CELEX: 51998PC0347
Language: en
Date: 1998-06-05
Title: 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)

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 andfinancialrelations
with the Federal Republic of Yugoslavia and the Republic of Serbia
                   (presented by the Commission)
 ---pagebreak---  ---pagebreak---                           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
 ---pagebreak---                          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
 ---pagebreak--- 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 in connection with this Regulation, without prejudice to existing
obligations with regard to certain items concerned;
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*.
 ---pagebreak--- 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
 ---pagebreak--- 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 :
                                                  £
 ---pagebreak--- 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-
 ---pagebreak--- 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.
3
  OJL309, 29.11.1996, p. 1
 ---pagebreak---                                        Article 12
Without prejudice to the EC rules of confidentiality, the competent authorities shall
have the power to require banks ,financialinstitutions 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.
                                       Article 15
This Regulation shall apply :
-   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.
                                       Article 16
Regulation (EC) No 926/98 is hereby repealed.
                                       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.
 ---pagebreak--- For the Council
The President
Done at....
                )o
 ---pagebreak---                                ANNEX 1
List of specially designated entities referred to in Article 1
                                         )f
 ---pagebreak---                                          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
 ---pagebreak--- - 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
 ---pagebreak---  -    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.
                                                           ) * * •
 ---pagebreak---                                        ANNEX 3
List of competent authorities/services of the Commission and Member States
               as referred to in Article 12
                                                 ir
 ---pagebreak---  ---pagebreak---                                                                   ISSN 0254-1475
                                                           COM(98) 347 final
                                              DOCUMENTS
EN                                                             11 10 09 02
                                    Catalogue number : CB-CO-98-358-EN-C
                                                             ISBN 92-78-36894-6
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