[Weekly Compilation of Presidential Documents Volume 32, Number 37 (Monday, September 16, 1996)]
[Pages 1744-1746]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Message to the Congress on Iran

September 13, 1996

To the Congress of the United States:

    I hereby report to the Congress on developments concerning the 
national emergency with respect to Iran that was declared in Executive 
Order 12957 of March 15, 1995, and matters relating to the measures in 
that order and in Executive Order 12959 of May 6, 1995. This report is 
submitted pursuant to section 204(c) of the International Emergency 
Economic Powers Act, 50 U.S.C. 1703(c) (IEEPA), and section 505(c) of 
the International Security and Development Cooperation Act of 1985, 22 
U.S.C. 2349aa-9(c). This report discusses only matters concerning the 
national emergency with respect to Iran that was declared in Executive 
Order 12957 and does not deal with those relating to the emergency 
declared on November 14, 1979, in connection with the hostage crisis.
    1. On March 15, 1995, I issued Executive Order 12957 (60 Fed. Reg. 
14615, March 17, 1995) to declare a national emergency with respect to 
Iran pursuant to IEEPA, and to prohibit the financing, management, or 
supervision by United States persons of the development of Iranian 
petroleum resources. This action was in response to actions and policies 
of the Government of Iran, including support for international 
terrorism, efforts to undermine the Middle East peace process, and the 
acquisition of weapons of mass destruction and the means to deliver 
them. A copy of the order was provided to the Speaker of the House of 
Representatives and the President of the Senate by letter dated March 
15, 1995. Following the imposition of these restrictions with regard to 
the development of Iranian petroleum resources, Iran continued to engage 
in activities that represent a threat to the peace and security of all 
nations, including Iran's continuing support for international 
terrorism, its support for acts that undermine the Middle East peace 
process, and its intensified efforts to acquire weapons of mass 
destruction. On May 6, 1995, I issued Executive Order 12959 to further 
respond to the Iranian threat to the national security, foreign policy, 
and economy of the United States.
    Executive Order 12959 (60 Fed. Reg. 24757, May 9, 1995) (1) 
prohibits exportation from the United States to Iran or to the 
Government of Iran of goods, technology, or services; (2) prohibits the 
reexportation of certain U.S. goods and technology to Iran from third 
countries; (3) prohibits transactions such as brokering and other 
dealing by United States persons in goods and services of Iranian origin 
or owned or controlled by the Government of Iran; (4) prohibits new 
investments by United States persons in Iran or in property owned or 
controlled by the Government of Iran;

(5) prohibits U.S. companies and other United States persons from 
approving, facilitating, or financing performance by a foreign subsidiary 
or other entity owned or controlled by a United States person of certain 
reexport, investment, and certain trade transactions that a United States 
person is prohibited from performing; (6) continue the 1987 prohibition on 
the importation into the United States of goods and services of Iranian 
origin; (7) prohibits any transaction by any United States person or within 
the United States that evades or avoids or attempts to violate any 
prohibition of the order; and (8) allowed U.S. companies a 30-day period in 
which to perform trade transactions pursuant to contracts predating the 
Executive order.

    At the time of signing Executive Order 12959, I directed the 
Secretary of the Treasury to authorize through specific licensing 
certain transactions, including transactions by United States persons 
related to the Iran-United States Claims Tribunal in The Hague, 
established pursuant to the Algiers Accords, and related to other 
international obligations and United States Government functions, and 
transactions related to the export of agricultural commodities pursuant 
to preexisting contracts consistent with section 5712(c) of title 7, 
United States Code. I also directed

[[Page 1745]]

the Secretary of the Treasury in consultation with the Secretary of 
State, to consider authorizing United States persons through specific 
licensing to participate in market-based swaps of crude oil from the 
Caspian Sea area for Iranian crude oil in support of energy projects in 
Azerbaijan, Kazakstan, and Turkmenistan.
    Executive Order 12959 revoked sections 1 and 2 of Executive Order 
12613 of October 29, 1987, and sections 1 and 2 of Executive Order 12957 
of March 15, 1995, to the extent they are inconsistent with it. A copy 
of Executive Order 12959 was transmitted to the Speaker of the House of 
Representatives and the President of the Senate by letters dated May 6, 
1995.
    2. On March 8, 1996, I renewed for another year the national 
emergency with respect to Iran pursuant to IEEPA. This renewal extended 
the current comprehensive trade embargo against Iran in effect since May 
1995. Under these sanctions, virtually all trade with Iran is prohibited 
except for information and informational materials and certain other 
limited exceptions.
    3. There were no amendments to the Iranian Transactions Regulations, 
31 CFR Part 560 (the ``ITR'') during the reporting period.
    4. During the current 6-month period, the Department of the 
Treasury's Office of Foreign Assets Control (OFAC) made numerous 
decisions with respect to applications for licenses to engage in 
transactions under the ITR, and issued 24 licenses. The majority of 
denials were in response to requests to authorize commercial exports to 
Iran and the importation of Iranian-origin goods. The majority of the 
licenses issued authorized the completion of commodity ``string 
transactions'' entered into by U.S. parties with respect to foreign 
commodities and having no knowledge or control over the Iranian interest 
in the contracts; the export and reexport of goods, services, and 
technology essential to ensure the safety of civil aviation and safe 
operation of certain commercial passenger aircraft in Iran;

licenses relating to Iranian participation in the 1996 Atlanta Olympic and 
Paralympic Games; the importation of Iranian-origin artwork for public 
exhibition; and certain humanitarian imports and exports. In light of 
statutory restrictions applicable to goods and technology involved in the 
air safety cases, the Department of the Treasury continues to consult and 
coordinate with the Departments of State and Commerce on these matters, 
consistent with section 4 of Executive Order 12959.

    In consultation with the Board of Governors of the Federal Reserve 
System and bank regulators in New York and California, OFAC revoked the 
licenses of all Iranian banking agencies in the United States. State 
regulators then required them to convert to Representative Office 
status. There are now no Iranian banks authorized to conduct banking 
business in the United States. Activities have been restricted to 
``limited representation,'' allowing only research and coordination with 
U.S. holders of affiliate correspondent accounts.
    Bank Saderat, Iran's New York Representative Office, was nominated 
by the Central Bank of Iran to act as its agent for procedures outlined 
in the ``Airbus'' settlement at The Hague. Accordingly, Bank Saderat was 
separately licensed by OFAC for the limited purpose of collecting 
information for the Central Bank of Iran about U.S. commercial claims 
against Iranian banks. The information will be forwarded to and cleared 
by Iranian and State Department officials and used in making independent 
determinations as to which claims can be paid from a special escrow 
account established at the Federal Reserve Bank of New York.
    The U.S. financial community continues to interdict transactions 
associated with Iran and to consult with OFAC about their appropriate 
handling. During this reporting period, OFAC took decisive action to 
prevent the U.S. clearing of third country dollar travelers checks sold 
by Iranian banks.
    5. The U.S. Customs Service has continued to effect numerous 
seizures of Iranian-origin merchandise, primarily carpets, for violation 
of the import prohibitions of the ITR. Various enforcement actions 
carried over from previous reporting periods are continuing and new 
reports of violations are being aggressively pursued. Since March 11, 
1996, OFAC has collected two civil penalties totaling $6,000. The 
violations underlying these collections involve unlicensed exports to 
Iran. Civil penalty action is pending

[[Page 1746]]

against 12 U.S. companies and financial institutions for violations of 
the Regulations.
    6. The expenses incurred by the Federal Government in the 6-month 
period from March 15 through September 14, 1996, that are directly 
attributable to the exercise of powers and authorities conferred by the 
declaration of a national emergency with respect to Iran are 
approximately $850,000, 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 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 Political-Military 
Affairs, and the Office of the Legal Adviser), and the Department of 
Commerce (the Bureau of Export Administration and the General Counsels 
Office).
    7. The situation reviewed above continues to involve important 
diplomatic, financial, and legal interests of the United States and its 
nationals and presents an extraordinary and unusual threat to the 
national security, foreign policy, and economy of the United States. The 
declaration of the national emergency with respect to Iran contained in 
Executive Order 12957 and the comprehensive economic sanctions imposed 
by Executive Order 12959 underscore the United States Government 
opposition to the actions and policies of the Government of Iran, 
particularly its support of international terrorism and its effort to 
acquire weapons of mass destruction and the means to deliver them. The 
Iranian Transactions Regulations issued pursuant to Executive Orders 
12957 and 12959 continue to advance important objectives in promoting 
the nonproliferation and antiterrorism policies of the United States. I 
shall exercise the powers at my disposal to deal with these problems and 
will report periodically to the Congress on significant developments.
                                            William J. Clinton
The White House,
September 13, 1996.