Proposal for a Council Regulation (EC) concerning the reduction of certain economic and financial relations with the Federal Republic of Yugoslavia and the Republic of Serbia - (presented by the Commission)
Date: 1998-06-05
Institutions: European Commission
Subjects: Serbia, Yugoslavia, economic relations, economic sanctions, foreign policy

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 05.06.1998 
COM(1998) 347  final 

Proposal for a 

COUNCIL REGULATION (EC) 

concerning the reduction of certain economic and financial relations 
with the Federal Republic of Yugoslavia and the Republic of Serbia 

(presented by the Commission) 

EXPLANATORY  MEMORANDUM 

The present proposal  of the Commission for a reduction of certain economic relations 
with the Federal Republic of Yugoslavia, follows  from the adoption by the Council of 
Common  Positions  98/240/CFSP  and  98/326/CFSP,  dealing  with  the  Kosovo 
situation, and the actions to be taken in this respect in order to obtain the fulfilment  by 
the Governments  of the Federal  Republic of Yugoslavia and of  Serbia of solving the 
Kosovo problem. 

Regulation  (EC)  No  926/98  of  27  April  1998  already  prohibits  the  supply  to  the 
Federal  Republic  of  Yugoslavia  of  equipment  which  might  be  used  for  internal 
repression  or terrorism,  the  provision  and/or  use  of  government  and/or  other  official 
financial  support, insurance and/or guarantees in respect of new export credit for trade 
with  or investment  in the  Republic  of Serbia and  the provision  or use of  government 
and/or other official financing for privatisation's in that Republic. 

For reasons of clear and transparent  legislation  the provisions of Regulation  (EC) No 
926/98  are  fully  integrated  in  this  proposal,  which  will  enable  the  repeal  of  that 
Regulation (Articles 5,6,7 and 8). 

The  other  provisions  in  this  proposal  concern  the  freezing  of the  funds  belonging  to 
the Government  of the Federal  Republic of Yugoslavia and/or the Government of the 
Republic of Serbia. 

The  definitions  in  Article  1  of  the  proposal  provide  clear  delimitations  of  the 
governmental bodies and of the funds concerned  by the new Regulation. 
Article 2 contains the provisions concerning the freezing  of funds. 

Articles  3, 4,  9,  10 and  14 deal  with  exceptions  (for  instance  for  daily  expenses  of 
embassies of the Federal  Republic of Yugoslavia or for transfer  of private pensions ), 
and  with  a procedure  for  dealing  with  exceptions  which  can not  yet  be foreseen  and 
for consultation on the application of the Regulation. 

In order to ensure full  compliance with the Regulation the competent authorities of the 
Member States should dispose of the necessary powers (Article 12). 

The  persons addressed  by  and  the territorial  scope of the Regulation  are the same as 
those in Regulation (EC) No 926/98 (Article  15). 

~l 

Council Regulation (EC) No  ..../98 

of....  1998 

concerning the reduction of certain economic and financial  relations 
with the Federal Republic of Yugoslavia and the Republic of Serbia 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to the Treaty  establishing  the European  Community,  and  in particular 
Articles 73g and 228a, 

Having  regard  to  Common  Positions  98/240/CFSP  and  98/326/CFSP  defined  by the 
Council  on  the  basis  of  Article  J.2  of  the  Treaty  on  European  Union  on  restrictive 
measures  against  the Federal Republic of Yugoslavia and the Republic of Serbia1, 

Having regard to the proposal from the Commission, 

Whereas  the  said  Common  Positions  provide  for  restrictive  measures  against  the 
Federal  Republic  of  Yugoslavia  and/or  the  Republic  of  Serbia,  including  action  by 
the Community for the reduction of certain economic relations; 

Whereas  certain of these measures fall  under the scope of the Treaty establishing  the 
European Community ; 

Whereas, therefore,  and  notably  with  a view  to  avoiding  distortion  of  competition, 
Community  legislation  is necessary  for  the  implementation  of these  measures, as far 
as the territory  of the  Community  is concerned;  whereas such territory  is deemed  to 
encompass, for the purposes of this Regulation, the territories of the Member States to 
which  the  Treaty  establishing  the  European  Community  is  applicable,  under  the 
conditions laid down in that Treaty; 

Whereas procedures  should  be provided  to authorise certain activities, amend  the list 
of  specially  designated  persons  contained  in  Annex  1  and  the  list  of  competent 
services/authorities  contained  in  Annex  3,  or  to  amend  the  list  of  equipment  for 
internal repression or terrorism contained in  Annex 2 to this Regulation; 

OJL 95, 27.3.98, p.l  and OJ L  143, 14.5.1998, p.l 

Whereas  competent  authorities  of  the  Member  States  should,  where  necessary,  be 
empowered to ensure compliance with this Regulation; 

Whereas there  is a need  for  Commission  and  Member  States to inform  each other of 
the  measures  taken  under  this  Regulation  and  of  other  relevant  information  at  their 
disposal 
to  existing 
obligations with regard to certain items concerned; 

this  Regulation,  without  prejudice 

in  connection  with 

Whereas  for  reasons  of transparent  legislation,  this Regulation  should  encompass  all 
the  restrictive  measures  taken  by  the  Community  foreseen  in  the  said  Common 
Positions; whereas, therefore, Regulation (EC) No 926/982 can be repealed ; 

HAS ADOPTED THIS REGULATION : 

Article 1 

For the purpose of this Regulation: 

1. Government of the Federal Republic of Yugoslavia means: the Government of the 
Federal Republic of Yugoslavia, including the public administrations and agencies at 
the federal  level, and the specially designated entities defined  below; 

2. Government of the Republic of Serbia means: the Government of the Republic of 
Serbia, including the public administrations and agencies at the central government 
level in the Republic of Serbia, and the specially designated entities defined  below; 

3. Specially designated entity means: any legal person owned or controlled by the 
Government of the Federal  Republic of Yugoslavia and/or the Government of the 
Republic of Serbia and listed in Annex  1  to this Regulation; 

4. Designated person means: a natural person acting for, on behalf of or to the benefit 
of  the Government of the Federal Republic of Yugoslavia and/or the Government of 
the Republic of Serbia; 

OJL  130,  1.5.1998,  p. 1 

l*. 

5.  Funds means: any financial asset or resource of whatever kind or origin, including 
but not limited to, cash, liquid assets, dividends, interests or other income on shares, 
bonds, debt obligations or any other securities, or amounts derived from an interest in 
or the sale or other disposal  of,  or any other dealing with, tangible and intangible 
assets and property rights; 

6.  Freezing of funds means:  preventing any change in volume, amount, location, 
ownership, possession, character, destination or other change that would enable the 
use of the funds concerned. 

Article 2 

1. All  funds held outside the territory of the Federal  Republic of Yugoslavia and 
belonging to the Government of the Federal  Republic of Yugoslavia and/or to the 
Government of the Republic  of Serbia shall  be  frozen. 

2. No funds shall be made available to either or both those Governments. 

3.  Designated  persons holding any funds belonging to the Government  of the Federal 
Republic of Yugoslavia  and/or the Government of the Republic of Serbia shall put 
those funds  into a separate account with a bank or financial  institution in order to 
enable the bank or institution to freeze those  funds. 

Article 3 

Authorisations  for the use of  frozen funds of the Government of the Federal  Republic 
of Yugoslavia and/or the government of the Republic of Serbia, or for making 
available new funds to these Governments may be given under the conditions of this 
Regulation. 

Article 4 

On the condition that the funds concerned are kept in separate accounts with banks or 
other financial institutions  within the Community, Article 2 does not apply to funds 
exclusively  used for the following  purposes: 

r 

a. Usual business activities within the Community of specially designated entities 
established, incorporated or constituted under the law of the Member States not 
resulting, directly or indirectly, in a transfer  of funds to the Government of the Federal 
Republic of Yugoslavia and/or the Government of the Republic of Serbia; 

b. Payment for current expenses, including salaries of local staff, of embassies, 
consular posts or diplomatic missions of the Government of the Federal Republic of 
Yugoslavia and/or the Government of the Republic of Serbia within the Community; 

c. Transfer of social security or pension payments from  the Community to natural 
persons resident in the Federal Republic of Yugoslavia. 

d. The implementation of the Education Agreement of September  1996, signed by 
President Milosevic and the leader of the ethnic Albanian community  Dr. Ibrahim 
Rugova; 

e. Payments through banks or financial institutions, directly or indirectly, to natural or 
legal persons in Serbia for the supply of goods or services by these persons to the 
Community, unless there exists a reasonable suspicion that the supply of goods or 
services has not taken place in fact or not at normal commercial conditions; 

f.  Payments by other means, directly or indirectly, for the supply of goods or services 
by natural or legal persons in Serbia for the supply of goods or services by these 
persons to the Community, on the condition that conclusive evidence is given to the 
competent authorities of the Member States listed in Annex 3 that the supply of goods 
or services has taken place in fact and at normal commercial conditions. 

Article 5 

The  supply  or  sale,  directly  or  indirectly,  to  the  Federal  Republic  of  Yugoslavia  of 
equipment  intended  for  internal  repression  or terrorism  such as that  in Annex 2 shall 
be  prohibited,  except  under  the  conditions  established  therein.  The  Annex  shall  not 
include  items  specially  designed  or  modified  for  military  use  already  subject  to  the 
arms  embargo  established  on  the  basis  of  Common  Positions  96/184/CFSP  and 
98/240/CFSP. 

Article 6 

As  foreseen  in  Article  3  of  Common  Position  98/240/CFSP,  the  following  shall  be 
prohibited : 

£ 

a)  the  provision  and/or  use  of  government  and/or  other  official  financial  support, 
insurance and/or guarantees in respect of new export credit for trade or  investment 
in the Republic of Serbia or in relation with renewal or extension of existing export 
credit, if the execution of the contract or transaction for which the export credit has 
been provided has not yet been started; 

b)  the provision or use of government and/or other official financing for  privatisations 
in the Republic of Serbia in respect of which no legally binding commitments have 
been undertaken so far. 

Article 7 

1. The  participation,  knowingly  and  intentionally  in  related  activities,  the  object  or 
effect  of which  is, directly  or  indirectly, to circumvent  the provisions  of Articles  2,3 
and 4, or  to promote the transactions or activities referred  to in Articles  5 and 6, shall 
be prohibited. 

2. Any natural or legal person must notify  the Commission directly or through  the 
competent authorities of the Member States listed in Annex 3 to this Regulation of 
any information  coming to their knowledge, or known by them, which will enable it 
to determine if an entity  should be added to or deleted  from the list of specially 
designated entities in Annex  1. 

Article 8 

The Council shall adopt by qualified  majority  amendments to the list contained in 
Annex 2 on the basis of a proposal from the Commission in accordance with Article 5 
of this Regulation. 

Article 9 

For the implementation of this Regulation and in accordance with the provisions of 
Article  10 the Commission shall be empowered to: 

a. amend Annex  1  to this Regulation, containing the names and addresses of the 
specially designated entities; 

b. grant authorisations  for Ihe use of frozen  funds of the Government of the Federal 
Republic of Yugoslavia and/or the Government of the Republic of Serbia, or for 
making available new funds  to these Governments; 

1-

c. to amend Annex 3 containing the names and addresses of the competent 
services/authorities or coordinating service/authority of the Commission and the 
Member States referred  to in Articles 4,7 and  12; 

Article 10 

For the purposes of the implementation of Article 9, the Commission shall be assisted 
by the committee composed of the representatives of the Member States and chaired 
by the representative of the Commission, established under Council Regulation (EC) 
No. 2271/963, in accordance with the following  provisions. 

The representative of the Commission shall submit to the committee a draft of the 
measures to be taken. The committee shall deliver its opinion on the draft within a 
time limit which the chairman may lay down according to the urgency of the matter. 
The opinion shall be delivered by the majority  laid down in Article  148 (2) of the 
Treaty  in the case of decisions which the Council  is required to adopt on a proposal 
from  the Commission. The voles of the representatives of the Member States within 
the committee shall be weighted in the manner set out in that Article. The chairman 
shall not vote. 

The Commission shall adopt the measures envisaged if they are in accordance with 
the opinion of the committee. 

If the measures envisaged are not in accordance with the opinion of the committee, or 
if no opinion is delivered, the Commission shall, without delay, submit to the Council 
a proposal relating to the measures to be taken. The Council shall act by a qualified 
majority. 

If, on the expiry of a period of one month from  the date of referral  to the Council, the 
Council has not acted, the proposed measures shall be adopted by the Commission. 

Article 11 

liach Member  State shall  determine the sanctions to be imposed  where the provisions 
of this  Regulation  are  infringed.  Such sanctions must  be effective,  proportionate  and 
dissuasive. 

3OJL309,  29.11.1996, p. 1 

Article 12 

Without  prejudice  to the EC rules of confidentiality,  the  competent  authorities  shall 
have the power to require banks , financial institutions and other bodies or persons to 
provide  all  relevant  information  necessary  for  ensuring  compliance  with  this 
Regulation. 

Article 13 

The  Commission  and  the  Member  States  shall,  insofar  as  they  are  not  otherwise 
obliged to do so, inform  each other of the measures taken under this Regulation and 
supply each other with other relevant information at their disposal  in connection with 
this Regulation, such as breaches and enforcement problems, judgments handed down 
by national courts or decisions of relevant international fora. 

Article 14 

The committee referred to in Article 10 of this Regulation may examine any question 
concerning the application of this Regulation, which may be raised either by the 
chairman or by a representative of a Member State. 

This Regulation shall apply : 

Article 15 

-  within the territory of the Community including its airspace, 
-  on board  any aircraft or any vessel under the jurisdiction of a Member State, 
- 
- 

to any person elsewhere who is a national of a Member State, 
to any body which is incorporated or constituted under the law of a Member State. 

Regulation (EC) No 926/98 is hereby repealed. 

Article 16 

Article 17 

This Regulation shall enter into force on the day of its publication in the Official 
Journal of the European Communities. 

This Regulation shall be binding in its entirety and directly applicable in all Member 
States. 

For the Council 

The President 
Done at.... 

)o 

ANNEX  1 

List of specially designated entities referred to in Article 1 

)f 

ANNEX 2 

Equipment for internal repression or terrorism, envisaged by Article 5 

( the following  list does not include items which have been specially designed or 
modified  for military use and are covered by the arms embargo established on the 
basis of Common Positions 96/184/CFSP and 98/240/CFSP) 

-  helmets providing ballistic protection, anti-riot helmets, anti-riot shields and 

ballistic shields and specially designed components  therefor 

- 

specially designed  fingerprint  equipment 

-  power controlled  searchlights 

- 

construction equipment provided with ballistic protection 

-  hunting knifes 

- 

- 

- 

- 

- 

- 

- 

specially designed production equipment to make shotguns 

ammunition hand loading equipment 

communications intercept devices 

solid state optical detectors 

image intensifier  tube 

telescopic weapon sights. 

smooth bore weapons and related ammunition, other than those specially designed 
for military use, and specially designed compoments therefor, except  : (a) signal 
pistols  (b) air or cartridge powered guns designed as industrial tools or humane 
animal stunners. 

- 

simulators  for  training  in the  use  of  firearms  and  specially  designed  or  modified 
components and accessories  therefor. 

;JL 

-  bombs  and  grenades,  other  than  those  specially  designed  for  military  use, and 

specially designed components  therefor. 

-  body armour, and specially designed components  therefor. 

-  all  wheel  drive  utility  vehicles  capable  of  off  road  use  that  have  been 
manufactured  or  fitted  with  ballistic  protection,  and  profiled  armour  for  such 
vehicles. 

-  water cannon and specially designed or modified  components  therefor. 

-  vehicles equipped with water cannon. 

-  vehicles  specially  designed  or  modified  to  be  electrified  to  repel  boarders  and 

components therefor  specially designed or modified for that purpose. 

- 

- 

acoustic  devices  represented  by the manufacturer  or supplier  as suitable  for riot-
control purposes, and specially designed components  therefor. 

leg-irons,  gangchains,  shackles  and  electric-shock  belts,  specially  designed  for 
restraining  human  beings  except  handcuffs  for  which  the  maximum  overall 
dimension including chain does not exceed 240mm when locked. 

-  portable  devices  designed  or  modified  for  the  purpose  or  riot  control  or  self-
protection by the administration  of an incapacitating  substance such as tear gas or 
pepper spray, and specially designed components therefor. 

-  portable  devices  designed  or  modified  for  the  purpose  or  riot  control  or  self-
protection  by  the  administration  of  an  electric  shock  (including  electric-shock 
batons, electric shock  shields, stun guns and electric shock dart guns (tasers)) and 
components therefor  specially designed or modified  for that purpose. 

- 

- 

electronic  equipment  capable  of  detecting  concealed  explosives  and  specially 
designed components therefor  except : TV or x-ray inspection equipment. 

electronic jamming  equipment  specially  designed  to  prevent  the  detonation  by 
radio  remote  control  of  improvised  explosive  devices  and  specially  designed 
components  therefor. 

/3 

- 

- 

- 

- 

equipment  and  devices  specially  designed  to  initiate  explosions  by  electrical  or 
non-electrical  means,  including  firing  sets,  detonators,  igniters,  boosters  and 
detonating  cord,  and  specially  designed  components  therefor  ;  except  : 
those 
specially  designed  for  a  specific  commercial  use  consisting  of  the  actuation  or 
operation by explosive means of other equipment or devices the function  of which 
is not the creation of explosions e. g., car air bag inflaters, electri-surge arresters of 
fire sprinkler actuators.4) 

equipment  and  devices  specially  designed  for  explosive  ordnance  disposal; 
except : (1) bomb blankets ;  (2) containers designed  for holding objects known to 
be, or suspected of being improvised explosive devices. 

linear cutting explosive charges 4) 

explosives and related substances as follows  4): 

amatol ; 
nitrocellulose (containing more than  12.5% nitrogen) ; 
nitroglycol ; 
pentaerythritol tetranitrate (PETN) ; 
picryl chloride ; 
trinitrophenylmethylnitramine  (tetryl) ; 
2, 4, 6-trinitrotoluene (TNT). 

- 

night  vision  and  thermal  imaging  equipment  and  image  intensifier  or  solid  state 
sensors  therefor. 

- 

software  and technology  related to all listed items. 

1 ) When they have obtained conclusive evidence that the end-use of the items is not  internal  repression 
or terrorism and under the conditons of Article 4 of this Regulation the competent authorities of the 
Member States may authorise the sale or supply of these items to the Federal Republic of Yugoslavia. 

)

*

*• 

ANNEX 3 

List of competent authorities/services of the Commission and Member States 

as referred to in Article 12 

ir 

ISSN 0254-1475 

COM(98) 347 final 

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