[Weekly Compilation of Presidential Documents Volume 34, Number 22 (Monday, June 1, 1998)]
[Pages 967-969]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Letter to Congressional Leaders on Burma

May 26, 1998

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

    I hereby report to the Congress on developments concerning the 
national emergency with respect to Burma that I declared in Executive 
Order 13047 of May 20, 1997, pursuant to section 570 of the Foreign 
Operations, Export Financing, and Related Programs Appropriations Act, 
1997, Public Law 104-208 (the ``Act'') and the International Emergency 
Economic Powers Act (IEEPA). This report is submitted pursuant to 
section 204(c) of IEEPA, 50 U.S.C. 1703(c) and section 401(c) of the 
National Emergencies Act, 50 U.S.C. 1641(c). This report discusses only 
matters concerning the national emergency with respect to Burma that was 
declared in Executive Order 13047.
    On May 20, 1997, I issued Executive Order 13047 (62 Fed. Reg. 28301, 
May 22, 1997), effective on May 21, 1997, to declare a national 
emergency with respect to Burma and to prohibit new investment in Burma 
by United States persons, except to the extent provided in regulations, 
orders, directives, or licenses that may be issued in conformity with 
section 570 of the Act. I renewed this order on May 19, 1998. The order 
also prohibits any approval or other facilitation by a United States 
person, wherever located, of a transaction by a foreign person where the 
transaction would constitute new investment in Burma prohibited by the 
order if engaged in by a United States person or within the United 
States. This action was taken in response to the large-scale repression 
of the democratic opposition by the Government of Burma since September 
30, 1996. A copy of the order was transmitted to the Congress on May 20, 
1997.
    By its terms, Executive Order 13047 does not prohibit the entry 
into, performance of, or financing of a contract to sell or purchase 
goods, services, or technology, except: (1) where the entry into such 
contract on or after May 21, 1997, is for the general supervision and 
guarantee of another person's performance of a contract for the economic 
development of resources located in Burma; or (2) where such contract 
provides for payment, in whole or in part, in (i) shares of ownership, 
including an equity interest, in the economic development of resources 
located in Burma; or (ii) participation in royalties, earnings, or 
profits in the economic development of resources located in Burma.
    On May 21, 1998, the Department of the Treasury's Office of Foreign 
Assets Control (OFAC) issued the Burmese Sanctions Regulations (the 
``BSR'' or the ``Regulations''), 31 C.F.R. Part 537, to implement the 
prohibitions of Executive Order 13047. The Regulations apply to United 
States persons, defined to include U.S. citizens and permanent resident 
aliens wherever they are located, entities organized under U.S. law 
(including their foreign branches), and entities and individuals 
actually located in the United States.

[[Page 968]]

The sanctions do not apply directly to foreign subsidiaries of U.S. 
firms, although foreign firms' activities may be affected by the 
restriction on United States persons' facilitation of a foreign person's 
investment transactions in Burma.
    The term ``new investment'' means any of the following activities, 
if such activity is undertaken pursuant to an agreement, or pursuant to 
the exercise of rights under such an agreement, that is entered into 
with the Government of Burma, or a nongovernmental entity in Burma, on 
or after May 21, 1997: (a) The entry into a contract that includes the 
economic development of resources located in Burma; (b) the entry into a 
contract providing for the general supervision and guarantee of another 
person's performance of a contract that includes the economic 
development of resources located in Burma; (c) the purchase of a share 
of ownership, including an equity interest, in the economic development 
of resources located in Burma; or (d) the entry into a contract 
providing for the participation in royalties, earnings, or profits in 
the economic development of resources located in Burma, without regard 
to the form of participation.
    Since the issuance of Executive Order 13047 on May 20, 1997, OFAC, 
acting under authority delegated by the Secretary of the Treasury, has 
implemented sanctions against Burma as imposed by the order. OFAC has 
issued several determinations with respect to transactions provided for 
by agreements and/or rights pursuant to contracts entered into by United 
States persons prior to May 21, 1997. One license was necessary to 
authorize a United States person's disinvestment in Burma, since this 
transaction facilitated a foreign person's investment in Burma.
    On May 21, 1997, OFAC disseminated details of this program to the 
financial, securities, and international trade communities by both 
electronic and conventional media. This included posting notices on the 
Internet, on ten computer bulletin boards, and two fax-on-demand 
services, and providing the material to the U.S. Embassy in Rangoon for 
distribution to U.S. companies operating in Burma.
    In addition, in early July, OFAC sent notification letters to 
approximately 50 U.S. firms with operations in or ties to Burma 
informing them of the restrictions on new investment. The letters 
included copies of Executive Order 13047, provided clarification of 
several technical issues, and urged firms to contact OFAC if they had 
specific questions on the application of the Executive order to their 
particular circumstances.

    The expenses incurred by the Federal Government in the 6-month 
period from November 20, 1997, through May 19, 1998, that are directly 
attributable to the exercise of powers and authorities conferred by the 
declaration of a national emergency with respect to Burma are estimated 
at approximately $370,000, 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 Office of the Under Secretary for Enforcement, and the 
Office of the General Counsel), and the Department of State 
(particularly the Bureau of Economic and Business Affairs, the Bureau of 
East Asian and Pacific Affairs, and the Office of the Legal Adviser).

    The situation reviewed above continues to present an extraordinary 
and unusual threat to the national security and foreign policy of the 
United States. The declaration of the national emergency with respect to 
Burma contained in Executive Order 13047 in response to the large-scale 
repression of the democratic opposition by the Government of Burma since 
September 30, 1996, reflected the belief that it is in the national 
security and foreign policy interests of the United States to seek an 
end to abuses of human rights in Burma, to support efforts to achieve 
democratic reform that would promote regional peace and stability, and 
to urge effective counter-narcotics policies.

    In the past 6 months, the State Law and Order Restoration Council, 
recently renamed the State Peace and Development Council (SPDC), has 
shown no sign of willingness to cede its hold on absolute power. Since 
refusing to recognize the results of the

[[Page 969]]

free and fair 1990 elections in which the National League for Democracy 
won a vast majority of both the popular vote and the parliamentary 
seats, the ruling junta has continued to refuse to negotiate with pro-
democracy forces and ethnic groups for a genuine political settlement to 
allow a return to the rule of law and respect for basic human rights. 
Burma has taken limited but insufficient steps to counter narcotics 
production and trafficking.
    The net effect of U.S. and international measures to pressure the 
SPDC to end its repression and move toward democratic government has 
been a further decline in investor confidence in Burma and deeper 
stagnation of the Burmese economy. Observers agree that the Burmese 
economy appears to be further weakening and that the government has a 
serious shortage of foreign exchange reserves with which to pay for 
imports. While Burma's economic crisis is largely a result of the SPDC's 
own heavy-handed mismanagement, the SPDC is unlikely to find a way out 
of the crisis unless political developments permit an easing of 
international pressure. I shall continue to exercise the powers at my 
disposal to deal with these problems and will report periodically to the 
Congress on significant developments.
    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.