Monday, February 9, 1998

 

Vol. 34, No. 6, ISSN: 0511-4187

 

Message to the Congress reporting on Iraq. (Pres. Bill Clinton)(Transcript)

 

 

� February 3, 1998

 

 

� To the Congress of the United States:

 

 

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

report of July 31, 1997, 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 August 2, 1997, through

February 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 by the 661 Committee 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 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 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. As of January 2, 1998, however, Iraq still had

not exported any petroleum under UNSCR 1143. During the reporting

period, imports into the United States under this program totaled about

14.2 million barrels, bringing total imports since December 10, 1996,

to approximately 23.7 million barrels.

 

 

� 2. There have been two 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. The Regulations were amended on

August 25, 1997. General reporting, recordkeeping, licensing, and other

procedural regulations were moved from the Regulations to a separate

part (31 C.F.R. Part 501) dealing solely with such procedural matters

(62 Fed. Reg. 45098, August 25, 1997). A copy of the amendment is

attached.

 

 

� On December 30, 1997, the Regulations were amended to remove from

appendices A and B to 31 C.F.R. chapter V the name of an individual who

had been determined previously to act for or on behalf of, or to be

owned or controlled by, the Government of Iraq (62 Fed. Reg. 67729,

December 30, 1997). A copy of the amendment is attached.

 

 

� 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.

 

 

� On July 15, 1995, a jury in the Eastern District of New York returned

a verdict of not guilty for two defendants charged with the attempted

exportation and transshipment to Iraq of zirconium ingots in violation

of IEEPA and the ISR. The two were charged in a Federal indictment on

July 10, 1995, along with another defendant who entered a guilty plea

on February 6, 1997.

 

 

� 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 collected civil monetary penalties

totaling more than $1.125 million for violations of IEEPA and the ISR

relating to the sale and shipment of goods to the Government of Iraq

and an entity in Iraq. Additional administrative proceedings have been

initiated and others await commencement.

 

 

� 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 UNSCR 986 and 1111, 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,

88 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 UNSCR 986 and 1111 valued at more than $239 million.

Of that amount, approximately $222 million represents sales of basic

foodstuffs, $7.9 million for medicines and medical supplies, $8.2

million for water testing and treatment equipment, and nearly $700,000

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 January 8, 1998, OFAC had

authorized sales valued at more than $165.8 million worth of

humanitarian goods during the reporting period beginning August 2,

1997.

 

 

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

period from August 2, 1997, through February 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 $1.2 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 of international relief organizations to all

those in need in all parts of Iraq. Seven and a half 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.

 

 

� William J. Clinton

 

 

� The White House, February 3, 1998.

 

 

� NOTE: This message was released by the Office of the Press Secretary

on February 4.