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[House Document 106-280]
[From the U.S. Government Publishing Office]

                                     

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

                                           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.

 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 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-for-food'' 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 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 
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 Committee 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 merchandise covered by such contracts is valued 
at approximately $27.7 million.
    In October 1992, OFAC issued directive licenses to eight 
commercial 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 
six-month 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; 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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