```

[House Document 106-297]
[From the U.S. Government Publishing Office]

                                     

106th Congress, 2d Session - - - - - - - - - - House Document 106-297

 
 SIX-MONTH PERIODIC REPORT WITH RESPECT TO THE NATIONAL EMERGENCY IN 
                                 IRAN

                               __________

                                MESSAGE

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              TRANSMITTING

A REPORT ON DEVELOPMENTS CONCERNING THE NATIONAL EMERGENCY WITH RESPECT 
TO IRAN THAT WAS DECLARED IN EXECUTIVE ORDER 13059 OF AUGUST 19, 1997, 
                     PURSUANT TO 50 U.S.C. 1641(c)

 September 25, 2000.--Message and accompanying papers referred to the 
     Committee on International Relations and ordered to be printed
    To the Congress of the United States:
    As required by section 401(c) of the National Emergencies 
Act, 50 U.S.C. 1641(c), section 204(c) of the International 
Emergency Economic Powers Act (IEEPA) 50 U.S.C. 1703(c), and 
section 505(c) of the International Security and Development 
Cooperation Act of 1985, 22 U.S.C. 2349aa-9(c), I transmit 
herewith a 6-month periodic report on developments concerning 
the national emergency with respect to Iran that was declared 
in Executive Order 12957 of March 15, 1995, and matters 
relating to the measures in that order and in Executive Order 
12959 of May 6, 1995, and in Executive Order 13059 of August 
19, 1997.
                                                William J. Clinton.
    The White House, September 26, 2000.
 President's Periodic Report on the National Emergency With Respect to 
                                  Iran

    I hereby report to the Congress on developments concerning 
the national emergency with respect to Iran that was declared 
in Executive Order 12957 of March 15, 1995, and matters 
relating to the measures in that order and in Executive Order 
12959 of May 6, 1995, and in Executive Order 13059 of August 
19, 1997. This report is submitted pursuant to section 204(c) 
of the International Emergency Economic Powers Act, 50 U.S.C. 
1703(c) (``IEEPA''), section 401(c) of the National Emergencies 
Act, 50 U.S.C. 1641(c), and section 505(c) of the International 
Security and Development Cooperation Act of 1985, 22 U.S.C. 
2349aa-9(c). This report discusses only matters concerning the 
national emergency with respect to Iran that was declared in 
Executive Order 12957 and does not deal with those relating to 
the emergency declared on November 14, 1979, in connection with 
the hostage crisis.
    1. On March 15, 1995, I issued Executive Order 12957 (60 
Fed. Reg. 14615, March 17, 1995) to declare a national 
emergency with respect to Iran pursuant to IEEPA, and to 
prohibit the financing, management, or supervision by U.S. 
persons of the development of Iranian petroleum resources. This 
action was in response to actions and policies of the 
Government of Iran, including support for international 
terrorism, efforts to undermine the Middle East peace process, 
and the acquisition of weapons of mass destruction and the 
means to deliver them. A copy of the order was provided to the 
Congress by message dated March 15, 1995.
    Following the imposition of these restrictions with regard 
to the development of Iranian petroleum resources, Iran 
continued to engage in activities that represent a threat to 
the peace and security of all nations, including Iran's 
continuing support for international terrorism, its support for 
acts that undermine the Middle East peace process, and its 
intensified efforts to acquire weapons of mass destruction. On 
May 6, 1995, I issued Executive Order 12959 (60 Fed. Reg. 
24757, May 9, 1995) to further respond to the Iranian threat to 
the national security, foreign policy, and economy of the 
United States. The terms of that order and an earlier order 
imposing an import ban on Iranian-origin goods and services 
(Executive Order 12613 of October 29, 1987) were consolidated 
and clarified in Executive Order 13059 of August 19, 1997.
    At the time of signing Executive Order 12959, I directed 
the Secretary of the Treasury to authorize through specific 
licensing certain transactions, including transactions by U.S. 
persons related to the Iran-United States Claims Tribunal in 
The Hague, established pursuant to the Algiers Accords, and 
related to other international obligations and United States 
Government functions, and transactions related to the export of 
agricultural commodities pursuant to preexisting contracts 
consistent with section 5712(c) of Title 7, United States Code. 
I also directed the Secretary of the Treasury, in consultation 
with the Secretary of State, to consider authorizing U.S. 
persons through specific licensing to participate in market-
based swaps of crude oil from the Caspian Sea area for Iranian 
crude oil in support of energy projects in Azerbaijan, 
Kazakhstan, and Turkmenistan.
    Executive Order 12959 revoked sections 1 and 2 of Executive 
Order 12613 of October 29, 1987, and sections 1 and 2 of 
Executive Order 12957 of March 15, 1995, to the extent they are 
inconsistent with it. A copy of Executive Order 12959 was 
transmitted to the Speaker of the House and the President of 
the Senate by letter dated May 6, 1995.
    2. On August 19, 1997, I issued Executive Order 13059 (the 
``order'') to clarify the steps taken in Executive Order 12957 
and Executive Order 12959, to confirm that the embargo on Iran 
prohibits all trade and investment activities by U.S. persons, 
wherever located, and to consolidate in one order the various 
prohibitions previously imposed to deal with the national 
emergency declared on March 15, 1995. A copy of the order was 
transmitted to the Speaker of the House and the President of 
the Senate by letter dated August 19, 1997.
    The other prohibits: (1) the importation into the United 
States of any goods or services of Iranian origin or owned or 
controlled by the Government of Iran except information or 
informational materials; (2) the exportation, reexportation, 
sale, or supply from the United States or by a U.S. person, 
wherever located, of goods, technology, or services to Iran or 
the Government of Iran, including knowing transfers to a third 
country for direct or indirect supply, transshipment, or 
reexportation to Iran or the Government of Iran, or 
specifically for use in the production, commingling with, or 
incorporation into goods, technology, or services to be 
supplied, transshipped, or reexported exclusively or 
predominantly to Iran or the Government of Iran; (3) knowing 
reexportation from a third country to Iran or the Government of 
Iran of certaincontrolled U.S.-origin goods, technology, or 
services by a person other than a U.S. person; (4) the purchase, sale, 
transport, swap, brokerage, approval, financing, facilitation, 
guarantee, or other transactions or dealings by U.S. persons, wherever 
located, related to goods, technology, or services for exportation, 
reexportation, sale or supply, directly or indirectly, to Iran or the 
Government of Iran, or to goods or services of Iranian origin or owned 
or controlled by the Government of Iran; (5) new investment by U.S. 
persons in Iran or in property or entities owned or controlled by the 
Government of Iran; (6) approval, financing, facilitation, or guarantee 
by a U.S. person of any transaction by a foreign person that a U.S. 
person would be prohibited from performing under the terms of the 
order; and (7) any transaction that evades, avoids, or attempts to 
violate a prohibition under the order.
    Executive Order 13059 became effective at 12:01 a.m., 
eastern daylight time on August 20, 1997. Because the order 
consolidated and clarified the provisions of prior orders, 
Executive Order 12613 and paragraphs (a), (b), (c), (d) and (f) 
of section 1 of Executive Order 12959 were revoked by Executive 
Order 13059. The revocation of corresponding provisions in the 
prior Executive orders did not affect the applicability of 
those provisions, or of regulations, licenses or other 
administrative actions taken pursuant to those provisions, with 
respect to any transaction or violation occurring before the 
effective date of Executive Order 13059. Specific licenses 
issued pursuant to prior Executive orders continue in effect, 
unless revoked or amended by the Secretary of the Treasury. 
General licenses, regulations, orders, and directives issued 
pursuant to prior orders continue in effect, except to the 
extent inconsistent with Executive Order 13059 or otherwise 
revoked or modified by the Secretary of the Treasury.
    The declaration of national emergency made by Executive 
Order 12957, and renewed each year since, remains in effect and 
is not affected by the order.
    3. On March 13, 2000, I renewed for another year the 
national emergency with respect to Iran pursuant to IEEPA. This 
renewal extended the authority for the current comprehensive 
trade embargo against Iran in effect since May 1995.
    4. On April 28, 1999, I announced that existing unilateral 
economic sanctions programs would be amended to modify 
licensing policies to permit case-by-case review of specific 
proposals for the commercial sale of agricultural commodities 
and products, aswell as medicine and medical equipment, where 
the United States Government has the discretion to do so. I further 
announced that the Administration was developing country-specific 
licensing criteria to guide the case-by-case review process so that 
governments subject to sanctions do not gain unwarranted benefits from 
such sales.
    On July 27, 1999, the Iranian Transactions Regulations, 31 
CFR Part 560 (the ``ITR'' or the ``Regulations'') were amended 
to add statements of licensing policy with respect to 
commercial sales of agricultural commodities and products, 
medicine and medical equipment (64 Fed. Reg. 41784, August 2, 
1999). These provisions were amended on October 27, 1999 (64 
Fed. Reg. 58789, November 1, 1999) to remove language that had 
prohibited the issuance of specific licenses authorizing 
financing by entities of the governments of Sudan, Libya, and 
Iran. In addition, technical revisions were made to the 
Regulations pertaining to informational materials and visas.
    On March 17, 2000, Secretary of State Madeleine Albright 
announced that economic sanctions against Iran would be eased 
to allow Americans to purchase and import carpets and food 
products such as dried fruits, nuts, and caviar from Iran. To 
implement this policy, the Department of the Treasury's Office 
of Foreign Assets Control (``OFAC'') amended the Regulations to 
authorize by general license the importation into the United 
States of, and dealings in, certain Iranian-origin foodstuffs 
and carpets and related transactions (65 Fed. Reg. 25642, May 
3, 2000).
    5. During the current six-month period, OFAC made numerous 
decisions with respect to applications for licenses to engage 
in transactions under the ITR, and issued 62 licenses. The 
majority of license denials were in response to requests to 
authorize commercial exports to Iran--particularly of machinery 
and equipment for various industries--and the importation of 
Iranian-origin goods. Twenty-one licenses were issued 
authorizing commercial sales and exportation to Iran of bulk 
agricultural commodities; in addition, licenses were issued 
that authorized 20 sales of medicines or medical equipment. 
Other licenses that were issued authorized certain air and 
marine safety, diplomatic, legal, financial, and travel 
transactions, filmmaking, humanitarian, journalistic, and 
research activities, and the importation of the art objects for 
public exhibition. Pursuant to Section 3 and 4 of Executive 
Order 12959, Executive Order 13059, and consistent with 
statutory restrictions concerning certain goods and technology, 
including those involved in air safety cases, Treasury 
continuesto consult with the Department of State and Commerce 
prior to issuing licenses.
    For the period March 15 through September 14, 2000, on 
OFAC's instruction, U.S. banks refused to process more than 
1,100 commercial transactions, the majority involving foreign 
financial institutions, that would have been contrary to U.S. 
sanctions against Iran. The transactions rejected amounted to 
nearly $170 million worth of business denied Iran by virtue of 
U.S. economic sanctions.
    Since my last report, OFAC has collected nearly $342,000 in 
civil monetary penalties for violations of IEEPA and the 
Regulations. The violators included one insurer, seven 
companies, six U.S. financial institutions, and six 
individuals. An additional 102 cases are undergoing penalty 
action for violations of IEEPA and the Regulations.
    6. On January 14, 2000, the vice president of a Wisconsin 
corporation was sentenced in the Eastern District of Wisconsin 
to 41 months in prison for his October 1999 jury conviction on 
charges he violated IEEPA and the Arms Export Control Act by 
illegally exporting U.S.-origin military aircraft component 
parts to Iran. On February 3, 2000, the corporation president 
was sentenced to six months in prison and ordered to pay $5,000 
fine for his guilty plea to one count of making false 
statements to the Government, and the corporation was ordered 
to pay a fine of $15,000. The defendants were charged with 
violating sanctions against Iran in an August 1998 indictment.
    A California resident is scheduled to be tried in October 
2000 in the District of Maryland for IEEPA and other charges 
filed in a superseding indictment on March 20, 1997. The 
indictment charges the defendant with the attempted exportation 
to Iran of gas chromatographs from the United States.
    On May 10, 2000, a Georgia corporation plead guilty in U.S. 
District Court in Atlanta to one count of violating IEEPA by 
exporting automobile parts from the United States to Iran 
through third countries. Two company officials and entered 
guilty pleas for making false statements to the United States 
Government in connection with the shipments. Sentencing is 
pending. The guilty pleas were the result of a 24-count 
indictment returned in December 1998.
    Various enforcement actions carried over from previous 
reporting periods are continuing and new reports of violations 
are being aggressively pursued.
    7. The expenses incurred by the Federal Government in the 
six-month period from March 15 through September 14, 2000 that 
are directly attributable to the exercise of powers and 
authorities conferred by the declaration of a national 
emergency with respect to Iran are reported to be approximately 
$1.5 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 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 Intelligence and Research, and 
the Office of the Legal Advisor), and the Department of 
Commerce (the Bureau of Export Administration and the Chief 
Counsel's Office).
    8. The situation reviewed above continues to present an 
extraordinary and unusual threat to the national security, 
foreign policy, and economy of the United States. The 
declaration of the national emergency with respect to Iran 
contained in Executive Order 12957 and the comprehensive 
economic sanctions imposed by Executive Order 12959 underscore 
the United States Government's opposition to the actions and 
policies of the Government of Iran, particularly its support of 
international terrorism and its efforts to acquire weapons of 
mass destruction and the means to deliver them. The Iranian 
Transactions Regulations issued pursuant to Executive Orders 
12957, 12959, and 13059 continue to advance important 
objectives in promoting the nonproliferation and anti-terrorism 
policies of the United States. I shall exercise the powers at 
my disposal to deal with these problems and will report 
periodically to the Congress on significant developments.

                                

```