Proposal for a Council Regulation amending Council Regulation (EC) No 1294/1999 concerning a freeze of funds and a ban on investment in relation to the Federal Republic of Yugoslavia (FRY) [and repealing Regulations (EC) No 1295/98 and (EC) No 1607/98]
Date: 2000-03-14
Institutions: European Commission
Subjects: Yugoslavia, capital market, economic sanctions, international sanctions, regulation of investments

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 14.03.2000
COM(2000) 150 final

Proposal for a

COUNCIL REGULATION

amending Council Regulation (EC) No 1294/1999 concerning a freeze of funds and a ban
on investment in relation to the Federal Republic of Yugoslavia (FRY) [and repealing
Regulations (EC) No 1295/98 and (EC) No 1607/98]

(presented by the Commission)

(1)

(2)

(3)

(4)

(5)

(6)

EXPLANATORY MEMORANDUM

By means of Council Regulation (EC) No 1294/1999 of 15 June 1999, the Council
confirmed and expanded the freezing of funds of certain Yugoslav funds, first imposed
in June 1998, and imposed restrictions on investments in the Republic of Serbia.

In its conclusions of 14 February 2000 the Council determined that, in order to exert
maximum pressure on the Milosevic regime, there were sufficient grounds to invite
the Commission to present detailed proposals on enhancing the effectiveness of the
financial sanctions, closing any loopholes that may exist in the Regulation, ensuring
that Community banks and companies are made aware of and understand their
obligations and reviewing enforcement and application at more frequent intervals.

is to provide for the amendments to the
The purpose of the attached proposal
Regulation necessary to implement
the existing financial
sanctions against the Federal Republic of Yugoslavia, as described in the Council’s
conclusions.

the strengthening of

The proposal is for a stricter regime as regards companies, undertakings, institutions or
entities included in the definitions of the Government of the Federal Republic of
Yugoslavia and the Republic of Serbia. In this regard,
the
definitions of these governments should be presented in a clearer way, in particular as
regards the inclusion of all socially-owned companies,
that silent approval of
transactions with such parties should be abolished, and that anybody obtaining
information with respect to such parties should have a statutory duty to share that
information with the authorities.

is proposed that

it

In order to close the existing loopholes,
is considered necessary to impose a
statutory reporting requirement in respect of payments that are exempt from the
prohibitions to use frozen funds and to make funds available to those included in the
definitions of the targeted governments.

it

As regards increasing the awareness of the Regulation and more systematic reviewing
of its application, most of the measures that need to be taken are of a non-legislative
nature. However, in order to provide a proper forum for review of the application of
the Regulation, it is proposed that the role of the existing management committee be
increased in this regard.

2

Proposal for a

COUNCIL REGULATION

amending Council Regulation (EC) No 1294/1999 concerning a freeze of funds and a ban
on investment in relation to the Federal Republic of Yugoslavia (FRY) [and repealing
Regulations (EC) No 1295/98 and (EC) No 1607/98]

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Articles
60 and 301 thereof,

Having regard to Common Positions 98/326/CFSP of 7 May 1998 defined by the Council on
the basis of Article J.2 of the Treaty on European Union, concerning the freezing of funds
held abroad by the Governments of the Federal Republic of Yugoslavia (FRY) and the
Republic of Serbia1, and Common Position 98/374/CFSP of 8 June 1998 defined by the
Council on the basis of Article J.2 of the Treaty on European Union concerning the
prohibition of new investment in Serbia2, as well as to Common Position 1999/318/CFSP of
10 May 1999 adopted by the Council on the basis of Article 15 of the Treaty on European
Union, concerning additional restrictive measures against the Federal Republic of Yugoslavia
(FRY),3

Having regard to the proposal from the Commission,

Whereas:

(1)

(2)

(3)

(4)

The Council adopted Regulation (EC) No 1294/1999 concerning a freeze of funds and
a ban on investment in relation to the Federal Republic of Yugoslavia (FRY)4

The Council has agreed to maintain its overall policy framework of applying
maximum pressure on Milosevic through the strengthening of the sanctions targeted at
the regime, without penalising the Serb people;

Under these circumstances the effectiveness of the existing financial sanctions should
be enhanced, inter alia, by closing any loopholes that may exist and improving the
enforcement:

At the same time the sanctions regime should be adapted with a view to reducing the
negative impact on the interests of the Community without diminishing the impact on
the targeted natural and legal persons;

1 OJ L 143, 14.5.98, p. 1
2 OJ L 165, 10.6.1998, p. 1
3 OJ L 123, 13. 5. 1999, p. 1.
4 OJ L 153, 19.6.1999, p. 63

3

HAS ADOPTED THIS REGULATION:

Article 1

Council Regulation (EC) No 1294/1999 shall be amended as follows:

1.

“1.

Paragraphs 1 and 2 of Article 1 shall be replaced by the following:

Government of the FRY means

–

–

–

–

–

–

the Government of the Federal Republic of Yugoslavia at any level,
agencies, bodies or organs;

its

any company, undertaking, institution, including any financial institution, and
entity owned or controlled by that Government;

any socially-owned entity organised in the Federal Republic of Yugoslavia

any successor to such companies, undertakings, institutions and entities as of
26 April 1999

any subsidiary or branch, wherever located, of such companies, undertakings,
institutions and entities; and

any person acting or purporting to act for or on behalf of any of the foregoing.

2.

Government of the Republic of Serbia means

–

–

–

–

–

–

the Government of the Republic of Serbia at any level, its agencies, bodies or
organs;

any company, undertaking, institution, including any financial institution, and
entity owned or controlled by that Government;

any socially-owned entity organised in the Republic of Serbia;

any successor to such companies, undertakings, institutions and entities as of
26 April 1999;

any subsidiary or branch, wherever located, of such companies, undertakings,
institutions and entities; and

any person acting or purporting to act for or on behalf of any of the foregoing.”

2.

1.

Article 2 shall be replaced by the following:

“Article 2

Any person listed in Annex I to this Regulation shall be deemed to be a person acting
or purporting to act for or on behalf of the Government of the FRY or the
Government of the Republic of Serbia.

4

2.

3.

4.

3.

Companies, undertakings, institutions or entities listed in Annex II to this Regulation
shall be deemed to be owned or controlled by the Government of the FRY of the
Government of the Republic of Serbia.

Annex II concerns only companies, undertakings, institutions or entities located,
registered or
the Federal Republic of
Yugoslavia.

incorporated outside the territory of

registered or
All companies, undertakings,
incorporated in the Federal Republic of Yugoslavia shall be deemed to be socially-
owned or owned or controlled by the Government of the FRY or the Government of
the Republic of Serbia.

institutions or entities

located,

Nothing in this Article shall discharge any natural or legal person from its obligations
to exercise due diligence in respect of acting in conformity with the provisions of this
Regulation.”

Article 6 shall be replaced by the following:

“Article 6

Without prejudice to the Community rules concerning confidentiality and to the provisions of
Article 284 of the Treaty, banks, other financial institutions, insurance companies, and other
bodies and persons shall provide immediately, on request or not, to the competent authorities
of the Member States in charge of monitoring and/or enforcing the provisions of this
Regulation and the Commission any information which may facilitate compliance with this
Regulation, notably accounts and amounts frozen in accordance with Article 3 and
transactions executed under the provisions of Article 7 of and 8.” The competent authorities
of the Member States and/or the Commission shall be empowered to verify these reports.”

4.

“1.

Paragraphs 1 and 2 of Article 8 shall be replaced by the following:

In accordance with the provisions of Article 9, the Commission shall be empowered:

(a)

to amend Annexes I and II;

(b)

to grant individual or general authorisations

(i)

(ii)

to unfreeze funds, or make funds available for the benefit of the
Government of the FRY or the Government of the Republic of Serbia; or

to acquire or extend a participation in, ownership of or control over real
estate, a company, undertaking, institution or entity referred to in Article
4,

if not granting such authorisations would cause damage to the interests of the
Community.

(c)

to establish a list of companies, undertakings, institutions or entities within the
Federal Republic of Yugoslavia that are neither socially owned, nor owned or
controlled by the Government of the FRY or the Government of Serbia.

5

(d)

issue, on a case-by-case basis and on request by an interested party,
confirmations that a company, undertaking, institution or entity within the
Federal Republic of Yugoslavia is neither socially owned, nor owned or
controlled by the Government of the FRY or the Government of Serbia.

2.

Any request by a legal or natural person for an authorisation referred to in paragraph
1 (b), for a confirmation referred to in paragraph 1 (d), for an amendment of Annexes
I or II or for being listed as not socially owned, or owned or controlled by the
Government of the FRY or the Government of Serbia, shall be made through the
competent authorities of the Member States.

The competent authorities of the Member States shall verify, to the fullest extent
possible, the information provided by the persons making a request.”

5.

Article 10 shall be replaced by the following:

“Article 10

The Committee referred to in Article 9 shall examine all questions 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 enter into force on the day following that of its publication in the
Official Journal of the European Communities.

Article 2

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

Done at Brussels,

For the Council
The President

6