[Weekly Compilation of Presidential Documents Volume 34, Number 48 (Monday, November 30, 1998)]
[Pages 2378-2380]
[Online from the Government Publishing Office, www.gpo.gov]

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

November 23, 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.
    1. On May 20, 1997, I issued Executive Order 13047 (62 Fed. Reg. 
28301, May 22, 1997), effective on May 21, 1997, to declare

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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. 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.
    2. On May 21, 1998, the Department of the Treasury's Office of 
Foreign Assets Control (OFAC) issued the Burmese Sanctions Regulations 
(the ``Regulations''), 31 C.F.R. Part 537, to implement the prohibitions 
of Executive Order 13047 (63 Fed. Reg. 27846, May 21, 1998). 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. 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. A copy of the Regulations is attached to this 
report.
    The term ``new investment'' means any of the following activities, 
if such an 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.
    3. 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 issued 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 and 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 1997, 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

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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.
    4. The expenses incurred by the Federal Government in the 6-month 
period from May 20 through November 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 $300,000, 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).
    5. 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 counternarcotics policies.
    In the past 6 months the State Law and Order Restoration Council 
(SLORC), recently renamed the State Peace and Development Council, has 
shown no sign of willingness to cede its hold on absolute power. Since 
refusing to recognize the results of the 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 
SLORC 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 weakening further and 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 SLORC's own 
heavy-handed mismanagement, the SLORC 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.