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H.Doc.107-46 CUMULATIVE REPORT ON ...
107th Congress, 1st Session - - - - - - - - - - - - - House Document 107-44 REPORT ON THE NATIONAL EMERGENCY WITH RESPECT TO IRAQ __________ MESSAGE FROM THE PRESIDENT OF THE UNITED STATES TRANSMITTING A 6-MONTH PERIODIC REPORT ON THE NATIONAL EMERGENCY WITH RESPECT TO IRAQ THAT WAS DECLARED IN EXECUTIVE ORDER NO. 12722 OF AUGUST 2, 1990, PURSUANT TO 50 U.S.C. 1703(c) <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT> February 12, 2001.--Message and accompanying papers referred to the Committee on International Relations and ordered to be printed To the Congress of the United States: As required by 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, 50 U.S.C. 1703(c), I transmit herewith a 6-month periodic report on the national emergency with respect to Iraq that was declared in Executive Order 12722 of August 2, 1990. George W. Bush. The White House, February 8, 2001. President's Periodic Report on the National Emergency With Respect to Iraq I hereby report to the Congress on the developments since the last report of July 28, 2000, 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, 50 U.S.C. 1703(c) (``IEEPA''). 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 U.S. 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. Subsequently, Executive Order 12817 was issued to implement provisions of UNSCR 778, authorizing the Secretary of the Treasury to identify the proceeds of the sale of Iraqi petroleum or petroleum products paid for by or on behalf of the purchaser on or after August 6, 1990, and directing U.S. financial institutions holding such funds to transfer them to the Federal Reserve Bank of New York (``FRBNY''). 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 August 2, 2000 through February 1, 2001. 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 United Nations 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 U.N. Security Council (the ``Security Council'') committee established pursuant to UNSCR 661 (``the 661 Committee'') adopted procedures it would employ 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 Security Council adopted UNSCR 1111, renewing for another 180 days the authorization of 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 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 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 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 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 productsduring 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 timeframe 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 Resolution 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. Subsequently, the Security Council extended the oil- for-food program for 180-day periods twice more, on November 24, 1998 and on May 21, 1999. Resolution 1266, adopted by the Security Council on October 4, 1999, authorized Iraq to export petroleum and petroleum products in excess of $5.2 billion per 180-day phase under the ``oil-for-food'' program in order to make up for revenue shortfalls from previous phases of the program. Resolutions 1275 and 1280 extended the sixth phase of the program for a total of three weeks. On December 10, the Security Council extended the ``oil-for-food'' program for a seventh 180-day phase. On December 17, 1999, the Security Council adopted resolution 1284, which permits Iraq to export petroleum products as required to meet humanitarian needs. On June 8, 2000, the Security Council adopted resolution 1302 which extended the ``oil-for-food'' program for an eighth 180-day phase. On December 5, 2000, the Security Council adopted resolution 1330, extending the ``oil for food'' program for another 180-day phase beginning December 6, 2000. During the period covered by this report, imports into the United States under the program totaled about 50.2 million barrels. During the prior period, U.S. imports included an additional 2 million barrels not previously reported, bringing total imports since December 10, 1996, to approximately 461 million barrels. 2. There have been no amendments to the Iraqi Sanctions Regulations, 31 C.F.R. Part 575 (the ``Regulations''), administered by the Office of Foreign Assets Control (``OFAC'') of the Department of the Treasury, during the current reporting period. As noted in the report of July 28, 2000, theRegulations were amended effective November 10, 1998, to authorize U.S. persons to enter into executory contracts for the sale of oilfield parts and equipment to the Government of Iraq in conformity with UNSCR 1153 and UNSCR 1175 (63 Fed. Reg. 62942, November 10, 1998). As previously reported, the Regulations were amended on December 10, 1996 to provide a statement of licensing policy regarding specific licensing of U.S. persons seeking to purchase Iraqi-origin petroleum and petroleum products (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 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, 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. In November 2000, OFAC granted a license, amended in December 2000, to Banque Nationale de Paris to establish a sub-account of the escrow account for the issuance, confirmation, or advisement of letters of credit in Euros. The use of Euros in addition to dollars in no way changes the control exercised by the United Nations over Iraqi's oil-for-food revenues. 3. Since the last report, OFAC has collected two civil monetary penalties totaling more than $12,500 for violations of the sanctions. One U.S. financial institution and one individual paid the penalties for violations involving a payment to Iraq and an attempted export of goods to Iraq. An additional twenty-one cases are undergoing agency penalty action or debt collection action for violation of the Regulations. 4. Three foreign businessmen were arrested in San Diego on March 21, 2000, by the U.S. Customs Service and subsequently were charged with conspiracy to violate the embargo against Iraq by purchasing oil from Iraq. They allegedly entered theUnited States to complete the purchase of 160,000 metric tons of oil from Iraq in violation of IEEPA and the Regulations. Separately, OFAC continues to investigate 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. 5. As of December 8, 2000, 24 transactions totaling approximately $2.5 million had been blocked during the reporting period. One hundred fifteen transactions, not involving blockable interests, were rejected by U.S. banks causing a disruption of more than $4.65 million in business for Iraq. 6. OPAC has issued numerous 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, the exportation to Iraq of donated medicine, medical supplies, and food intended for humanitarian relief purposes, sales of humanitarian supplies and oilfield parts and equipments to Iraq under UNSCRs 986, 1111, 1143, 1153, 1210, 1242, 1284, 1302, and 1330, 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 the last report, 104 specific licenses have been issued, most with respect to sales of humanitarian goods and oilfield parts and equipment. 7. Since December 10, 1996, OFAC has issued specific licenses authorizing participation by U.S. persons in commercial sales of humanitarian goods to Iraq funded by Iraqi oil sales, and imports of Iraqi petroleum products, pursuant to UNSCRs 986, 1111, 1143, 1153,1210, 1242, 1284, 1302, and 1330, valued at more than $587 million. Of that amount, approximately $453 million represents sales of basic foodstuffs, $46 million for medicines and medical supplies, $76 million for water testing and treatment equipment, and nearly $12 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 in Iraq. Assisting U.N. agencies include the World Food Program, the U.N. Population Fund, the U.N. Food and Agriculture Organization, and World Health Organization, and UNICEF. As ofDecember 15, 2000, OFAC had authorized sales valued at nearly $77 million of humanitarian goods during the current reporting period. In addition, in conformity with UNSCR 1153 and UNSCR 1175, OFAC has issued 165 licenses since November 10, 1998, authorizing U.S. persons to enter into executory contracts for the sale of oilfield parts and equipment to the Government of Iraq. The oil infrastructure merchandise covered by such contracts is valued at approximately $67.7 million. Earlier, in October 1992, OFAC had issued directive licenses to eight commercial banks ordering the transfer of a total of $200 million blocked Iraqi oil funds to the FRBNY for further transfer to and use by the United Nations in Iraq. This action was taken pursuant to UNSCR 778 and Executive Order 12817. Under UNSCR 986, and its successors, the funds were to have been repaid from the proceeds of the oil-for-food program. In late 1998, OFAC was informed that money was flowing back into the FRBNY from the United Nations to effect this repayment. At the request of the Department of State, OFAC licensed the distribution of Iraqi funds repaid by the United Nations, and held at the FRBNY, to the eight commercial banks. The licenses were issued April 14, 1999, jointly to the FRBNY and the eight commercial banks. A total amount of $37,694,734.46 was transferred, representing $36,474,145.00 in principal (amounts received from the United Nations) and $1,220,589.46 in interest (earned at the FRBNY). As of December 15, 2000, an additional total of $17,319,828 has been received at the FRBNY. 8. The expenses incurred by the Federal Government in the six-month period from August 2, 2000 through February 1, 2001, 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 $895,000, 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 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
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