[Weekly Compilation of Presidential Documents Volume 33, Number 38 (Monday, September 22, 1997)]
[Pages 1360-1363]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Message to the Congress on Iran

September 17, 1997

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), section 401(c) of the 
National Emergencies Act, 50 U.S.C. 1641(c), 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 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 dealings by United States persons in goods and 
services of Iranian origin or owned or controlled by the Government of 
Iran; (4) prohibits new

[[Page 1361]]

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 trade 
transactions that a United States person is prohibited from performing; 
(6) continues the 1987 prohibition on the importation into the United 
States of goods and services of Iranian origin; (7) prohibits any 
transaction by a 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 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, Kazakhstan, 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 and 
the President of the Senate by letter dated May 6, 1995.
    2. On March 5, 1997, I renewed for another year the national 
emergency with respect to Iran pursuant to IEEPA. This renewal extended 
the authority for the current comprehensive trade embargo against Iran 
in effect since May 1995. Under these sanctions, virtually all trade 
with Iran is prohibited except for trade in information and 
informational materials and certain other limited exceptions.
    3. On August 19, 1997, I issued Executive Order 13059 in order to 
clarify the steps taken in Executive Order 12957 and Executive Order 
12959, to confirm that the embargo on Iran prohibits all trade and 
investment activities by United States persons, wherever located, and to 
consolidate in one order the various prohibitions previously imposed to 
deal with the national emergency declared on March 15, 1995. A copy of 
Executive Order 13059 was transmitted to the Speaker of the House and 
the President of the Senate by letter dated August 19, 1997.
    The order prohibits (1) the importation into the United States of 
any goods or services of Iranian origin or owned or controlled by the 
Government of Iran except information or informational material; (2) the 
exportation, reexportation, sale, or supply from the United States or by 
a United States person, wherever located, of goods, technology, or 
services to Iran or the Government of Iran, including knowing transfers 
to a third country for direct or indirect supply, transshipment, or 
reexportation to Iran or the Government of Iran, or specifically for use 
in the production, commingling with, or incorporation into goods, 
technology, or services to be supplied, transshipped, or reexported 
exclusively or predominantly to Iran or the Government of Iran; (3) 
reexportation from a third country of controlled U.S.-origin goods, 
technology, or services by a person other than a United States person; 
(4) purchase, sale, transport, swap, brokerage, approval, financing, 
facilitation, guarantee, or other transactions or dealings by United 
States persons, wherever located, related to direct or indirect trade 
with Iran or the Government of Iran or to goods or services of Iranian 
origin or owned or controlled by the Government of Iran; (5) new 
investment by United States persons in Iran or in property or entities 
owned or controlled by the Government of Iran; (6) approval, financing, 
facilitation, or guarantee by a United States person of any transaction 
by a foreign person

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that a United States person would be prohibited from performing under 
the embargo; and (7) any evasion, avoidance, or attempt to violate a 
prohibition under the order.
    Executive Order 13059 became effective at 12:01 a.m., eastern 
daylight time on August 20, 1997. Revocation of corresponding provisions 
in prior Executive orders does not affect the applicability of those 
provisions, or of regulations, licenses, or other administrative actions 
taken pursuant to those provisions, with respect to any transaction or 
violation occurring before the effective date of Executive Order 13059. 
Specific licenses issued pursuant to prior Executive orders continue in 
effect, unless revoked or amended by the Secretary of the Treasury. 
General licenses, regulations, orders, and directives issued pursuant to 
prior orders continue in effect, except to the extent inconsistent with 
Executive Order 13059 or otherwise revoked or modified by the Secretary 
of the Treasury.
    4. The Iranian Transactions Regulations, 31 CFR Part 560 (the 
``ITR''), were amended on April 18, 1997 (62 Fed. Reg. 19670, April 23, 
1997), on July 30, 1997 (62 Fed. Reg. 41851, August 4, 1997), and on 
August 25, 1997 (62 Fed. Reg. 45098, August 25, 1997). In April 1997, 
Section 560.603 was amended to require a United States person to file a 
transaction report as to each foreign affiliate that engages in 
reportable oil-related transactions involving Iran of $1,000,000 or more 
during the calendar quarter.
    In July 1997, sections 560.510(d)(1) and (d)(2) were amended to 
generally license all payments of awards against Iran issued by the 
Iran-U.S. Claims Tribunal in The Hague, irrespective of the source of 
funds for payment, and to generally license implementation (except 
exports or reexports that are subject to export license application 
requirements of Federal agencies other than the Department of the 
Treasury's Office of Foreign Assets Control (OFAC)) as well as payment 
of awards or settlements in cases to which the United States Government 
is a party.
    Sections 560.525(a)(3) and (a)(5)(i) were amended to generally 
license the provision of legal services to initiate and conduct U.S. 
court and other domestic legal proceedings on behalf of persons in Iran 
or the Government of Iran and to initiate proceedings to resolve 
disputes between the Government of Iran or an Iranian national and the 
United States or a United States national, notwithstanding the 
prohibition on exportation of services to Iran. On August 25, 1997, 
general reporting, record keeping, licensing, and other procedural 
regulations were moved from the ITR to a separate part (31 CFR Part 501) 
dealing solely with such procedural matters. (62 Fed. Reg. 45098, August 
25, 1997). A copy of these amendments is attached.
    5. During the current 6-month period, OFAC made numerous decisions 
with respect to applications for licenses to engage in transactions 
under the ITR, and issued 12 licenses. The majority of denials were in 
response to requests to authorize commercial exports to Iran--
particularly of machinery and equipment for various industries--and the 
importation of Iranian-origin goods. The licenses issued authorized 
certain financial transactions, including those relating to disposal of 
U.S.-owned goods located in Iran and extension of, but not payment 
under, standby letters of credit. Pursuant to sections 3 and 4 of 
Executive Order 12959 and consistent with the Iran-Iraq Arms Non-
Proliferation Act of 1992 and other statutory restrictions concerning 
certain goods and technology, including those involved in air-safety 
cases, Treasury continues to consult with the Departments of State and 
Commerce on these matters.
    The U.S. financial community continues to scrutinize transactions 
associated with Iran and to consult with OFAC about their appropriate 
handling. Many of these inquiries have resulted in investigations into 
the activities of U.S. parties and, where appropriate, the initiation of 
enforcement action.
    6. On March 20, 1997, a seven-count indictment was returned by a 
grand jury in the District of Maryland against a U.S. resident and two 
Iranian co-conspirators. The March indictment superseded a two-count 
indictment handed down on February 13, 1997. Each indictment charged 
violations of IEEPA and the ITR involving the attempted exportation from 
the United States to Iran of sophisticated state-of-the-art gas 
chromatographs used in the electric power

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industry, which were prevented from reaching Iran.
    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 my last report on March 
14, 1997, OFAC has collected four civil monetary penalties totaling 
nearly $22,000. The violations relate to the unlicensed import from or 
export of goods to Iran. Civil penalty action is pending against 37 
companies, financial institutions, and individuals for violations of the 
Regulations.
    7. The expenses incurred by the Federal Government in the 6-month 
period from March 15 through September 14, 1997, 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 represent 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 Intelligence and Research, 
and the Office of the Legal Adviser), and the Department of Commerce 
(the Bureau of Export Administration and the General Counsel's Office).
    8. The situation reviewed above continues to present 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 efforts 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 17, 1997.