U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

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79–011 2000

106th Congress, 2d Session – – – – – – – – – – – – House Document 106–280

SIX MONTH PERIODIC REPORT ON THE NATIONAL

EMERGENCY WITH RESPECT TO IRAQ

COMMUNICATION

FROM

THE PRESIDENT OF THE UNITED STATES

TRANSMITTING

A REPORT ON DEVELOPMENTS CONCERNING THE NATIONAL

EMERGENCY WITH RESPECT TO IRAQ THAT WAS DECLARED IN

EXECUTIVE ORDER NO. 12722 OF AUGUST 2, 1990, PURSUANT

TO 50 U.S.C. 1703(c)

SEPTEMBER 6, 2000.—Referred to the Committee on International

Relations and ordered to be printed

(1)

THE WHITE HOUSE,

Washington, July 28, 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 Iraq that was declared in Executive Order 12722 of August 2, 1990.

Sincerely,

WILLIAM J. CLINTON.

(3)

PRESIDENT’S PERIODIC REPORT ON THE NATIONAL EMERGENCY WITH

RESPECT TO IRAQ

I hereby report to the Congress on the developments since my

last report of March 2, 2000, 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,

50 U.S.C. 1703(c) (‘‘IEEPA’’).

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 U.S. 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. U.S. 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. Subsequently, Executive Order 12817 was issued to implement provisions of UNSCR 778, authorizing the Secretary of the

Treasury to identify the proceeds of the sale of Iraqi petroleum or

petroleum products paid for by or on behalf of the purchaser on or

after August 6, 1990, and directing U.S. financial institutions holding such funds to transfer them to the Federal Reserve Bank of

New York (‘‘FRBNY’’).

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, 2000.

1. In April 1995, the UN 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 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 1443 for the remainder of the second 90-day period and set

the authorized value during that timeframe to $1.4 billion pending

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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 Resolution 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-forfood’’ distribution plan be ongoing and project-based. Subsequently,

the Security Council extended the oil-for-food program for 180-day

periods twice more, on November 24, 1998 and on May 21, 1999.

Resolution 1266, adopted by the Security Council on October 4,

1999, authorized Iraq to export petroleum and petroleum products

in excess of $5.2 billion per 180-day phase under the ‘‘oil-for-food’’

program in order to make up for revenue shortfalls from previous

phases of the program. Resolutions 1275 and 1280 extended the

sixth phase of the program for a total of three weeks. On December

10, the Security Council extended the ‘‘oil-for-food’’ program for a

seventh 180-day phase. On December 17, 1999, the Security Council adopted resolution 1284, which permits Iraq to export petroleum

products as required to meet humanitarian needs. On June 8,

2000, the Security Council adopted resolution 1302 which extended

the ‘‘oil-for-food’’ program for an eighth 180-day phase. During the

period covered by this report, imports into the United States under

the program totaled about 20.5 million barrels, bringing total imports since December 10, 1996, to approximately 409 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 current reporting period. As

noted in my report of August 24, 1999, the Regulations were

amended, effective November 10, 1998, to authorize U.S. persons to

enter into executory contracts for the sale of oilfield parts and

equipment to the Government of Iraq in conformity with UNSCR

1153 and UNSCR 1175 (63 Fed. Reg. 62942, November 10, 1998).

As previously reported, the Regulations were amended on December 10, 1996 to provide a statement of licensing policy regarding specific licensing of U.S. persons seeking to purchase Iraqi-origin petroleum and petroleum products (61 Fed. Reg. 65312, December 11, 1996). Statements of licensing policy were also provided regarding sales of essential parts and equipment for the KirkukYumurtalik 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 exported from Iraq with United Nations and U.S.

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, be placed in the UN 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 ComVerDate 11-MAY-2000 02:18 Sep 08, 2000 Jkt 079011 PO 00000 Frm 00006 Fmt 6601 Sfmt 6602 E:\HR\OC\HD280.XXX pfrm03 PsN: HD280
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mittee and satisfaction of other conditions established by the

United Nations, be paid or payable out of the 986 Escrow Account.

3. Since my last report, OFAC has collected one civil monetary

penalty totaling nearly $25,000 for violation of the sanctions. The

violation involved a payment to an entity in Iraq by a U.S. financial institution. An additional twenty cases are undergoing penalty

action for violation of the Regulations.

Investigations are continuing in several cases opened in prior reporting periods involving possible violations of the Iraqi sanctions.

OFAC continues to investigate 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.

As of June 13, 2000, 17 transactions totaling more than $445,000

had been blocked during the reporting period. One hundred ten

transactions, not involving blockable interests, were rejected by

U.S. banks causing a disruption of more than $5.25 million in business for Iraq.

4. OFAC 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, the exportation to Iraq of donated medicine,

medical supplies, and food intended for humanitarian relief purposes, sales of humanitarian supplies and oilfield parts and equipment to Iraq under UNSCRs 986, 1111, 1143, 1153, 1210, 1242 and

1302, 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, 91 specific licenses have been

issued, most with respect to sales of humanitarian goods and oilfield parts and equipment.

Since December 10, 1996, OFAC has issued specific licenses authorizing participation by U.S. persons in commercial sales of humanitarian goods to Iraq funded by Iraqi oil sales, and imports of

Iraqi petroleum products, pursuant to UNSCRs 986, 1111, 1143,

1153, 1210, 1242, and 1284, valued at more than $510 million. Of

that amount, approximately $420 million represents sales of basic

foodstuffs, $41 million for medicines and medical supplies, $38 million for water testing and treatment equipment, and $11 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 in Iraq.

Assisting UN agencies include the World Food Program, the UN

Population Fund, the UN Food and Agriculture Organization, the

World Health Organization, and UNICEF. As of June 14, 2000,

OFAC had authorized sales valued at about $58 million of humanitarian goods during the current reporting period. In addition, in

conformity with UNSCR 1153 and UNSCR 1175, OFAC has issued

106 licenses since November 10, 1998, authorizing U.S. persons to

enter into executory contracts for the sale of oilfield parts and

equipment to the Government of Iraq. The oil infrastructure merVerDate 11-MAY-2000 02:18 Sep 08, 2000 Jkt 079011 PO 00000 Frm 00007 Fmt 6601 Sfmt 6602 E:\HR\OC\HD280.XXX pfrm03 PsN: HD280
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chandise covered by such contracts is valued at approximately

$27.7 million.

In October 1992, OFAC issued directive licenses to eight commer- cial banks ordering the transfer of a total of $200 million in blocked

Iraqi oil funds to the FRBNY for further transfer to and use by the

United Nations in Iraq. This action was taken pursuant to UNSCR

778 and Executive Order 12817. Under UNSCR 986, and its successors, the funds were to have been repaid from the proceeds of

the oil-for-food program.

In late 1998, OFAC was informed that money was flowing back

into the FRBNY. At the request of the Department of State, OFAC

licensed the distribution of Iraqi funds repaid by the United Nations, and held at the FRBNY, to the eight commercial banks. The

licenses were issued April 14, 1999, jointly to the FRBNY and the

eight commercial banks. A total amount of $37,694,734.46 was

transferred, representing $36,474,145.00 in principal (amounts received from the United Nations) and $1,220,589.46 in interest

(earned at the FRBNY). As of June 16, 2000, an additional total

of $17,319,828 has been received at the FRBNY.

5. The expenses incurred by the federal government in the sixmonth period from February 2 through August 1, 2000 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 $750,000, most of which represent

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. Ten years after the invasion, a pattern of defiance persists: a refusal to account for missing Kuwaiti detainees;

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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; failure to cooperate

with the UN Special Commission, the UN Monitoring and

Verification Commission, its successor organization and the International Atomic Energy Agency in accordance with Security Council resolutions; and ongoing widespread human rights violations. As

a result, the UN sanctions remain in place and 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 arbitrary arrests and executions. The Government of Iraq has repeatedly said

it will not comply with UNSC Resolution 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 attacks against civilian

population centers in the south, including the razing of villages.

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 Security Council resolutions affirm that

the Security Council review Iraq’s policies and practices in judging

Iraq’s compliance with those resolutions. 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.

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