THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release March 11, 1996
TO THE CONGRESS OF THE UNITED STATES:
I hereby report to the Congress on developments concerning the national emergency with respect to Iran that was declared in Executive Order No. 12957 of March 15, 1995, and matters relating to the measures in that order and in Executive Order No. 12959 of May 6, 1995. This report is submitted pursuant to section 204(c) of the International Emergency Economic Powers Act, 50 U.S.C. 1703(c) (IEEPA), 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 No. 12957 and matters relating to that Executive order and Executive Order No. 12959.
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 No. 12959 to further respond to the Iranian threat to the national security, foreign policy, and economy of the United States.
Executive Order No. 12959 (60 Fed. Reg. 24757, May 9, 1995) (1) prohibits exportation from the United States to Iran or to the Government of Iran of goods, technology, or services; (2) prohibits the reexportation of certain U.S. goods and technology to Iran from third countries; (3) prohibits transactions such as brokering and other dealing by United States persons in goods and services of Iranian origin or owned or controlled by the Government of Iran; (4) prohibits new investments by United States persons in Iran or in property owned or controlled by the Government of Iran; (5) prohibits U.S. companies and other United States persons from approving, facilitating, or financing performance by a foreign subsidiary or other entity owned or controlled by a United States person of reexport, investment, and certain trade transactions that a United States person is prohibited from performing; (6) continues the 1987 prohibition on the importation into the United States of goods and services of Iranian origin; (7) prohibits any transaction by any United States person or within the United States that evades or avoids or attempts to violate any prohibition of the order; and (8) allowed U.S. companies a 30-day period in which to perform trade transactions pursuant to contracts predating the Executive order.
In Executive Order No. 12959, I directed the Secretary of the Treasury to authorize through specific licensing certain transactions, including transactions by United States 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 United States 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 No. 12959 revoked sections 1 and 2 of Executive Order No. 12613 of October 29, 1987, and sections 1 and 2 of Executive Order No. 12957 of March 15, 1995, to the extent they are inconsistent with it. A copy of Executive Order No. 12959 was transmitted to the Speaker of the House of Representatives and President of the Senate by letters dated May 6, 1995.
2. There were no amendments to the Iranian Transactions Regulations, 31 CFR Part 560 (the "ITR") during the reporting period.
3. During the current 6-month period, the Department of the Treasury's Office of Foreign Assets Control (FAC) made numerous decisions with respect to applications for licenses to engage in transactions under the ITR, issuing 54 licensing determinations -- both approvals and denials. The majority of denials were in response to requests to extend contract performance beyond the time specified by Executive Order No. 12959 and by FAC general license. Licenses were issued authorizing the continued operation of Iranian diplomatic accounts, powers of attorney, extensions of standby letters of credit, payments for trade transactions pursuant to contracts prior to May 6, 1995, and exportation of certain agricultural products contracted for prior to May 6, 1995. The FAC continues to review under section 560.528 requests for authorization to export and reexport goods, services, and technology to ensure the safety of civil aviation and safe operation of U.S.-origin commercial passenger aircraft in Iran. In light of statutory restrictions applicable to goods and technology involved in these cases, Treasury continues to consult and coordinate with the Departments of State and Commerce on these matters, consistent with section 4 of Executive Order No. 12959.
During the reporting period, FAC administered provisions on services related to maintaining Iranian bank accounts and identified and rejected Iran-related payments not authorized under the ITR. United States banks were notified that they could not process transactions on behalf of accounts held in the name of the Government of Iran or persons in Iran, with the exception of certain transactions related to interest accruals, customary service charges, the exportation of information or informational material, travel-related remittances, donations of articles to relieve human suffering, or lump sum closures of accounts by payment to their owners. United States banks continue to handle certain dollar payment transactions involving Iran between third-country banks that do not involve a direct credit or debit to Iranian accounts. Noncommercial family remittances involving Iran must be routed to or from non-U.S., non-Iranian offshore banks.
The FAC continues to coordinate closely with the Federal Reserve Board, the Federal Reserve Bank of New York, and the California banking authorities concerning the treatment of three Iranian bank agencies -- Banks Sepah, Saderat, and Melli. Licenses have been issued to the Iranian bank agencies authorizing them to pay overhead expenses under the supervision of the California and New York banking departments while meeting obligations incurred prior to May 6, 1995. Authorization expired at the end of December, which had enabled them to make payments to U.S. exporters under letters of credit advised prior to June 6, 1995, where the underlying exports were completed in accordance with the Regulations or a specific license issued by FAC. The FAC also had permitted the agencies to offer discounted advance payments on deferred payment letters of credit under the same conditions.
4. The U.S. Customs Service has continued to effect numerous seizures of Iranian-origin merchandise, primarily carpets, for violation of the import prohibitions of the ITR. Various enforcement actions carried over from previous reporting periods are continuing and new reports of violations are being aggressively pursued.
5. The expenses incurred by the Federal Government in the 6-month period from September 15, 1995, through March 14, 1996, that are directly attributable to the exercise of powers and authorities conferred by the declaration of a national emergency with respect to Iran are approximately $965,000, most of which represents 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 Politico-Military Affairs, and the Office of the Legal Adviser), and the Department of Commerce (the Bureau of Export Administration and the General Counsel's Office).
6. The situation reviewed above continues to involve important diplomatic, financial, and legal interests of the United States and its nationals and presents 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 No. 12957 and the comprehensive economic sanctions imposed by Executive Order No. 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 No. 12957 and No. 12959 continue to advance important objectives in promoting the nonproliferation and antiterrorism 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.
WILLIAM J. CLINTON
THE WHITE HOUSE,
March 11, 1996.
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