Monday, August 17, 1998

 

Vol. 34, No. 33

 

Letter to Congressional leaders reporting on the national emergency with

respect to Iraq

William J Clinton

 

 

�� Letter to Congressional Leaders Reporting on the National

Emergency With Respect to Iraq

 

 

� August 13, 1998

 

 

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

 

 

� I hereby report to the Congress on the developments since my last

report of February 3, 1998, 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 (IEEPA), 50 U.S.C.

1703(c).

 

 

� 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 United

States 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.

 

 

� 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 February 2

through August 1, 1998.

 

 

� 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 U.N.

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 UNSC committee established pursuant to UNSCR 661

("the 661 Committee") adopted procedures to be employed 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 U.N. Security Council adopted UNSCR 1111,

renewing for another 180 days the authorization for 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 hvo 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 U.N. 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 U.N. 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 worth

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 products during 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 time frame 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 UNSCR

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. During the period covered by this report, imports

into the United States under the program totaled about 14.2 million

barrels, bringing total imports since December 10, 1996, to

approximately 51.5 million barrels.

 

 

� 2. There have been no amendments to the Iraqi Sanctions

Regulations, 31 C.F.R. Part 575 (the "ISR" or the "Regulations")

administered by the Office of Foreign Assets Control (OFAC) of the

Department of the Treasury during the reporting period.

 

 

� As previously reported, the Regulations were amended on December

10, 1996, to provide a statement of licensing policy regarding

specific licensing of United States persons seeking to purchase

Iraqi-origin petroleum and petroleum products from Iraq (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 that have been 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, must 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.

 

 

� 3. Investigations of possible violations of the Iraqi sanctions

continue to be pursued and appropriate enforcement actions taken.

Several cases from prior reporting periods are continuing, and recent

additional allegations have been referred by OFAC to the U.S. Customs

Service for investigation.

 

 

� Investigation also continues into 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.

 

 

� Since my last report, OFAC has collected two civil monetary

penalties totaling $9,000 from one company and one individual for

violations of IEEPA and ISR prohibitions against transactions with

Iraq.

 

 

� 4. The Office of Foreign Assets Control has issued hundreds of

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, and the

exportation to Iraq of donated medicine, medical supplies, and food

intended for humanitarian relief purposes, sales of humanitarian

supplies to Iraq under UNSCRs 986, 1111, 1143, and 1153, 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 my last report, 75 specific licenses have been issued, most

with respect to sales of humanitarian goods.

 

 

��Since December 10, 1996, OFAC has issued specific licenses

authorizing commercial sales of humanitarian goods funded by Iraqi

oil sales pursuant to UNSCRs 986, 1111, 1143, and 1153 valued at more

than $324 million. Of that amount, approximately $298 million

represents sales of basic foodstuffs, $1 4 million for medicines and

medical supplies, $9.2 million for water testing and treatment

equipment, and nearly $3 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 of Iraq. Assisting U.N. agencies include

the World Food Program, the U.N. Population Fund, the U.N. Food and

Agriculture Organization, the World Health Organization, and UNICEF.

As of June 29, 1998, OFAC had authorized sales valued at more than

$85 million worth of humanitarian goods during the current reporting

period.

 

 

� 5. The expenses incurred by the Federal Government in the 6-month

period from February 2 through August 1, 1998, 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 $1.1 million, most of which represents 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 Affairs, the Bureau of

Political-Military Affairs, the Bureau of Intelligence and Research,

the U.S. Mission to the United Nations, and the Office of the Legal

Adviser), and the Department of Transportation (particularly the U.S.

Coast Guard).

 

 

� 6. The United States imposed economic sanctions on Iraq in

response to Iraq's illegal invasion and occupation of Kuwait, a clear

act of brutal aggression. The United States, together with the

international community, is maintaining economic sanctions against

Iraq because the Iraqi regime has failed to comply fully with

relevant United Nations Security Council resolutions. Iraqi

compliance with these resolutions is necessary before the United

States will consider lifting economic sanctions. Security Council

resolutions on Iraq call for the elimination of Iraqi weapons of mass

destruction, Iraqi recognition of Kuwait and the inviolability of the

Iraq-Kuwait boundary, the release of Kuwaiti and other third-country

nationals, compensation for victims of Iraqi aggression, long-term

monitoring of weapons of mass destruction capabilities, the return of

Kuwaiti assets stolen during Iraq's illegal occupation of Kuwait,

renunciation of terrorism, an end to internal Iraqi repression of its

own civilian population, and the facilitation of access by

international relief organizations to all those in need in all parts

of Iraq. Eight years after the invasion, a pattern of defiance

persists: a refusal to account for missing Kuwaiti detainees; failure

to return Kuwaiti property worth millions of dollars, including

military equipment that was used by Iraq in its movement of troops to

the Kuwaiti border in October 1994; sponsorship of assassinations in

Lebanon and in northern Iraq; incomplete declarations to weapons

inspectors and refusal to provide immediate, unconditional, and

unrestricted access to sites by these inspectors; and ongoing

widespread human rights violations. As a result, the U.N. sanctions

remain in place; the United States will continue to enforce those

sanctions under domestic authority.

 

 

� The Baghdad government continues to violate basic human rights of

its own citizens through systematic repression of all forms of

political expression, oppression of minorities, and denial of

humanitarian assistance. The Government of Iraq has repeatedly said

it will not comply with UNSCR 688 of April 5, 1991. The Iraqi

military routinely harasses residents of the north, and has attempted

to "Arabize" the Kurdish, Turkomen, and Assyrian areas in the north.

Iraq has not relented in its artillery attacks against civilian

population centers in the south, or in its burning and draining

operations in the southern marshes, which have forced thousands to

flee to neighboring states.

 

 

� The policies and actions of the Saddam Hussein regime continue to

pose an unusual and extraordinary threat to the national security and

foreign policy of the United States, as well as to regional peace and

security. The U.N. resolutions affirm that the Security Council be

assured of Iraq's peaceful intentions in judging its compliance with

sanctions. Because of Iraq's failure to comply fully with these

resolutions, the United States will continue to apply economic

sanctions to deter it from threatening peace and stability in the

region.

 

 

� 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. This letter was released by the Office of the Press

Secretary on August 14.