Monday, July 24, 1995
ISSN: 0511-4187; Volume v31; Issue n29
Message to the Congress on the Federal Republic of Yugoslavia (Serbia and
Montenegro). (Pres. Bill Clinton)
Total number of pages for this article: 6 FULL TEXT
� (Serbia and Montenegro)
��July 18, 1995
� To the Congress of the United States:
a national emergency to deal with the threat to the national security,
foreign policy, and economy of the United States arising from actions
and policies of the Governments of Serbia and Montenegro, acting under
the name of the Socialist Federal Republic of Yugoslavia or the Federal
Republic of Yugoslavia, in their involvement in and support for groups
attempting to seize territory in Croatia and the Republic of Bosnia and
Herzegovina by force and violence utilizing, in part, the forces of the
so-called Yugoslav National Army (57 FR 23299, June 2, 1992). I expanded
the national emergency in Executive Order No. 12934 of October 25, 1994,
to address the actions and policies of the Bosnian Serb forces and the
authorities in the territory of the Republic of Bosnia and Herzegovina
that they control. The present report is submitted pursuant to 50 U.S.C.
1641(c) and 1703(c). It discusses Administration actions and expenses
directly related to the exercise of powers and authorities conferred by
the declaration of a national emergency in Executive Order No. 12808 and
Executive Order No. 12934 and to expanded sanctions against the Federal
Republic of Yugoslavia (Serbia and Montenegro) (the "FRY (S/M)") and the
Bosnian Serbs contained in Executive Order No. 12810 of June 5, 1992 (57
FR 24347, June 9, 1992), Executive Order No. 12831 of January 15, 1993
(58 FR 25771, April 27, 1993), and Executive Order No. 12934 of October
25, 1994 (59 FR 54117, October 27, 1994).
� 1. Executive Order No. 12808 blocked all property and interests in
property of the Governments of Serbia and Montenegro, or held in the
name of the former Government of the Socialist Federal Republic of
Yugoslavia or the Government of the Federal Republic of Yugoslavia, then
or thereafter located in the United States or within the possession or
control of U.S. persons, including their overseas branches.
� Subsequently, Executive Order No. 12810 expanded U.S. actions to
implement in the United States the United Nations sanctions against the
FRY (S/M) adopted in United Nations Security Council ("UNSC") Resolution
757 of May 30, 1992. In addition to reaffirming the blocking of FRY
(S/M) Government property, this order prohibited transactions with
respect to the FRY (S/M) involving imports, exports, dealing in
FRY-origin property, air and sea transportation, contract performance,
funds transfers, activity promoting importation or exportation or
dealings in property, and official sports, scientific, technical, or
other cultural representation of, or sponsorship by, the FRY (S/M) in
the United States.
� Executive Order No. 12810 exempted from trade restrictions (1)
transshipments through the FRY (S/M), and (2) activities related to the
United Nations Protection Force ("UNPROFOR"), the Conference on
Yugoslavia, or the European Community Monitor Mission.
� On January 15, 1993, President Bush issued Executive Order No. 12831
to implement new sanctions contained in U.N. Security Council Resolution
787 of November 16, 1992. The order revoked the exemption for
transshipments through the FRY (S/M) contained in Executive Order No.
12810, prohibited transactions within the United States or by a U.S.
person relating to FRY (S/M) vessels and vessels in which a majority or
controlling interest is held by a person or entity in, or operating
from, the FRY (S/M), and stated that all such vessels shall be
considered as vessels of the FRY (S/M), regardless of the flag under
which they sail.
� On April 25, 1993, I issued Executive Order No. 12846 to implement in
the United States the sanctions adopted in UNSC Resolution 820 of April
17, 1993. That resolution called on the Bosnian Serbs to accept the
they failed to do so by April 26, called on member states to take
additional measures to tighten the embargo against the FRY (S/M) and
Serbian controlled areas of the Republic of Bosnia and Herzegovina and
the United Nations Protected Areas in Croatia. Effective April 26, 1993,
the order blocked all property and interests in property of commercial,
industrial, or public utility undertakings or entities organized or
located in the FRY (S/M), including property and interests in property
of entities (wherever organized or located) owned or controlled by such
undertakings or entities, that are or thereafter come within the
possession or control of U.S. persons.
� On October 25, 1994, in view of UNSC Resolution 942 of September 23,
1994, I issued Executive Order No. 12934 in order to take additional
steps with respect to the crisis in the former Yugoslavia. (59 FR 54117,
October 27, 1994.) Executive Order No. 12934 expands the scope of the
national emergency declared in Executive Order No. 12808 to address the
unusual and extraordinary threat to the national security, foreign
policy, and economy of the United States posed by the actions and
policies of the Bosnian Serb forces and the authorities in the territory
in the Republic of Bosnia and Herzegovina that they control, including
conflict in the Republic of Bosnia and Herzegovina.
� The Executive order blocks all property and interests in property that
are in the United States, that hereafter come within the United States,
or that are or hereafter come within the possession or control of United
States persons (including their overseas branches) of: (1) the Bosnian
Serb military and paramilitary forces and the authorities in areas of
the Republic of Bosnia and Herzegovina under the control of those
forces; (2) any entity, including any commercial, industrial, or public
utility undertaking, organized or located in those areas of the Republic
of Bosnia and Herzegovina under the control of Bosnian Serb forces; (3)
any entity, wherever organized or located, which is owned or controlled
directly or indirectly by any person in, or resident in, those areas of
the Republic of Bosnia and Herzegovina under the control of Bosnian Serb
forces; and (4) any person acting for or on behalf of any person within
the scope of the above definitions.
� The Executive order also prohibits the provision or exportation of
services to those areas of the Republic of Bosnia and Herzegovina under
the control of Bosnian Serb forces, or to any person for the purpose of
by a U.S. person. The order also prohibits the entry of any U.S.-flagged
vessel, other than a U.S. naval vessel, into the riverine ports of those
areas of the Republic of Bosnia and Herzegovina under the control of
Bosnia Serb forces. Finally, any transaction by any U.S. person that
evades or avoids, or has the purpose of evading or avoiding, or attempts
to violate any of the prohibitions set forth in the order is prohibited.
Executive Order No. 12934 became effective at 11:59 p.m., e.d.t., on
October 25, 1994.
� 2. The declaration of the national emergency on May 30, 1992, was made
pursuant to the authority vested in the President by the Constitution
and laws of the United States, including the International Emergency
Economic Powers Act (50 U.S.C. 1701 et seq.), the National Emergencies
Act (50 U.S.C. 1601 et seq.), and section 301 of title 3 of the United
States Code. The emergency declaration was reported to the Congress on
May 30, 1992, pursuant to section 204(b) of the International Emergency
Economic Powers Act (50 U.S.C. 1703(b)) and the expansion of that
National Emergency under the same authorities was reported to the
Congress on October 25, 1994. The additional sanctions set forth in
related Executive orders were imposed pursuant to the authority vested
including the statutes cited above, section 1114 of the Federal Aviation
Act (49 U.S.C. App. 1514), and section 5 of the United Nations
Participation Act (22 U.S.C. 287c).
� 3. There have been no amendments to the Federal Republic of Yugoslavia
(Serbia and Montenegro) Sanctions Regulations (the "Regulations"), 31
C.F.R. Part 585, since the last report. The Treasury Department had
previously published 853 names in the Federal Register on November 17,
1994 (59 FR 59460), as part of a comprehensive listing of all blocked
persons and specially designated nationals ("SDNs") of the FRY (S/M).
This list identified individuals and entities determined by the
Department of the Treasury to be owned or controlled by or acting for or
on behalf of the Government of the FRY (S/M), persons in the FRY (S/M),
or entities located or organized in or controlled from the FRY (S/M).
All prohibitions in the Regulations pertaining to the Government of the
FRY (S/M) apply to the entities and individuals identified. U.S.
persons, on notice of the status of such blocked persons and specially
designated nationals, are prohibited from entering into transactions
with them, or transactions in which they have an interest, unless
otherwise exempted or authorized pursuant to the Regulations.
Regulations, Treasury identified 85 individuals as leaders of the
Bosnian Serb forces or civilian authorities in the territories in the
Republic of Bosnia and Herzegovina that they control. Also on February
22, Treasury designated 19 individuals and 23 companies as SDNs of the
FRY (S/M). These designations include FRY (S/M)connected companies
around the world that are being directed from Cyprus, two Cypriot-owned
firms that have had a central role in helping establish and sustain
sanctions-evading FRY (S/M) front companies in Cyprus, and the head of
the FRY (S/M)'s Central Bank who is also the architect of the FRY (S/M)
� Additionally, on March 13, 1995, Treasury named 32 firms and eight
individuals that are part of the Karic Brothers' family network of
companies as SDNs of the FRY (S/M). Their enterprises span the globe and
are especially active in former East Bloc countries. These additions and
amendments, published in the Federal Register on April 18, 1995 (60 FR
19448), bring the current total of Blocked Entities and SDNs of the FRY
(S/M) to 938 and the total number of individuals identified as leaders
of the Bosnian Serb military or paramilitary forces or civilian
that they control to 85. A copy of the notice is attached.
� Treasury's blocking authority as applied to FRY (S/M) subsidiaries and
vessels in the United States has been challenged in court. In Milena
Ship Management Company, Ltd. v. Newcomb, 804 F.Supp. 846, 855, and 859
(E.D.L.A. 1992) aff'd, 995 F.2d 620 (5th Cir. 1993), cert. denied, 114
S.Ct. 877 (1994), involving five ships owned or controlled by FRY (S/M)
entities blocked in various U.S. ports, the blocking authority as
applied to these vessels was upheld. In IPT Company, Inc. v. United
States Department of the Treasury, No. 92 CIV 5542 (S.D.N.Y. 1994), the
district court also upheld the blocking authority as applied to the
property of a Yugoslav subsidiary located in the United States. The
latter case is currently on appeal to the Second Circuit.
� 4. Over the past 6 months, the Departments of State and Treasury have
worked closely with European Union (the "EU") member states and other
U.N. member nations to coordinate implementation of the U.N. sanctions
against the FRY (S/M). This has included visits by assessment teams
formed under the auspices of the United States, the EU, and the
Organization for Security and Cooperation in Europe (the "OSCE") to
sanctions assistance missions ("SAMs") to Albania, Bulgaria, Croatia,
the former Yugoslav Republic of Macedonia, Hungary, Romania, and Ukraine
to assist in monitoring land and Danube River traffic; support for the
International Conference on the Former Yugoslavia ("ICFY") monitoring
missions along the Serbia-Montenegro-Bosnia border; bilateral contacts
between the United States and other countries for the purpose of
tightening financial and trade restrictions on the FRY (S/M); and
ongoing multilateral meetings by financial sanctions enforcement
authorities from various countries to coordinate enforcement efforts and
to exchange technical information.
� 5. In accordance with licensing policy and the Regulations, FAC has
exercised its authority to license certain specific transactions with
respect to the FRY (S/M) that are consistent with U.S. foreign policy
and the Security Council sanctions. During the reporting period, FAC has
issued 109 specific licenses regarding transactions pertaining to the
FRY (S/M) or assets it owns or controls, bringing the total as of April
25, 1995, to 930. Specific licenses have been issued (1) for payment to
U.S. or third-country secured creditors, under certain narrowly-defined
circumstances, for pre-embargo import and export transactions; (2) for
(S/M)-located or controlled entities; (3) for the liquidation or
protection of tangible assets of subsidiaries of FRY (S/M)located or
controlled firms located in the U.S.; (4) for limited transactions
related to FRY (S/M) diplomatic representation in Washington and New
York; (5) for patent, trademark and copyright protection in the FRY
(S/M) not involving payment to the FRY (S/M) Government; (6) for certain
communications, news media, and travel-related transactions; (7) for the
payment of crews' wages, vessel maintenance, and emergency supplies for
FRY (S/M) controlled ships blocked in the United States; (8) for the
removal from the FRY (S/M), or protection within the FRY (S/M), of
certain property owned and controlled by U.S. entities; (9) to assist
the United Nations in its relief operations and the activities of the
U.N. Protection Force; and (10) for payment from funds outside the
United States where a third country has licensed the transaction in
accordance with U.N. sanctions. Pursuant to U.S. regulations
implementing UNSC Resolutions, specific licenses have also been issued
to authorize exportation of food, medicine, and supplies intended for
humanitarian purposes in the FRY (S/M).
� During the past 6 months, FAC has continued to oversee the liquidation
the FRY (S/M). Subsequent to the issuance of Executive Order No. 12846,
all operating licenses issued for these U.S.-located Serbian or
Montenegrin subsidiaries or joint ventures were revoked, and the net
proceeds of the liquidation of their assets placed in blocked accounts.
� In order to reduce the drain on blocked assets caused by continuing to
rent commercial space, FAC arranged to have the blocked personalty,
files, and records of the two Serbian banking institutions in New York
moved to secure storage. The personalty is being liquidated, with the
net proceeds placed in blocked accounts.
��Following the sale of the M/V Kapetan Martinovic in January 1995, five
Yugoslav-owned vessels remain blocked in the United States. Approval of
the UNSC's Serbian sanctions Committee was sought and obtained for the
sale of the M/V Kapetan Martinovic (and the M/V Bor, which was sold in
June 1994) based on U.S. assurances that the sale would comply with four
basic conditions, which assure that both U.S. and U.N. sanctions
objectives with respect to the FRY (S/M) are met: (1) the sale will be
for fair market value; (2) the sale will result in a complete
divestiture of any interest of the FRY (S/M) (or of commercial interests
would result in no economic benefit to the FRY (S/M) (or commercial
interests located in or controlled from the FRY (S/M)); and (4) the net
proceeds of the sale (the gross proceeds less the costs of sale normally
paid by the seller) will be placed in a blocked account in the United
States. Negotiations for the sale of the M/V Bar, now blocked in New
Orleans, are underway and are likely to be concluded prior to my next
� Other than the M/V Bar, the four remaining Yugoslav-owned vessels are
beneficially owned by Jugooceanija Plovidba of Kotor, Montenegro, and
managed by Milena Ship Management Co. Ltd. in Malta. These vessels have
many unpaid U.S. creditors for services and supplies furnished during
the time they have been blocked in the United States; moreover, the
owner appears to have insufficient resources to provide for the future
upkeep and maintenance needs of these vessels and their crews. The
United States is notifying the UNSC's Serbian Sanctions Committee of the
United States's intention to license some or all of these remaining four
vessels upon the owner's request.
� With the FAC-licensed sales of the M/V Kapetan Martinovic and the M/V
and merchant vessels maintained by FAC. The new owners of several
formerly Yugoslav-owned vessels, which have been sold in other
countries, have petitioned FAC to remove those vessels from the list.
FAC, in coordination with the Department of State, is currently
reviewing the sale terms and conditions for those vessels to ascertain
whether they comply with U.N. sanctions objectives and UNSC's Serbian
Sanctions Committee practice.
� During the past 6 months, U.S. financial institutions have continued
to block funds transfers in which there is an interest of the Government
of the FRY (S/M) or an entity or undertaking located in or controlled
from the FRY (S/M), and to stop prohibited transfers to persons in the
FRY (S/M). Such interdicted transfers have accounted for $125.6 million
since the issuance of Executive Order No. 12808, including some $9.3
million during the past 6 months.
� To ensure compliance with the terms of the licenses that have been
issued under the program, stringent reporting requirements are imposed.
More than 279 submissions have been reviewed by FAC since the last
report, and more than 125 compliance cases are currently open.
closely with the U.S. Customs Service to ensure both that prohibited
imports and exports (including those in which the Government of the FRY
(S/M) or Bosnian Serb authorities have an interest) are identified and
interdicted, and that permitted imports and exports move to their
intended destination without undue delay. Violations and suspected
violations of the embargo are being investigated and appropriate
enforcement actions are being taken. There are currently 37 cases under
active investigation. Since the last report, FAC has collected nine
civil penalties totaling nearly $20,000. Of these, five were paid by
U.S. financial institutions for violative funds transfers involving the
Government of the FRY (S/M), persons in the FRY (S/M), or entities
located or organized in or controlled from the FRY (S/M). Three U.S.
companies and one air carrier have also paid penalties related to
exports or unlicensed payments to the Government of the FRY (S/M) or
persons in the FRY (S/M) or other violations of the Regulations.
� 7. The expenses incurred by the Federal Government in the 6-month
period from November 30, 1994, through May 29, 1995, that are directly
attributable to the authorities conferred by the declaration of a
forces and authorities are estimated at about $3.5 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 FAC and its Chief Counsel's Office, and the U.S.
Customs Service), the Department of State, the National Security
Council, the U.S. Coast Guard, and the Department of Commerce.
� 8. The actions and policies of the Government of the FRY (S/M), in its
involvement in and support for groups attempting to seize and hold
territory in the Republics of Croatia and Bosnia and Herzegovina by
force and violence, and the actions and policies of the Bosnian Serb
forces and the authorities in the areas of Bosnia and Herzegovina under
their control, continue to pose an unusual and extraordinary threat to
the national security, foreign policy, and economy of the United States.
The United States remains committed to a multilateral resolution of the
conflict through implementation of the United Nations Security Council
� I shall continue to exercise the powers at my disposal to apply
economic sanctions against the FRY (S/M) and the Bosnian Serb forces,
appropriate, and will continue to report periodically to the Congress on
significant developments pursuant to 50 U.S.C. 1703(c).
� William J. Clinton
� The White House, July 18, 1995.