[Weekly Compilation of Presidential Documents Volume 34, Number 33 (Monday, August 17, 1998)]
[Pages 1625-1628]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Letter to Congressional Leaders Reporting on the National Emergency With 
Respect to Iraq

August 13, 1998

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

    I hereby report to the Congress on the developments since my last 
report of February 3, 1998, concerning the national emergency with 
respect to Iraq that was declared in Executive Order 12722 of August 2, 
1990. This report is submitted pursuant to section 401(c) of the 
National Emergencies Act, 50 U.S.C. 1641(c), and section 204(c) of the 
International Emergency Economic Powers Act (IEEPA), 50 U.S.C. 1703(c).
    Executive Order 12722 ordered the immediate blocking of all property 
and interests in property of the Government of Iraq (including the 
Central Bank of Iraq) then or thereafter located in the United States or 
within the possession or control of a United States person. That order 
also prohibited the importation into the United States of goods and 
services of Iraqi origin, as well as the exportation of goods, services, 
and technology from the United States to Iraq. The order prohibited 
travel-related transactions to or from Iraq and the performance of any 
contract in support of any industrial, commercial, or governmental 
project in Iraq. United States persons were also prohibited from 
granting or extending credit or loans to the Government of Iraq.
    The foregoing prohibitions (as well as the blocking of Government of 
Iraq property) were continued and augmented on August 9, 1990, by 
Executive Order 12724, which was issued in order to align the sanctions 
imposed by the United States with United Nations Security Council 
Resolution (UNSCR) 661 of August 6, 1990.
    This report discusses only matters concerning the national emergency 
with respect to Iraq that was declared in Executive Order 12722 and 
matters relating to Executive Orders 12724 and 12817 (the ``Executive 
Orders''). The report covers events from February 2 through August 1, 
1998.
    1. In April 1995, the U.N. Security Council adopted UNSCR 986 
authorizing Iraq to export up to $1 billion in petroleum and petroleum 
products every 90 days for a total of 180 days under U.N. supervision in 
order to finance the purchase of food, medicine, and other humanitarian 
supplies. UNSCR 986 includes arrangements to ensure equitable 
distribution of humanitarian goods purchased with UNSCR 986 oil revenues 
to all the people of Iraq. The resolution also provides for the payment 
of compensation to victims of Iraqi aggression and for the funding of 
other U.N. activities with respect to Iraq. On May 20, 1996, a 
memorandum of understanding was concluded between the Secretariat of the 
United Nations and the Government of Iraq agreeing on terms for 
implementing UNSCR 986. On August 8, 1996, the UNSC committee 
established pursuant to UNSCR 661 (``the 661 Committee'') adopted 
procedures to be employed in implementation of UNSCR 986. On December 9, 
1996, the President of the Security Council received the report prepared 
by the Secretary General as requested by paragraph 13 of UNSCR 986, 
making UNSCR 986 effective as of 12:01 a.m. December 10, 1996.
    On June 4, 1997, the U.N. Security Council adopted UNSCR 1111, 
renewing for another 180 days the authorization for Iraqi petroleum 
sales and purchases of humanitarian aid contained in UNSCR 986 of April 
14, 1995. The Resolution became effective on June 8, 1997. On September 
12, 1997, the Security Council, noting Iraq's decision not to export 
petroleum and petroleum products pursuant to UNSCR 1111 during the 
period June 8 to August 13, 1997, and deeply concerned about the 
resulting humanitarian consequences for the Iraqi people, adopted UNSCR 
1129. This resolution replaced the two 90-day quotas with one 120-day 
quota and one 60-day quota in order to enable Iraq to export its full $2 
billion quota of oil within the original 180 days of UNSCR 1111. On 
December 4, 1997, the U.N. Security Council adopted UNSCR 1143, renewing 
for another 180 days, beginning December 5, 1997, the authorization for 
Iraqi petroleum sales and humanitarian aid purchases contained in UNSCR 
986.
    On February 20, 1998, the U.N. Security Council adopted UNSCR 1153, 
authorizing the sale of Iraqi petroleum and petroleum products and the 
purchase of humanitarian aid for a 180-day period beginning with the

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date of notification by the President of the Security Council to the 
members thereof of receipt of the report requested in UNSCR 1153. UNSCR 
1153 authorized the sale of $5.256 billion worth of Iraqi petroleum and 
petroleum products. On March 25, 1998, the Security Council, noting the 
shortfall in revenue from Iraq's sale of petroleum and petroleum 
products during the first 90-day period of implementation of UNSCR 1143, 
due to the delayed resumption in sales and a serious decrease in prices, 
and concerned about the resulting humanitarian consequences for the 
Iraqi people, adopted UNSCR 1158. This Resolution reaffirmed the 
authorization for Iraqi petroleum sales and purchases of humanitarian 
aid contained in UNSCR 1143 for the remainder of the second 90-day 
period and set the authorized value during that time frame to $1.4 
billion pending implementation of UNSCR 1153. The 180-day period 
authorized in UNSCR 1153 began on May 30, 1998. On June 19, 1998, the 
Security Council adopted UNSCR 1175, authorizing the expenditure of up 
to $300 million on Iraqi oil infrastructure repairs in order to help 
Iraq reach the higher export ceiling permitted under UNSCR 1153. UNSCR 
1175 also reaffirmed the Security Council's endorsement of the Secretary 
General's recommendation that the ``oil-for-food'' distribution plan be 
ongoing and project-based. During the period covered by this report, 
imports into the United States under the program totaled about 14.2 
million barrels, bringing total imports since December 10, 1996, to 
approximately 51.5 million barrels.
    2. There have been no amendments to the Iraqi Sanctions Regulations, 
31 C.F.R. Part 575 (the ``ISR'' or the ``Regulations'') administered by 
the Office of Foreign Assets Control (OFAC) of the Department of the 
Treasury during the reporting period.
    As previously reported, the Regulations were amended on December 10, 
1996, to provide a statement of licensing policy regarding specific 
licensing of United States persons seeking to purchase Iraqi-origin 
petroleum and petroleum products from Iraq (61 Fed. Reg. 65312, December 
11, 1996). Statements of licensing policy were also provided regarding 
sales of essential parts and equipment for the Kirkuk-Yumurtalik 
pipeline system, and sales of humanitarian goods to Iraq, pursuant to 
United Nations approval. A general license was also added to authorize 
dealings in Iraqi-origin petroleum and petroleum products that have been 
exported from Iraq with United Nations and United States Government 
approval.
    All executory contracts must contain terms requiring that all 
proceeds of oil purchases from the Government of Iraq, including the 
State Oil Marketing Organization, must be placed in the U.N. escrow 
account at Banque Nationale de Paris, New York (the ``986 escrow 
account''), and all Iraqi payments for authorized sales of pipeline 
parts and equipment, humanitarian goods, and incidental transaction 
costs borne by Iraq will, upon approval by the 661 Committee and 
satisfaction of other conditions established by the United Nations, be 
paid or payable out of the 986 escrow account.
    3. Investigations of possible violations of the Iraqi sanctions 
continue to be pursued and appropriate enforcement actions taken. 
Several cases from prior reporting periods are continuing, and recent 
additional allegations have been referred by OFAC to the U.S. Customs 
Service for investigation.
    Investigation also continues into the roles played by various 
individuals and firms outside Iraq in the Iraqi government procurement 
network. These investigations may lead to additions to OFAC's listing of 
individuals and organizations determined to be Specially Designated 
Nationals (SDNs) of the Government of Iraq.
    Since my last report, OFAC has collected two civil monetary 
penalties totaling $9,000 from one company and one individual for 
violations of IEEPA and ISR prohibitions against transactions with Iraq.
    4. The Office of Foreign Assets Control has issued hundreds of 
licensing determinations regarding transactions pertaining to Iraq or 
Iraqi assets since August 1990. Specific licenses have been issued for 
transactions such as the filing of legal actions against Iraqi 
governmental entities, legal representation of Iraq, and the exportation 
to Iraq of donated medicine, medical supplies, and food intended for 
humanitarian relief purposes, sales of humanitarian supplies to Iraq 
under UNSCRs 986, 1111, 1143, and

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1153, diplomatic transactions, the execution of powers of attorney 
relating to the administration of personal assets and decedents' estates 
in Iraq, and the protection of preexistent intellectual property rights 
in Iraq. Since my last report, 75 specific licenses have been issued, 
most with respect to sales of humanitarian goods.
    Since December 10, 1996, OFAC has issued specific licenses 
authorizing commercial sales of humanitarian goods funded by Iraqi oil 
sales pursuant to UNSCRs 986, 1111, 1143, and 1153 valued at more than 
$324 million. Of that amount, approximately $298 million represents 
sales of basic foodstuffs, $14 million for medicines and medical 
supplies, $9.2 million for water testing and treatment equipment, and 
nearly $3 million to fund a variety of United Nations activities in 
Iraq. International humanitarian relief in Iraq is coordinated under the 
direction of the United Nations Office of the Humanitarian Coordinator 
of Iraq. Assisting U.N. agencies include the World Food Program, the 
U.N. Population Fund, the U.N. Food and Agriculture Organization, the 
World Health Organization, and UNICEF. As of June 29, 1998, OFAC had 
authorized sales valued at more than $85 million worth of humanitarian 
goods during the current reporting period.
    5. The expenses incurred by the Federal Government in the 6-month 
period from February 2 through August 1, 1998, that are directly 
attributable to the exercise of powers and authorities conferred by the 
declaration of a national emergency with respect to Iraq, are reported 
to be about $1.1 million, 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 International Organization 
Affairs, the Bureau of Political-Military Affairs, the Bureau of 
Intelligence and Research, the U.S. Mission to the United Nations, and 
the Office of the Legal Adviser), and the Department of Transportation 
(particularly the U.S. Coast Guard).
    6. The United States imposed economic sanctions on Iraq in response 
to Iraq's illegal invasion and occupation of Kuwait, a clear act of 
brutal aggression. The United States, together with the international 
community, is maintaining economic sanctions against Iraq because the 
Iraqi regime has failed to comply fully with relevant United Nations 
Security Council resolutions. Iraqi compliance with these resolutions is 
necessary before the United States will consider lifting economic 
sanctions. Security Council resolutions on Iraq call for the elimination 
of Iraqi weapons of mass destruction, Iraqi recognition of Kuwait and 
the inviolability of the Iraq-Kuwait boundary, the release of Kuwaiti 
and other third-country nationals, compensation for victims of Iraqi 
aggression, long-term monitoring of weapons of mass destruction 
capabilities, the return of Kuwaiti assets stolen during Iraq's illegal 
occupation of Kuwait, renunciation of terrorism, an end to internal 
Iraqi repression of its own civilian population, and the facilitation of 
access by international relief organizations to all those in need in all 
parts of Iraq. Eight years after the invasion, a pattern of defiance 
persists: a refusal to account for missing Kuwaiti detainees; failure to 
return Kuwaiti property worth millions of dollars, including military 
equipment that was used by Iraq in its movement of troops to the Kuwaiti 
border in October 1994; sponsorship of assassinations in Lebanon and in 
northern Iraq; incomplete declarations to weapons inspectors and refusal 
to provide immediate, unconditional, and unrestricted access to sites by 
these inspectors; and ongoing widespread human rights violations. As a 
result, the U.N. sanctions remain in place; the United States will 
continue to enforce those sanctions under domestic authority.
    The Baghdad government continues to violate basic human rights of 
its own citizens through systematic repression of all forms of political 
expression, oppression of minorities, and denial of humanitarian 
assistance. The Government of Iraq has repeatedly said it will not 
comply with UNSCR 688 of April 5, 1991. The Iraqi military routinely 
harasses residents of the north, and has attempted to

[[Page 1628]]

``Arabize'' the Kurdish, Turkomen, and Assyrian areas in the north. Iraq 
has not relented in its artillery attacks against civilian population 
centers in the south, or in its burning and draining operations in the 
southern marshes, which have forced thousands to flee to neighboring 
states.
    The policies and actions of the Saddam Hussein regime continue to 
pose an unusual and extraordinary threat to the national security and 
foreign policy of the United States, as well as to regional peace and 
security. The U.N. resolutions affirm that the Security Council be 
assured of Iraq's peaceful intentions in judging its compliance with 
sanctions. Because of Iraq's failure to comply fully with these 
resolutions, the United States will continue to apply economic sanctions 
to deter it from threatening peace and stability in the region.
    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. This 
letter was released by the Office of the Press Secretary on August 14.