Monday, December 18, 1995

 

ISSN: 0511-4187; Volume v31; Issue n50

 

Message to the Congress on the Federal Republic of Yugoslavia (Serbia and

Montenegro). (Pres. Bill Clinton's foreign policy)(Transcript)

Total number of pages for this article: 6 FULL TEXT

 

 

� December 8, 1995

 

 

� To the Congress of the United States:

 

 

� On May 30, 1992, in Executive Order No. 12808, the President declared

a national emergency to deal with the threat to the national security,

foreign policy, and economy of the United States arising from actions

and policies of the Governments of Serbia and Montenegro, acting under

the name of the Socialist Federal Republic of Yugoslavia or the Federal

Republic of Yugoslavia, in their involvement in and support for groups

attempting to seize territory in Croatia and the Republic of 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). I expanded

the national emergency in Executive Order No. 12934 of October 25, 1994,

to address the actions and policies of the Bosnian Serb forces and the

authorities in the territory of the Republic of Bosnia and Herzegovina

that they control.

 

 

� The present report is submitted pursuant to 50 U.S.C. 1641(c) and

1703(c) and covers the period from May 30, 1995, to November 29, 1995.

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 Executive Order No.

12934 and to expanded sanctions against the Federal Republic of

Yugoslavia (Serbia and Montenegro) (the "FRY (S&M)") and the Bosnian

Serbs 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), Executive Order No. 12846 of April 25, 1993

(58 FR 25771, April 27, 1993), and Executive Order No. 12934 of October

25, 1994 (59 FR 54117, October 27, 1994).

 

 

� 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 possession 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 (UNSC) Resolution

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

(S&M)-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 UNSC Resolution 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 25, 1993, I issued Executive Order No. 12846 to implement in

the United States the sanctions adopted in UNSC 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, 1993, 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 in 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 UNSC Resolution 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

in the Republic of Bosnia and Herzegovina 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 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.

 

 

� 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)) 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).

 

 

� 3. Effective June 30, 1995, the Federal Republic of Yugoslavia (Serbia

and Montenegro) Sanctions Regulations, 31 C.F.R. Part 585 (the

"Regulations"), were amended to implement Executive Order No. 12934 (60

FR 34144, June 30, 1995). The name of the Regulations was changed to

reflect the expansion of the national emergency to the Bosnian Serbs,

and now reads "Federal Republic of Yugoslavia (Serbia & Montenegro) and

Bosnian Serb-Controlled Areas of the Republic of Bosnia and Herzegovina

Sanctions Regulations." A copy of the amended Regulations is attached.

 

 

� Treasury's blocking authority as applied to FRY (S&M) subsidiaries and

vessels in the United States has been challenged in court. In Milena

Ship Management Company, Ltd. v. Newcomb, 804 F. Supp. 846, 855, and 859

(E.D.L.A. 1992) aff'd, 995 F. 2d 620 (5th Cir. 1993), cert. denied, 114

S. Ct. 877 (1994), involving five ships owned or controlled by FRY (S&M)

entities blocked in various U.S. ports, the blocking authority as

applied to these vessels was upheld. In IPT Company, Inc. v. United

States Department of the Treasury, No. 92 CIV 5542 (S.D.N.Y. 1994), the

district court also upheld the blocking authority as applied to the

property of a Yugoslav subsidiary located in the United States, and the

case was subsequently settled.

 

 

� 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 continued deployment of

Organization for Security and Cooperation in Europe (OSCE) 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; support for the

International Conference on the Former Yugoslavia (ICFY) monitoring

missions along the Serbia-Montenegro-Bosnia border; 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 Office

of Foreign Assets Control (FAC) has exercised its authority to license

certain specific transactions with respect to the FRY (S&M), which are

consistent with U.S. foreign policy and the Security Council sanctions.

During the reporting period, FAC has issued 90 specific licenses

regarding transactions pertaining to the FRY (S&M) or assets it owns or

controls, bringing the total specific licenses issued as of October 13,

1995, to 1,020. Specific licenses have been issued: (1) for payment to

U.S. or third country secured creditors, under certain narrowly defined

circumstances, for preembargo import and export transactions; (2) for

legal representation or advice to the Government of the FRY (S&M) or FRY

(S&M)-located or controlled entities; (3) for the liquidation or

protection of tangible assets of subsidiaries of FRY (S&M)-located or

controlled firms located in the United States; (4) for limited

transactions related to FRY (S&M) diplomatic representation in

Washington and New York; (5) for patent, trademark, and copyright

protection 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

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 UNSC Resolutions, 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 period, FAC addressed the status of the unallocated debt of

the former Yugoslavia by authorizing nonblocked U.S. creditors under the

New Financing Agreement for Yugoslavia (Blocked Debt) to exchange a

portion of the Blocked Debt for new debt (bonds) issued by the Republic

of Slovenia. The completion of this exchange will mark the transfer to

Slovenia of sole liability for a portion of the face value of the $4.2

billion unallocated debt of the FRY (S&M) for which Slovenia, prior to

the authorized exchange, was jointly and severally liable. The exchange

will relieve Slovenia of the joint and several liability for the

remaining unallocated FRY (S&M) debt and pave the way for its entry into

international capital markets.

 

 

� 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.

 

 

� In order to reduce the drain on blocked assets caused by continuing to

rent commercial space, FAC arranged to have the blocked personalty,

files, and records of the two Serbian banking institutions in New York

moved to secure storage. The personalty is being liquidated, with the

net proceeds placed in blocked accounts.

 

 

��Following the sale of the M/V Kapetan Martinovic in January 1995, five

Yugoslav-owned vessels remain blocked in the United States. Approval of

the UNSC's Serbian Sanctions Committee was sought and obtained for the

sale of the M/V Kapetan Martinovic (and the M/V Bor, which was sold in

June 1994).

 

 

� With the FAC-licensed sales of the M/V Kapetan Martinovic and the M/V

Bor, those vessels were removed from the list of blocked FRY (S&M)

entities and merchant vessels maintained by FAC. As of October 12, 1995,

five additional vessels have been removed from the list of blocked FRY

(S&M) entities and merchant vessels maintained by FAC as a result of

sales conditions that effectively extinguished any FRY (S&M) interest:

the M/V Blue Star, M/V Budva, M/V Bulk Star, M/V Hanuman, and M/V

Sumadija. The new owners of several other formerly Yugoslav-owned

vessels, which have been sold in other countries, have petitioned FAC to

remove those vessels from the list.

 

 

� During the past 6 months, U.S. financial institutions have continued

to block funds transfers in which there is a possible 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). The value of transfers blocked has amounted to

$137.5 million since the issuance of Executive Order No. 12808,

including some $13.9 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 318 submissions have been reviewed by FAC since the last

report, and more than 130 compliance cases are currently open.

 

 

� 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) or Bosnian Serb authorities have 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. Numerous investigations carried

over from the prior reporting period are continuing. Since the last

report, FAC has collected 10 civil penalties totaling more than $27,000.

Of these, five 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 entities located or organized in or controlled from

the FRY (S&M). One U.S. company and one air carrier have also paid

penalties related to unlicensed payments to the Government of the FRY

(S&M) or other violations of the Regulations. Two companies and one law

firm have also remitted penalties for their failure to follow the

conditions of FAC licenses.

 

 

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

period from May 30, 1995, through November 29, 1995, 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 about $3.5 million, most of which represent wage and salary costs for

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 the Republics of Croatia and Bosnia and Herzegovina by

force and violence, and the actions and policies of the Bosnian Serb

forces and the authorities in the areas of Bosnia and Herzegovina under

their control, 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

resolutions.

 

 

� I shall continue to exercise the powers at my disposal to apply

economic sanctions against the FRY (S&M) 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).

 

 

� William J. Clinton

 

 

� The White House, December 8, 1995.

 

 

� NOTE: This item was not received in time for publication in the

appropriate issue.