pd05de94 Statement on Action in the House of Representatives on the General...

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Bosnia and Herzegovina by force and violence utilizing, in part, the 
forces of the so-called Yugoslav National Army (57 FR 23299, June 2, 
1992). The present report is submitted pursuant to 50 U.S.C. 1641(c) and 
1703(c). 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 No. 12808 and to 
expanded sanctions against the Federal Republic of Yugoslavia (Serbia 
and Montenegro) (the ``FRY (S/M)'') contained in Executive Order No. 
12810 of June 5, 1992 (57 FR 24347, June 9, 1992), Executive Order No. 
12831 of January 15, 1993 (58 FR 5253, January 21, 1993), and Executive 
Order No. 12846 of April 26, 1993 (58 FR 25771, April 27, 1993).
    1. Executive Order No. 12808 blocked all property and interests in 
property of the Governments of Serbia and Montenegro, or held in the 
name of the former Government of the Socialist Federal Republic of 
Yugoslavia or the Government of the Federal Republic of Yugoslavia, then 
or thereafter located in the United States or within the pos- 

[[Page 2447]]

session or control of United States persons, including their overseas 
branches.
    Subsequently, Executive Order No. 12810 expanded U.S. actions to 
implement in the United States the United Nations sanctions against the 
FRY (S/M) adopted in United Nations Security Council Resolution (UNSCR) 
757 of May 30, 1992. In addition to reaffirming the blocking of FRY (S/
M) Government property, this order prohibited transactions with respect 
to the FRY (S/M) involving imports, exports, dealing in FRY-origin 
property, air and sea transportation, contract performance, funds 
transfers, activity promoting importation or exportation or dealings in 
property, and official sports, scientific, technical, or other cultural 
representation of, or sponsorship by, the FRY (S/M) in the United 
States.
    Executive Order No. 12810 exempted from trade restrictions (1) 
transshipments through the FRY (S/M), and (2) activities related to the 
United Nations Protection Force (UNPROFOR), the Conference on 
Yugoslavia, or the European Community Monitor Mission.
    On January 15, 1993, President Bush issued Executive Order No. 12831 
to implement new sanctions contained in UNSCR 787 of November 16, 1992. 
The order revoked the exemption for transshipments through the FRY (S/M) 
contained in Executive Order No. 12810, prohibited transactions within 
the United States or by a United States person relating to FRY (S/M) 
vessels and vessels in which a majority or controlling interest is held 
by a person or entity in, or operating from, the FRY (S/M), and stated 
that all such vessels shall be considered as vessels of the FRY (S/M), 
regardless of the flag under which they sail.
    On April 26, 1993, I issued Executive Order No. 12846 to implement 
in the United States the sanctions adopted in UNSCR Resolution 820 of 
April 17, 1993. That resolution called on the Bosnian Serbs to accept 
the Vance-Owen peace plan for the Republic of Bosnia and Herzegovina 
and, if they failed to do so by April 26, called on member states to 
take additional measures to tighten the embargo against the FRY (S/M) 
and Serbian-controlled areas of the Republic of Bosnia and Herzegovina 
and the United Nations Protected Areas of Croatia. Effective April 26, 
1993, the order blocked all property and interests in property of 
commercial, industrial, or public utility undertakings or entities 
organized or located in the FRY (S/M), including property and interests 
in property of entities (wherever organized or located) owned or 
controlled by such undertakings or entities, that are or thereafter come 
within the possession or control of United States persons.
    On October 25, 1994, in view of UNSCR 942 of September 23, 1994, I 
issued Executive Order No. 12934 in order to take additional steps with 
respect to the crisis in the former Yugoslavia. (59 FR 54117, October 
27, 1994.) Executive Order No. 12934 expands the scope of the national 
emergency declared in Executive Order No. 12808 to address the unusual 
and extraordinary threat to the national security, foreign policy, and 
economy of the United States posed by the actions and policies of the 
Bosnian Serb forces and the authorities in the territory that they 
control, including their refusal to accept the proposed territorial 
settlement of the conflict in the Republic of Bosnia and Herzegovina.
    The Executive order blocks all property and interests in property 
that are in the United States, that hereafter come within the United 
States, or that are or hereafter come within the possession or control 
of United States persons (including their overseas branches) of: (1) the 
Bosnian Serb military and paramilitary forces and the authorities in 
areas of the Republic of Bosnia and Herzegovina under the control of 
those forces; (2) any entity, including any commercial, industrial, or 
public utility undertaking, organized or located in those areas of the 
Republic of Bosnia and Herzegovina under the control of Bosnian Serb 
forces; (3) any entity, wherever organized or located, which is owned or 
controlled directly or indirectly by any person in, or resident in, 
those areas of the Republic of Bosnia and Herzegovina under the control 
of Bosnian Serb forces; and (4) any person acting for or on behalf of 
any person within the scope of the above definitions.
    The Executive order also prohibits the provision or exportation of 
services to those

[[Page 2448]]

areas of the Republic of Bosnia and Herzegovina under the control of 
Bosnian Serb forces, or to any person for the purpose of any business 
carried on in those areas, either from the United States or by a United 
States person. The order also prohibits the entry of any U.S.-flagged 
vessel, other than a U.S. naval vessel, into the riverine ports of those 
areas of the Republic of Bosnia and Herzegovina under the control of 
Bosnian Serb forces. Finally, any transaction by any United States 
person that evades or avoids, or has the purpose of evading or avoiding, 
or attempts to violate any of the prohibitions set forth in the order is 
prohibited. Executive Order No. 12934 became effective at 11:59 p.m., 
e.d.t. on October 25, 1994. A copy of the Executive order is attached 
for reference.
    2. 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)). The 
additional sanctions set forth in subsequent 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).
    3. There have been no amendments to the Federal Republic of 
Yugoslavia (Serbia and Montenegro) Sanctions Regulations (the 
``Regulations''), 31 C.F.R. Part 585, since the last report. Treasury's 
blocking authority as applied to FRY (S/M) subsidiaries and vessels in 
the United States has been challenged in court. A case involving a 
blocked subsidiary, IPT Company, Inc. v. United States Department of the 
Treasury, No. 92 CIV 5542 (S.D.N.Y.), is pending a decision by the court 
on the Government's motion for a summary judgment.
    4. Over the past 6 months, the Departments of State and Treasury 
have worked closely with European Union (the ``EU'') member states and 
other U.N. member nations to coordinate implementation of the U.N. 
sanctions against the FRY (S/M). This has included visits by assessment 
teams formed under the auspices of the United States, the EU, and the 
Conference for Security and Cooperation in Europe (the ``CSCE'') to 
states bordering on Serbia and Montenegro; deployment of CSCE sanctions 
assistance missions (SAMs) to Albania, Bulgaria, Croatia, the former 
Yugoslav Republic of Macedonia, Hungary, Romania, and Ukraine to assist 
in monitoring land and Danube River traffic; bilateral contacts between 
the United States and other countries for the purpose of tightening 
financial and trade restrictions on the FRY (S/M); and ongoing 
multilateral meetings by financial sanctions enforcement authorities 
from various countries to coordinate enforcement efforts and to exchange 
technical information.
    5. In accordance with licensing policy and the Regulations, the 
Department of the Treasury's Office of Foreign Assets Control (FAC) has 
exercised its authority to license certain specific transactions with 
respect to the FRY (S/M) that are consistent with the Security Council 
sanctions. During the reporting period, FAC has issued 144 specific 
licenses regarding transactions pertaining to the FRY (S/M) or assets it 
owns or controls, bringing the total as of October 25, 1994, to 821. 
Specific licenses have been issued (1) for payment to U.S. or third-
country secured creditors, under certain narrowly defined circumstances, 
for pre-embargo import and export transactions; (2) for legal 
representation or advice to the Government of the FRY (S/M) or FRY (S/
M)-controlled entities; (3) for the liquidation or protection of 
tangible assets of subsidiaries of FRY (S/M)-controlled firms located in 
the United States; (4) for limited FRY (S/M) diplomatic representation 
in Washington and New York; (5) for patent, trademark and copyright 
protection, and maintenance transactions in the FRY (S/M) not involving 
payment to the FRY (S/M) Government; (6) for certain communications, 
news media, and travel-related transactions; (7) for the payment of 
crews' wages, vessel

[[Page 2449]]

maintenance, and emergency supplies for FRY (S/M)-controlled ships 
blocked in the United States; (8) for the removal from the FRY (S/M), or 
protection within the FRY (S/M), of certain property owned and 
controlled by U.S. entities; (9) to assist the United Nations in its 
relief operations and the activities of the UNPROFOR; and (10) for 
payment from funds outside the United States where a third country has 
licensed the transaction in accordance with U.N. sanctions. Pursuant to 
U.S. regulations implementing UNSCR 757, specific licenses have also 
been issued to authorize exportation of food, medicine, and supplies 
intended for humanitarian purposes in the FRY (S/M).
    During the past 6 months, FAC has continued to oversee the 
liquidation of tangible assets of the 15 U.S. subsidiaries of entities 
organized in the FRY (S/M). Subsequent to the issuance of Executive 
Order No. 12846, all operating licenses issued for these U.S.-located 
Serbian or Montenegrin subsidiaries or joint ventures were revoked, and 
the net proceeds of the liquidation of their assets placed in blocked 
accounts.
    Bank regulators again worked closely with FAC with regard to two 
Serbian banking institutions in New York that were not permitted to 
conduct normal business after June 1, 1992. The banks had been issued 
licenses to maintain a limited staff for audit purposes while full-time 
bank examiners were posted in their offices to ensure that banking 
records were appropriately safeguarded. Subsequent to the issuance of 
Executive Order No. 12846, all licenses previously issued were revoked. 
In order to reduce the drain on blocked assets caused by continuing to 
rent commercial space, FAC has arranged to have the blocked personalty, 
files, and records moved to secure storage. The personalty will be 
liquidated and the net proceeds placed in blocked accounts.
    A similar liquidation involved the motor vessel Bor, a Montenegrin-
owned, Maltese-flagged vessel, blocked in Norfolk on September 15, 1992. 
The owners of the vessel requested that it be sold in order to provide 
funds for the support of another of their Maltese-flagged vessels, the 
M/V Bar, blocked in the port of New Orleans. The FAC submitted this 
request to the U.N. Sanctions Committee, which approved sale of the Bor 
on March 11, 1994.
    Through a contractor, FAC auctioned the vessel on June 24, 1994, for 
$1.35 million. Prior to authorizing the sale, FAC determined that the 
purchaser of the vessel was neither organized or located in a country 
subject to U.N. or U.S. economic sanctions, nor owned or controlled by 
entities that are organized or located in a country subject to economic 
sanctions, nor owned or controlled by, or acting or purporting to act 
directly or indirectly on behalf of, the government or de facto regime 
of a country subject to economic sanctions.
    The proceeds of sale were deposited into a blocked, interest-bearing 
account in a U.S. financial institution, after certain payments were 
made related to the costs of maintaining the vessel in blocked status 
and the costs of sale. During the 2 years that the Bor was blocked, 
vendors continued to provide provisions and fuel to the vessel despite 
deferred payment due to lack of funds. U.N. Security Council Sanctions 
Committee approval of the sale also provided for Treasury reimbursement 
of auction and other expenses from the proceeds of the sale.
    The previous and new owners of the vessel concluded the transaction 
on July 28, 1994, and the vessel was unblocked and removed from the 
Treasury's list of blocked entities. Arrangements were made for payment 
of wages to the crew and their travel to their port of embarkation.
    During the past 6 months, U.S. financial institutions have continued 
to block funds transfers in which there is an interest of the Government 
of the FRY (S/M) or an entity or undertaking located in or controlled 
from the FRY (S/M) and to stop prohibited transfers to persons in the 
FRY (S/M). Such interdicted transfers have accounted for $91.5 million 
since the issuance of Executive Order No. 12808, including some $7.3 
million during the past 6 months.
    To ensure compliance with the terms of the licenses that have been 
issued under the program, stringent reporting requirements are imposed. 
More than 292 submissions have been reviewed since the last report and 
more than 193 compliance cases are currently open.

[[Page 2450]]

    6. Since the issuance of Executive Order No. 12810, FAC has worked 
closely with the U.S. Customs Service to ensure both that prohibited 
imports and exports (including those in which the Government of the FRY 
(S/M) has an interest) are identified and interdicted, and that 
permitted imports and exports move to their intended destination without 
undue delay. Violations and suspected violations of the embargo are 
being investigated and appropriate enforcement actions are being taken. 
There are currently 59 cases under active investigation. Since the last 
report, FAC has collected 31 civil penalties totaling more than 
$141,000. Of these, 24 were paid by U.S. financial institutions for 
violative funds transfers involving the Government of the FRY (S/M), 
persons in the FRY (S/M), or entitles located or organized in or 
controlled from the FRY (S/M). Five U.S. companies, one organization, 
and one law firm have also paid penalties related to exports or 
unlicensed payments to the Government of the FRY (S/M) or persons in the 
FRY (S/M) for trademark registrations.
    As previously reported, FAC has issued a series of General Notices 
announcing the names of entities and individuals determined by the 
Department of the Treasury to be Blocked Entities or Specially 
Designated Nationals (SDNs) of the FRY (S/M). On May 4, 1994, Treasury 
announced the identification of three companies registered in Cyprus as 
FRY (S/M) owned or controlled. Additionally, on September 15, 1994, FAC 
announced that two firms previously named as SDNs of the FRY (S/M), had 
changed their corporate names. The FAC published those name changes. 
These additions and amendments bring the current total of Blocked 
Entities and SDNs of the FRY (S/M) to 853. All prohibitions in the 
Regulations pertaining to the Government of the FRY (S/M) apply to the 
entities and individuals identified. United States persons on notice of 
the status of such blocked persons are prohibited from entering into 
transactions with them, or transactions in which they have an interest, 
unless otherwise exempted or authorized pursuant to the Regulations. 
Copies of these announcements are attached to this report.
    7. The expenses incurred by the Federal Government in the 6-month 
period from May 30 through November 29, 1994, that are directly 
attributable to the authorities conferred by the declaration of a 
national emergency with respect to the FRY (S/M) are estimated at about 
$4 million, most of which represent wage and salary costs of Federal 
personnel. Personnel costs were largely centered in the Department of 
the Treasury (particularly in FAC and its Chief Counsel's Office, and 
the U.S. Customs Service), the Department of State, the National 
Security Council, the U.S. Coast Guard, and the Department of Commerce.
    8. The actions and policies of the Government of the FRY (S/M), in 
its involvement in and support for groups attempting to seize and hold 
territory in Croatia and the Republic of Bosnia and Herzegovina by force 
and violence, the actions and policies of the Bosnian Serb military and 
paramilitary forces, and the authorities in the areas of Bosnia and 
Herzegovina under the control of those forces, continue to pose an 
unusual and extraordinary threat to the national security, foreign 
policy, and economy of the United States. The United States remains 
committed to a multilateral resolution of the conflict through 
implementation of the United Nations Security Council mandate.
    I shall continue to exercise the powers at my disposal to apply 
economic sanctions against the FRY (S/M) 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 Thomas S. Foley, Speaker of the 
House of Representatives, and Albert Gore, Jr., President of the Senate.


<DOC>
[Weekly Compilation of Presidential Documents]
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[Page 2450-2452]
 
Monday, December 5, 1994
 
Volume 30--Number 48
Pages 2435-2457

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