[Weekly Compilation of Presidential Documents Volume 34, Number 49 (Monday, December 7, 1998)]
[Pages 2420-2423]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Letter to Congressional Leaders Reporting on the National Emergency With 
Respect to the Federal Republic of Yugoslavia (Serbia and Montenegro)

December 3, 1998

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

    On May 30, 1992, by Executive Order 12808, President Bush declared a 
national emergency to deal with the unusual and extraordinary threat to 
the national security, foreign policy, and economy of the United States 
constituted by the actions and policies of the Governments of Serbia and 
Montenegro, blocking all property and interests in property of those 
Governments. President Bush took additional measures to prohibit trade 
and other transactions with the Federal Republic of Yugoslavia (Serbia 
and Montenegro) by Executive Orders 12810 and 12831, issued on June 5, 
1992, and January 15, 1993, respectively.
    On April 25, 1993, I issued Executive Order 12846, blocking the 
property and interests in property of all commercial, industrial, or 
public utility undertakings or entities organized or located in the 
Federal Republic of Yugoslavia (Serbia and Montenegro) (the ``FRY 
(S&M)''), and prohibiting trade-related transactions by United States 
persons involving those areas of the Republic of Bosnia and Herzegovina 
controlled by the Bosnian Serb forces and the United Nations Protected 
Areas in the Republic of Croatia. On October 25, 1994, because of the 
actions and policies of the Bosnian Serbs, I expanded the scope of the 
national emergency by issuance of Executive Order 12934 to block the 
property of the Bosnian Serb forces and the authorities in the territory 
that they controlled within the Republic of Bosnia and Herzegovina, as 
well as the property of any entity organized or located in, or 
controlled by any person in, or resident in, those areas.
    On November 22, 1995, the United Nations Security Council passed 
Resolution 1022 (``Resolution 1022''), immediately and indefinitely 
suspending U.N. economic sanctions against the FRY (S&M). Sanctions were 
subsequently lifted by the United Nations Security Council pursuant to 
Resolution 1074 on October 1, 1996. Resolution 1022, however, continues 
to provide for the release of funds and assets previously blocked 
pursuant to sanctions against the FRY (S&M), provided that such funds 
and assets that are subject to claims and encumbrances, or that are the 
property of persons deemed insolvent, remain blocked until ``released in 
accordance with applicable law.'' This provision was implemented in the 
United States on December 27, 1995, by Presidential Determination No. 
96-7. The determination, in conformity with Resolution 1022, directed 
the Secretary of the Treasury, inter alia, to suspend the application of 
sanctions imposed on the FRY (S&M) pursuant to the above-referenced 
Executive orders and to continue to block property previously blocked 
until provision is made to address claims or encumbrances, including the 
claims of the other successor states of the former Yugoslavia. This 
sanctions relief was an essential factor motivating Serbia and 
Montenegro's acceptance of the General Framework Agreement for Peace in 
Bosnia and Herzegovina initialed by the parties in Dayton on November 
21, 1995 (the ``Peace Agreement'') and signed in Paris on December 14, 
1995. The sanctions imposed on the FRY (S&M) and on the United Nations 
Protected Areas in the Republic of Croatia were accordingly suspended 
prospectively, effective January 16, 1996. Sanctions imposed on the 
Bosnian Serb forces and authorities and on the territory that they 
controlled within the Republic of Bosnia and Herzegovina were 
subsequently suspended prospectively, effective May 10, 1996, in 
conformity with Resolution 1022. On October 1, 1996, the United Nations 
Security Council passed Resolution 1074, terminating U.N. sanctions 
against the FRY (S&M) and the Bosnian Serbs in light of the elections 
that took place in Bosnia and Herzegovina on September 14, 1996. 
Resolution 1074, however, reaffirms the provisions of Resolution 1022 
with respect to the release of blocked assets, as set forth above.
    The present report is submitted pursuant to 50 U.S.C. 1641(c) and 
1703(c) and covers

[[Page 2421]]

the period from May 30 through November 29, 1998. It discusses 
Administration actions and expenses directly related to the exercise of 
powers and authorities conferred by the declaration of a national 
emergency in Executive Order 12808 as expanded with respect to the 
Bosnian Serbs in Executive Order 12934, and against the FRY (S&M) 
contained in Executive Order 12810, Executive Order 12831, and Executive 
Order 12846.
    1. The declaration of the national emergency on May 30, 1992, was 
made pursuant to the authority vested in the President by the 
Constitution and laws of the United States, including the International 
Emergency Economic Powers Act (50 U.S.C. 1701 et seq.), the National 
Emergencies Act (50 U.S.C. 1601 et seq.), and section 301 of title 3 of 
the United States Code. The emergency declaration was reported to the 
Congress on May 30, 1992, pursuant to section 204(b) of the 
International Emergency Economic Powers Act (50 U.S.C. 1703(b)) and the 
expansion of that national emergency under the same authorities was 
reported to the Congress on October 25, 1994. The additional sanctions 
set forth in related Executive orders were imposed pursuant to the 
authority vested in the President by the Constitution and laws of the 
United States, including the statutes cited above, section 1114 of the 
Federal Aviation Act (49 U.S.C. App. 1514), and section 5 of the United 
Nations Participation Act (22 U.S.C. 287c).
    2. The Office of Foreign Assets Control (OFAC), acting under 
authority delegated by the Secretary of the Treasury, implemented the 
sanctions imposed under the foregoing statutes in the Federal Republic 
of Yugoslavia (Serbia and Montenegro) and Bosnian Serb-Controlled Areas 
of the Republic of Bosnia and Herzegovina Sanctions Regulations, 31 
C.F.R. Part 585 (the ``Regulations''). To implement Presidential 
Determination No. 96-7, the Regulations were amended to authorize 
prospectively all transactions with respect to the FRY (S&M) otherwise 
prohibited (61 Fed. Reg. 1282, January 19, 1996). Property and interests 
in property of the FRY (S&M) previously blocked within the jurisdiction 
of the United States remain blocked, in conformity with the Peace 
Agreement and Resolution 1022, until provision is made to address claims 
or encumbrances, including the claims of the other successor states of 
the former Yugoslavia.
    On May 10, 1996, OFAC amended the Regulations to authorize 
prospectively all transactions with respect to the Bosnian Serbs 
otherwise prohibited, except with respect to property previously blocked 
(61 Fed. Reg. 24696, May 16, 1996). On December 4, 1996, OFAC amended 
Appendices A and B to 31 C.F.R. Chapter V, containing the names of 
entities and individuals in alphabetical order and by location that are 
subject to the various economic sanctions programs administered by OFAC, 
to remove the entries for individuals and entities that were determined 
to be acting for or on behalf of the Government of the Federal Republic 
of Yugoslavia (Serbia and Montenegro). These assets were blocked on the 
basis of these persons' activities in support of the FRY (S&M)--
activities no longer prohibited--not because the Government of the FRY 
(S&M) or entities located in or controlled from the FRY (S&M) had any 
interest in those assets (61 Fed. Reg. 64289, December 4, 1996).
    On April 18, 1997, the Regulations were amended by adding new 
section 585.528, to provide for the unblocking of the following five 
vessels: the M/V MOSLAVINA, M/V ZETA, M/V LOVCEN, M/V DURMITOR and M/V 
BAR (a/k/a M/V INVIKEN) after 30 days (62 Fed. Reg. 19672, April 23, 
1997). Two previously blocked vessels, the M/V KAPETAN MARTINOVIC and 
the M/V BOR, were sold prior to August 18, 1997, pursuant to licenses 
and the proceeds of the sales placed in blocked interest-bearing 
accounts at U.S. financial institutions as substitute property for the 
blocked vessels.
    On November 6, 1998, section 585.528 was amended to provide for the 
unblocking of these accounts, representing the two vessels, after 30 
days (63 Fed. Reg. 59883, November 6, 1998). During this period, United 
States persons may negotiate settlements of their outstanding claims 
with respect to the vessels with the vessels' owners or agents. If 
claims remain unresolved by November 27, United States persons are 
generally licensed

[[Page 2422]]

to seek and obtain judicial writs of attachment against the funds during 
the 10-day period prior to the accounts' unblocking. A copy of the 
amendment is attached to this report.
    3. Over the past 2 years, the Departments of State and the Treasury 
have worked closely with European Union member states and other U.N. 
member nations to implement the provisions of Resolution 1022. In the 
United States, retention of blocking authority pursuant to the extension 
of a national emergency provides a framework for administration of an 
orderly claims settlement. This accords with past policy and practice 
with respect to the suspension of sanctions regimes.
    4. During this reporting period, OFAC issued two specific licenses 
regarding transactions pertaining to the FRY (S&M) or property in which 
it has an interest. Specific licenses were issued (1) to authorize the 
payment from blocked funds of licensing fees due to the New York State 
Banking Department for one of the Serbian financial institutions blocked 
in 1992 and (2) to authorize the transfer of a blocked account from one 
financial institution into another.
    During the past 6 months, OFAC has continued to oversee the 
maintenance of blocked FRY (S&M) accounts, and records with respect to: 
(1) liquidated tangible assets and personalty of the 15 blocked U.S. 
subsidiaries of entities organized in the FRY (S&M); (2) the blocked 
personalty, files, and records of the two Serbian banking institutions 
in New York previously placed in secure storage; and (3) remaining 
blocked FRY (S&M) tangible property, including real estate.
    D.C. Precision, Inc. v. United States, et al., 97 Civ. 9123 CRLC, 
was filed in the Southern District of New York on December 10, 1997, 
alleging that the Government had improperly blocked Precision's funds 
held at one of the closed Serbia banking agencies in New York. This case 
is still pending.
    5. Despite the prospective authorization of transactions with the 
FRY (S&M), OFAC has continued to work closely with the US. Customs 
Service and other cooperating agencies to investigate alleged violations 
that occurred while sanctions were in force. On February 13, 1997, a 
Federal grand jury in the Southern District of Florida, Miami, returned 
a 13-count indictment against one U.S. citizen and two nationals of the 
FRY (S&M). The indictment charges that the subjects participated and 
conspired to purchase three Cessna propeller aircraft, a Cessna jet 
aircraft, and various aircraft parts in the United States and to export 
them to the FRY (S&M) in violation of U.S. sanctions and the 
Regulations. Timely interdiction action prevented the aircraft from 
being exported from the United States. On October 23, 1998, the 
defendants in the case entered guilty pleas. A sentencing date has not 
yet been scheduled.
    Since my last report, OFAC has collected one civil monetary penalty 
totaling nearly $4,200 for violations of the sanctions. These violations 
involved prohibited importations into the United States of goods 
originating in Serbia.
    6. The expenses incurred by the Federal Government in the 6-month 
period from May 30 through November 29, 1998, that are directly 
attributable to the declaration of a national emergency with respect to 
the FRY (S&M) and the Bosnian Serb forces and authorities are estimated 
at approximately $360,000, most of which represents wage and salary 
costs for Federal personnel. Personnel costs were largely centered in 
the Department of the Treasury (particularly in OFAC and its Chief 
Counsel's Office, and the U.S. Customs Service), the Department of 
State, the National Security Council, and the Department of Commerce.
    7. In the last 2 years, substantial progress has been achieved to 
bring about a settlement of the conflict in Bosnia-Herzegovina 
acceptable to the parties. Resolution 1074 terminated sanctions in view 
of the first free and fair elections to occur in Bosnia and Herzegovina, 
as provided for in the Dayton Peace Agreement. In reaffirming Resolution 
1022, however, Resolution 1074 contemplates the continued blocking of 
assets potentially subject to conflicting claims and encumbrances until 
provision is made to address them under applicable law, including claims 
of the other successor states of the former Yugoslavia.
    The resolution of the crisis and conflict in the former Yugoslavia 
that has resulted from the actions and policies of the Government of the 
Federal Republic of Yugoslavia (Serbia

[[Page 2423]]

and Montenegro), and of the Bosnian Serb forces and the authorities in 
the territory that they controlled, will not be complete until such time 
as the Peace Agreement is implemented and the terms of Resolution 1022 
have been met. Therefore, on May 28, 1998, I continued for another year 
the national emergency declared on May 30, 1992, as expanded in scope on 
October 25, 1994, and will continue to enforce the measures adopted 
pursuant thereto. The importance of maintaining these sanctions is 
further reinforced by the unacceptable actions and policies of Belgrade 
authorities in Kosovo and in the areas of human rights, democratization, 
and war crimes investigations. These developments threaten to disrupt 
progress in implementation of Dayton and security in the region 
generally.
    Accordingly, I shall continue to exercise the powers at my disposal 
with respect to the measures against the Government of the Federal 
Republic of Yugoslavia (Serbia and Montenegro), and the Bosnian Serb 
forces, civil authorities and entities, as long as these measures are 
appropriate, and will continue to report periodically to the Congress on 
significant developments pursuant to 50 U.S.C. 1703(c).
    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.