[Weekly Compilation of Presidential Documents Volume 34, Number 38 (Monday, September 21, 1998)]
[Pages 1811-1814]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Message to the Congress Reporting on the National Emergency With Respect 
to Iran

September 16, 1998

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, and in Executive 
Order 13059 of August 19, 1997. 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 (60 Fed. 
Reg. 24757, May 9, 1995) to further respond to the Iranian threat to the 
national security, foreign policy, and economy of the United States. The 
terms of that order and an earlier order imposing an import ban on 
Iranian-origin goods and services (Executive Order 12613 of October 29, 
1987) were consolidated and clarified in Executive Order 13059 of August 
19, 1997.
    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 U.S. 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 Congressional leadership 
by letter dated May 6, 1995.

[[Page 1812]]

    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 
the Order 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) 
knowing reexportation from a third country to Iran or the Government of 
Iran of certain controlled U.S.-origin goods, technology, or services by 
a person other than a United States person; (4) the purchase, sale, 
transport, swap, brokerage, approval, financing, facilitation, 
guarantee, or other transactions or dealings by United States persons, 
wherever located, related to goods, technology, or services for 
exportation, reexportation, sale or supply, directly or indirectly, to 
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 that a United States person would be prohibited from 
performing under the terms of the Order; and (7) any transaction that 
evades, avoids, or attempts to violate a prohibition under the Order.
    Executive Order 13059 became effective at 12:01 a.m., eastern 
daylight time on August 20, 1997. Because the order consolidated and 
clarified the provisions of prior orders, Executive Order 12613 and 
paragraphs (a), (b), (c), (d) and (f) of section 1 of Executive Order 
12959 were revoked by Executive Order 13059. The revocation of 
corresponding provisions in the prior Executive orders did 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.
    The declaration of national emergency made by Executive Order 12957, 
and renewed each year since, remains in effect and is not affected by 
the Order.
    3. On March 4, 1998, 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.
    4. There have been no amendments to the Iranian Transactions 
Regulations, 31 CFR Part 560 (the ``ITR''), since my report of March 16, 
1998.
    5. 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 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

[[Page 1813]]

importation of Iranian-origin goods. The licenses that were issued 
authorized certain financial transactions and transactions relating to 
air safety policy. Pursuant to sections 3 and 4 of Executive Order 
12959, Executive Order 13059, and consistent with statutory restrictions 
concerning certain goods and technology, including those involved in air 
safety cases, the Department of the Treasury continues to consult with 
the Departments of State and Commerce on these matters.
    Since the issuance of Executive Order 13059, more than 1,500 
transactions involving Iran initially have been ``rejected'' by U.S. 
financial institutions under IEEPA and the ITR. United States banks 
declined to process these transactions in the absence of OFAC 
authorization. Twenty percent of the 1,500 transactions scrutinized by 
OFAC resulted in investigations by OFAC to assure compliance with IEEPA 
and ITR by United States persons.
    Such investigations resulted in 15 referrals for civil penalty 
action, issuance of 5 warning letters, and an additional 52 cases still 
under compliance or legal review prior to final agency action.
    Since my last report, OFAC has collected 20 civil monetary penalties 
totaling more than $110,000 for violations of IEEPA and the ITR related 
to the import or export to Iran of goods and services. Five U.S. 
financial institutions, twelve companies, and three individuals paid 
penalties for these prohibited transactions. Civil penalty action is 
pending against another 45 United States persons for violations of the 
ITR.
    6. On January 22, 1997, an Iranian national resident in Oregon and a 
U.S. citizen were indicted on charges related to the attempted 
exportation to Iran of spare parts for gas turbines and precursor agents 
utilized in the production of nerve gas. The 5-week trial of the 
American citizen defendant, which began in early February 1998, resulted 
in his conviction on all counts. That defendant is awaiting sentencing. 
The other defendant pleaded guilty to one count of criminal conspiracy 
and was sentenced to 21 months in prison.
    On March 24, 1998, a Federal grand jury in Newark, New Jersey, 
returned an indictment against a U.S. national and an Iranian-born 
resident of Singapore for violation of IEEPA and the ITR relating to 
exportation of munitions, helicopters, and weapons systems components to 
Iran. Among the merchandise the defendants conspired to export were 
parts for Phoenix air-to-air missiles used on F-14A fighter jets in 
Iran. Trial is scheduled to begin on October 6, 1998.
    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.
    7. The expenses incurred by the Federal Government in the 6-month 
period from March 15 through September 14, 1998, that are directly 
attributable to the exercise of powers and authorities conferred by the 
declaration of a national emergency with respect to Iran are reported to 
be approximately $1.7 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 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 Government's 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, 12959, and 13059 
continue to

[[Page 1814]]

advance important objectives in promoting the nonproliferation and anti-
terrorism 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 16, 1998.

Note: This message was released by the Office of the Press Secretary on 
September 17.