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H.Doc.107-7 FINAL SEQUESTRATION REPORT FOR FISCAL YEAR 2001 ...


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107th Congress, 1st Session - - - - - - - - - - - - - House Document 107-6


 
  REPORT TO CONGRESS ON THE NATIONAL EMERGENCIES WITH RESPECT TO THE 
   FEDERAL REPUBLIC OF YUGOSLAVIA (SERBIA AND MONTENEGRO) AND KOSOVO

                               __________

                             COMMUNICATION

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

A REPORT ON DEVELOPMENTS CONCERNING THE NATIONAL EMERGENCY WITH RESPECT 
   TO THE FEDERAL REPUBLIC OF YUGOSLAVIA (SERBIA AND MONTENEGRO) AND 
                 KOSOVO, PURSUANT TO 50 U.S.C. 1703(c)

<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>


January 3, 2001.--Referred to the Committee on International Relations 
                       and ordered to be printed
                                           The White House,
                                     Washington, December 20, 2000.
Hon. J. Dennis Hastert,
Speaker of the House of Representatives,
Washington, DC.
    Dear Mr. Speaker: 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 (IEEPA), 50 
U.S.C. 1703(c), I transmit herewith a 6-month periodic report 
on the national emergency with respect to the Yugoslavia 
(Serbia and Montenegro) emergency declared in Executive Order 
12808 on May 30, 1992, and with respect to the Kosovo emergency 
declared in Executive Order 13088 on June 9, 1998.
            Sincerely,
                                                William J. Clinton.
  Report to Congress on the National Emergencies With Respect to the 
   Federal Republic of Yugoslavia (Serbia and Montenegro) and Kosovo

    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) (the ``FRY (S&M)''), 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 FRY (S&M), and prohibiting trade-
related transactions by U.S. 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.
    On November 22, 1995, the United Nations Security Council 
passed Resolution (``UNSCR'') 1022, immediately and 
indefinitely suspending U.N. economic sanctions against the FRY 
(S&M). On October 1, 1996, the United Nations passed UNSCR 
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. Both UNSCR 1022 
and UNSCR 1074, however, provided that funds and assets 
previously blocked pursuant to sanctions against the FRY (S&M) 
that are subject to claims and encumbrances, or that are the 
property of persons deemed insolvent, shall remained 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, which directed 
the Secretary of the Treasury to suspend the application of 
sanctions on the FRY (S&M) and to continue to block property 
previously blocked.
    On June 9, 1998, by Executive Order 13088, I declared a new 
and separate national emergency to deal with the unusual and 
extraordinary threat to the national security and foreign 
policy of the United States constituted by the actions and 
policies of the Governments of the FRY (S&M) and the Republic 
of Serbia with respect to Kosovo. Executive Order 13088, with 
certain exceptions, blocked all property and interests in 
property of the Governments of the FRY (S&M), the Republic of 
Serbia, and the Republic of Montenegro within the United States 
or within the possession or control of U.S. persons, and 
prohibited all new investment in the territory of the Republic 
of Serbia by U.S. persons, and the approval or other 
facilitation by U.S. persons of other persons' new investment 
in the territory of the Republic of Serbia.
    On April 30, 1999, I took additional steps with respect to 
the national emergency declared in Executive Order 13088 by 
issuing Executive Order 13121, which became effective at 12:01 
a.m., EDT, May 1, 1999. Executive Order 13121 continues to 
block all property and interests in property of the Governments 
of the FRY (S&M), the Republic of Serbia, and the Republic of 
Montenegro within the United States or within the possession or 
control of U.S. persons. The Order also revoked section 2 of 
Executive Order 13088, which had permitted U.S. persons to 
engage in certain financial transactions within the territory 
of the FRY (S&M). Executive Order 13121 added a new section 2 
to Executive Order 13088, which prohibits trade transactions 
involving the FRY (S&M).
    On October 12, 2000, in support of Yugoslavia's newly 
elected leaders, I directed the Department of the Treasury and 
the Department of State to take immediate steps to begin 
lifting trade and financial sanctions imposed against Serbia in 
1998 and 1999, except those targeted against members of the 
former regime. This directive included, with immediate effect, 
lifting of the oil embargo and flight ban.
    The present report is submitted pursuant to 50 U.S.C. 
1641(c) and 1703(c) and covers the period from May 30 through 
November 29, 2000. 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 modified by Executive 
Order 12810, Executive Order 12831, Executive Order 12846, and 
Executive Order 12934, the declaration of a national emergency 
in Executive Order 13088, as revised by Executive Order 13121, 
and my October 12 statement on the lifting of sanctions against 
Serbia.
    1. The declaration of the national emergency in Executive 
Order 12808 on May 30, 1992, and the declaration of a national 
emergency in Executive Order 13088 on June 9, 1998, were 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 (``IEEPA'')(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. 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, sections 1114 
of the Federal Aviation Act of 1958 (49 U.S.C. App. 1514), and section 
5 of the United Nations Participation Act of 1945 (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 
and Executive orders in the Federal Republic of Yugoslavia 
(Serbia and Montenegro) and Bosnia Serb-Controlled Areas of the 
Republic of Bosnia and Herzegovina Sanctions Regulations, 31 
CFR Part 585 (the ``Regulations'') and the Federal Republic of 
Yugoslavia (Serbia and Montenegro) Kosovo Sanctions 
Regulations, 31 CFR Part 586 (the ``Kosovo Sanctions 
Regulations''). On November 8, 1999, pursuant to the Kosovo 
Sanctions Regulations, OFAC published in the Federal Register 
changes to appendix A to 31 CFR Chapter V, inter alia, adding 
the names of 650 entities determined to be state- or socially-
owned entities organized or located in the FRY (S&M) and 76 
individuals determined to be acting for or on behalf of the 
Governments of the FRY (S&M) and/or the Republic of Serbia by 
virtue of the high-level positions they hold in those 
governments (64 Fed. Reg. 60660).
    On June 10, 1998, OFAC issued General License No. 1, 
excluding the Government of the Republic of Montenegro from the 
blocking provisions of the Kosovo sanctions. On May 5, 1999, 
OFAC issued a Notice revoking provisions of the Kosovo 
Sanctions Regulations that were inconsistent with the 
additional sanctions imposed in Executive Order 13121. By the 
Notice of May 5, 1999, OFAC also issued General License No. 2 
authorizing certain trade and trade-related transactions 
involving the Republic of Montenegro that would otherwise be 
prohibited by Executive Order 13088, as revised.
    On May 20, 1999, OFAC issued General License No. 3, 
authorizing all transactions ordinarily incident to the 
exportation of goods (including petroleum and petroleum 
products), software, or technology (including technical data) 
from the United States or reexportation of U.S.-origin goods, 
software, or technology from a foreign country to any person in 
the FRY (S&M), to the Government of the FRY (S&M), or to the 
Government of the Republic of Serbia, provided that the 
following terms and conditions, among others, are met: (1) the 
exportation or reexportation is licensed or otherwise 
authorized by the Department of Commerce under the provisions 
of the Export Administration Act of 1979 (50 U.S.C. App. 2401 
et seq.) and IEEPA; and (2) the exportation or reexportation is 
financed by a financial institution in a third country that is 
neither a U.S. person nor a person whose property is blocked 
pursuant to the Kosovo Sanctions Regulations, or by cash 
payment in advance, or by open account financing not to exceed 
90 days net.
    On August 19, 1999, OFAC issued General License No. 4, 
authorizing, subject to specific terms and conditions, certain 
trade and trade-related transactions involving the territory of 
Kosovo that would otherwise be prohibited by Executive Order 
13088, as revised. General License No. 4 also authorizes all 
new investment by U.S. persons in the territory of Kosovo and 
the approval or other facilitation by U.S. persons of other 
persons' new investment in the territory of Kosovo.
    To implement the President's directive on the lifting of 
sanctions against Serbia, on October 12, OFAC issued General 
Licenses No. 5 and No. 6. General License No. 5 authorizes air 
transportation-related transactions involving the FRY (S&M). 
This authorization includes: (1) the provision of air 
transportation services, directly or indirectly, between the 
United States and the FRY (S&M); (2) the provision of ground 
support services by Judoslovenski Aerotransport (``JAT'') in 
the FRY (S&M) or in any third country; (3) the operation of 
charter flights to or from the FRY (A&M), except for a charter 
flight operated by or for JAT; and (4) the payment of charges 
for services rendered and all fees assessed in connection with 
taking off from, landing in, or overflying the FRY (S&M). 
General License No. 5 does not authorize any transactions or 
dealings, directly or indirectly, by a U.S. person relating to 
JAT taking off from, landing in, or overflying the United 
States. Finally, General License No. 5 does not excuse a person 
from complying with other applicable laws, including, but not 
limited to, title 49 of the U.S. Code and regulations issued 
thereunder, as well as those laws governing the importation, 
exportation, reexportation, sale or supply of goods, software, 
technology (including technical data), or services.
    General License No. 6 authorizes transactions relating to 
the exportation of petroleum and petroleum products to the FRY 
(S&M). All transactions or dealings relating to the 
exportation, reexportation, sale, or supply, directly or 
indirectly, from the United States, or by a U.S. person, 
wherever located, of any petroleum or petroleum products to the 
FRY (S&M) are authorized. General License No. 6 does not 
authorize: (1) any transactions or dealings, directly or 
indirectly, with Jugopetrol or Nis-Nafta Industrija Srebije; 
(2) any transactions or dealings, by a U.S. person with any 
financial institution located or headquartered in the Republic 
of Serbia; or (3) any debit to a blocked account orsetoff 
against blocked property. Moreover, General License No. 6 does not 
excuse a person from complying with other applicable U.S. laws and 
regulations, including, but not limited to, those governing the 
exportation, reexportation, sale or supply of goods, software, 
technology (including technical data), or services.
    3. Over the past four 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 UNSCR 1022 and UNSCR 1074. In the United States, 
retention of statutory blocking authority pursuant to the 
extension of a national emergency helps provide a framework for 
administration of an orderly claims settlement process. This 
accords with past policy and practice with respect to the 
suspension of sanctions regimes.
    4. During this reporting period, OFAC issued a total of 59 
specific licenses pursuant to the Regulations. Specific 
licenses were issued to: (1) unblock wire transfers involving 
generally small amounts of individuals' purely personal funds; 
(2) authorize the settlement of pending legal actions and 
receipt of payment for legal services; (3) authorize certain 
transactions relating to air safety policy; and (4) authorize 
certain administrative transactions by other United States 
government agencies. No additional OFAC registrations of 
nongovernmental agencies providing humanitarian assistance have 
been made since my last report. Thus, the total of such 
registrations since the inception of the program remains at 50.
    During the past six months, OFAC has continued to oversee 
the maintenance of FRY (S&M) accounts blocked pursuant to 31 
CFR Part 585, and records with respect to: (1) liquidated 
tangible assets and personalty of the fifteen 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. Pursuant to the Kosovo Sanctions 
Regulations, 31 CFR Part 586, OFAC blocked 146 transactions 
totaling more than $3.7 million during this reporting period. 
Most of the blockings were of funds transfers originating from, 
or destined for, Serbian banks. In addition, 369 funds 
transfers totaling more than $3.8 million were rejected by U.S. 
banking institutions as contrary to U.S. sanctions.
    5. OFAC has continued to work closely with the U.S. Customs 
Service and other cooperating agencies to investigate alleged 
violations of the sanctions imposed pursuant to Executive Order 
12808, as modified, and Executive Order 13088, as revised.
    On February 16, 2000, a resident alien, along with his 
company, was named in a 40-count indictment in the Central 
District of California. The indictment alleged unauthorized 
sales and exportation from the United States of aircraft parts 
to Jugoslovenski Aerotransport (``JAT'') in the FRY (S&M) and 
further alleged conspiracy with U.S. persons to acquire U.S.-
manufactured aircraft parts from companies such as Boeing, 
Pratt & Whitney, Honeywell, and others for resale and 
exportation to JAT. The defendant shipped the aircraft parts to 
JAT in third countries with the knowledge that they would be 
transshipped to the FRY (S&M) without authorization by the 
United States Government. Trial has been scheduled for February 
2001.
    On October 10, 2000, a New York corporation pleaded guilty 
in the Southern District of New York to one count of exporting 
carbon black from the United States to Serbia in violation of 
IEEPA and the Regulations. Carbon black is a component in the 
manufacture of tires. This action was the culmination of a 
lengthy and difficult investigation by the U.S. Customs Service 
that began in 1993. The defendant has stipulated in a plea 
agreement to pay a criminal fine of between $40,000 and $60,000 

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