulations is attached.
    3. Section 2 of UNSCR 1022 of November 22, 1995, provides that 
sanctions remain in force against the Bosnian Serbs until the day after 
the High Representative described in the Peace Agreement or the 
Commander of the International Force deployed in accordance with that 
Agreement has informed the United Nations Security Council via the 
Secretary General that all Bosnian Serb forces had withdrawn behind the 
zones of separation established by the Peace Agreement. Finally, UNSCR 
1022 provides for the reimposition of sanctions against the Bosnian 
Serbs and the FRY (S&M) if either the Bosnian Serbs or the FRY (S&M) 
fail significantly to meet their obligations under the Peace Agreement.
    In light of the Resolution, and the transmittal of the Commander's 
report to the Security Council by the U.N. Secretary General on February 
26, 1996, FAC amended the Regulations effective May 13, 1996, to 
authorize prospectively those transactions previously prohibited with 
respect to the Bosnian Serb forces and authorities; entities organized 
or located in those areas of the Republic of Bosnia and Herzegovina 
under their control; entities owned or controlled directly or indirectly 
by any person in, or resident in, those areas; and any person acting for 
or on behalf of any of the foregoing. United States persons are also 
authorized to engage in transactions involving the areas of the Republic 
of Bosnia and Herzegovina under the control of the Bosnian Serb forces, 
and services may be exported either from the United States or by United 
States persons to those areas. Property and interests in property 
previously blocked because of an interest of any of the above persons 
remains blocked (61 FR 24696, May 16, 1996). A copy of the amended 
Regulations is attached.
    4. Over the past 6 months, the Departments of State and the Treasury 
have worked closely with European Union (the ``EU'') member states and 
other U.N. member nations to implement the provisions of UNSCR 1022. In 
the United States, retention of blocking authority pursuant to the 
extension of the national emergency provides a framework for 
administration of an orderly claims settlement. This accords with past 
policy and practice with respect to the suspension of sanctions regimes.
    5. Subsequent to the suspension of sanctions imposed on the FRY 
(S&M), effective January 16, 1996, FAC has issued 20 specific licenses 
regarding transactions pertaining to the FRY (S&M) or assets it owns or 
controls. As of May 14, 1996, specific licenses have been issued (1) to 
authorize the unblocking of certain funds and other financial assets 
previously blocked; (2) for the payment of crews' wages, vessel 
maintenance, and emergency supplies for FRY (S&M)-controlled ships 
blocked in the United States; and (3)

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to authorize performance of certain transactions under presanctions 
contracts.
    During the past 6 months, FAC has continued to oversee the 
maintenance of blocked accounts and records with respect to: (1) 
liquidated tangible assets and personalty of the 15 blocked U.S. 
subsidiaries of entities organized in the FRY (S&M); (2) the blocked 
personalty, files, and records of the 2 Serbian banking institutions in 
New York previously placed in secure storage; (3) remaining tangible 
property, including real estate; and (4) the 5 Yugoslav-owned vessels 
still blocked in the United States.
    6. Despite the suspension of sanctions imposed on the FRY (S&M), FAC 
has continued to work closely with the U.S. Customs Service and other 
cooperating agencies to investigate alleged violations that occurred 
while sanctions were in force. On January 31, 1996, a Federal grand jury 
in San Jose, California, handed down a three-count indictment against 
the owner of a Santa Clara, California-based electronics firm. The 
indictment charges that the defendant made three separate shipments of 
computer equipment to Macedonia with knowledge that the equipment would 
be transshipped to Serbia.
    Since the last report, FAC has collected eight civil penalties 
totaling nearly $33,000. Of these, three 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). One U.S. company paid a 
penalty related to the unlicensed sale of equipment to a FRY (S&M) 
entity, another for the unauthorized import of goods originating in the 
FRY (S&M). A third company settled a penalty for the performance of a 
contract in the FRY (S&M). A law firm and a company remitted penalties 
relating to unlicensed payments to the Government of the FRY (S&M) for 
intellectual property registrations.
    7. The expenses incurred by the Federal Government in the 6-month 
period from November 30, 1995, through May 29, 1996, that are directly 
attributable to the declaration of a national emergency with respect to 
the FRY (S&M) and the Bosnian Serb forces and authorities are estimated 
at about $1.3 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. In the last year, substantial progress has been achieved to bring 
about a settlement of the conflict in the former Yugoslavia acceptable 
to the parties. Before agreeing to the sanctions suspension, the United 
States insisted on a credible reimposition mechanism to ensure the full 
implementation of the Peace Agreement. Thus, UNSCR 1022 provides a 
mechanism to reimpose the sanctions if the Federal Republic of 
Yugoslavia or the Bosnian Serb authorities fail significantly to meet 
their obligations under the Peace Agreement. It also provides that 
sanctions will not be terminated until after the first free and fair 
elections occur in the Republic of Bosnia and Herzegovina, as provided 
for in the Peace Agreement, and provided that the Bosnian Serb forces 
have continued to respect the zones of separation as provided in the 
Peace Agreement. The Resolution also contemplates the continued blocking 
of assets potentially subject to conflicting claims and encumbrances 
until provision is made to address them, including claims of the other 
successor states of the former Yugoslavia.
    The resolution of the crisis and conflict in the former Yugoslavia 
that has resulted from the actions and policies of the Government of the 
Federal Republic of Yugoslavia (Serbia and Montenegro), and of the 
Bosnian Serb forces and the authorities in the territory that they 
control, will not be complete until such time as the Peace Agreement is 
implemented fully and the terms of UNSCR 1022 have been met. Therefore, 
I have continued the national emergency declared on May 30, 1992, as 
expanded in scope on October 25, 1994, and will continue to enforce the 
measures adopted pursuant thereto.
    I shall continue to exercise the powers at my disposal with respect 
to the measures against the Government of the Federal Republic of 
Yugoslavia (Serbia and Montenegro), and the Bosnian Serb forces,

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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).
    Sincerely,
                                            William J. Clinton

Note: Identical letters were sent to Newt Gingrich, Speaker of the House 
of Representatives, and Albert Gore, Jr., President of the Senate.