News

USIS Washington File

15 May 1997

TEXT: CLINTON REPORT TO CONGRESS ON IRAN NATIONAL EMERGENCY

(Situation presents unusual challenge to U.S. foreign policy) (1690)



Washington -- President Clinton on May 14 reported to Congress on
developments concerning the national emergency with respect to Iran
that was declared in Executive Order 12170 of November 14, 1979.


The Iranian Assets Control Regulations issued pursuant to Executive
Order 12170, under which civil monetary penalties are assessed,
"continue to play an important role in structuring our relationship
with Iran and in enabling the United States to implement properly the
Algiers Accords," the president said.


Clinton reported that the Iran-United States Claims Tribunal (the
"Tribunal"), established at The Hague pursuant to the Algiers Accords,
continues to make progress in arbitrating the claims before it. "Since
the period covered in my last report, the Tribunal has rendered eight
awards. This brings the total number of awards rendered to 579, the
majority of which have been in favor of U.S. claimants," he noted.


He also reported that the Department of State continues to pursue
other United States Government claims against Iran and to respond to
claims brought against the United States by Iran, in coordination with
concerned government agencies.


The situation reviewed in this report, the president said, "continues
to implicate important diplomatic, financial, and legal interests of
the United States and its nationals and presents an unusual challenge
to the national security and foreign policy of the United States."


Following is the text of the president's report, obtained from the
White House Home Page:


(Begin text)



May 14, 1997



TO THE CONGRESS OF THE UNITED STATES:



I hereby report to the Congress on developments since the last
Presidential report of November 14, 1996, concerning the national
emergency with respect to Iran that was declared in Executive Order
12170 of November 14, 1979. This report is submitted pursuant to
section 204(c) of the International Emergency Economic Powers Act, 50
U.S.C. 1703(c) (IEEPA). This report covers events through March 31,
1997. My last report, dated November 14, 1996, covered events through
September 16, 1996.


1. The Iranian Assets Control Regulations, 31 CFR Part 535 (IACR),
were amended on October 21, 1996 (61 Fed. Reg. 54936, October 23,
1996), to implement section 4 of the Federal Civil Penalties Inflation
Adjustment Act of 1990, as amended by the Debt Collection Improvement
Act of 1996, by adjusting for inflation the amount of the civil
monetary penalties that may be assessed under the Regulations. The
amendment increases the maximum civil monetary penalty provided in the
Regulations from $10,000 to $11,000 per violation.


The amended Regulations also reflect an amendment to 18 U.S.C. 1001
contained in section 330016(1)(L) of Public Law 103-322, September 13,
1994, 108 Stat. 2147. Finally, the amendment notes the availability of
higher criminal fines for violations of IEEPA pursuant to the formulas
set forth in 18 U.S.C. 3571. A copy of the amendment is attached.


2. The Iran-United States Claims Tribunal (the "Tribunal"),
established at The Hague pursuant to the Algiers Accords, continues to
make progress in arbitrating the claims before it. Since the period
covered in my last report, the Tribunal has rendered eight awards.
This brings the total number of awards rendered to 579, the majority
of which have been in favor of U.S. claimants. As of March 24, 1997,
the value of awards to successful U.S. claimants from the Security
Account held by the NV Settlement Bank was $2,424,959,689.37.


Since my last report, Iran has failed to replenish the Security
Account established by the Algiers Accords to ensure payment of awards
to successful U.S. claimants. Thus, since November 5, 1992, the
Security Account has continuously remained below the $500 million
balance required by the Algiers Accords. As of March 24, 1997, the
total amount in the Security Account was $183,818,133.20, and the
total amount in the Interest Account was $12,053,880.39. Therefore,
the United States continues to pursue Case A/28, filed in September
1993, to require Iran to meet its obligation under the Algiers Accords
to replenish the Security Account. Iran filed its Rejoinder on April
8, 1997.


The United States also continues to pursue Case A/29 to require Iran
to meet its obligation of timely payment of its equal share of
advances for Tribunal expenses when directed to do so by the Tribunal.
The United States filed its Reply to the Iranian Statement of Defense
on October 11, 1996.


Also since my last report, the United States appointed Richard Mosk as
one of the three U.S. arbitrators on the Tribunal. Judge Mosk, who has
previously served on the Tribunal and will be joining the Tribunal
officially in May of this year, will replace Judge Richard Allison,
who has served on the Tribunal since 1988.


3. The Department of State continues to pursue other United States
Government claims against Iran and to respond to claims brought
against the United States by Iran, in coordination with concerned
government agencies.


On December 3, 1996, the Tribunal issued its award in Case B/36, the
U.S. claim for amounts due from Iran under two World War II military
surplus property sales agreements. While the Tribunal dismissed the
U.S. claim as to one of the agreements on jurisdictional grounds, it
found Iran liable for breach of the second (and larger) agreement and
ordered Iran to pay the United States principal and interest in the
amount of $43,843,826.89. Following payment of the award, Iran
requested the Tribunal to reconsider both the merits of the case and
the calculation of interest; Iran's request was denied by the Tribunal
on March 17, 1997.


Under the February 22, 1996, agreement that settled the Iran Air case
before the International Court of Justice and Iran's bank-related
claims against the United States before the Tribunal (reported in my
report of May 17, 1996), the United States agreed to make ex gratia
payments to the families of Iranian victims of the 1988 Iran Air 655
shootdown and a fund was established to pay Iranian bank debt owed to
U.S. nationals. As of March 17, 1997, payments were authorized to be
made to surviving family members of 125 Iranian victims of the aerial
incident, totaling $29,100,000.00. In addition, payment of 28 claims
by U.S. nationals against Iranian banks, totaling $9,002,738.45 was
authorized.


On December 12, 1996, the Department of State filed the U.S. Hearing
Memorial and Evidence on Liability in Case A/11. In this case, Iran
alleges that the United States failed to perform its obligations under
Paragraphs 12-14 of the Algiers Accords, relating to the return to
Iran of assets of the late Shah and his close relatives. A hearing
date has yet to be scheduled.


On October 9, 1996, the Tribunal dismissed Case B/58, Iran's claim for
damages arising out of the U.S. operation of Iran's southern railways
during the Second World War. The Tribunal held that it lacked
jurisdiction over the claim under Article II, paragraph two, of the
Claims Settlement Declaration.


4. Since my last report, the Tribunal conducted two hearings and
issued awards in six private claims. On February 24-25, 1997, Chamber
One held a hearing in a dual national claim, G.E. Davidson v. The
Islamic Republic of Iran, Claim No. 457. The claimant is requesting
compensation for real property that he claims was expropriated by the
Government of Iran. On October 24, 1996, Chamber Two held a hearing in
Case 274, Monemi v. The Islamic Republic of Iran, also concerning the
claim of a dual national.


On December 2, 1996, Chamber Three issued a decision in Johangir &
Jila Mohtadi v. The Islamic Republic of Iran (AWD 573-271-3), awarding
the claimants $510,000 plus interest for Iran's interference with the
claimants' property rights in real property in Velenjak. The claimants
also were awarded $15,000 in costs. On December 10, 1996, Chamber
Three issued a decision in Reza Nemazee v. The Islamic Republic of
Iran (AWD 575-4-3), dismissing the expropriation claim for lack of
proof. On February 25, 1997, Chamber Three issued a decision in Dadras
Int'l v. The Islamic Republic of Iran (AWD 578-214-3), dismissing the
claim against Kan Residential Corp. for failure to prove that it is an
"agency, instrumentality, or entity controlled by the Government of
Iran" and dismissing the claim against Iran for failure to prove
expropriation or other measures affecting property rights. Dadras had
previously received a substantial recovery pursuant to a partial
award. On March 26, 1997, Chamber Two issued a final award in Case
389, Westinghouse Electric Corp. v. The Islamic Republic of Iran Air
Force (AWD 579-389-2), awarding Westinghouse $2,553,930.25 plus
interest in damages arising from the Iranian Air Force's breach of
contract with Westinghouse.


Finally, there were two settlements of claims of dual nationals, which
resulted in awards on agreed terms. They are Dora Elghanayan, et al.
v. The Islamic Republic of Iran (AAT 576-800/801/802/803/804-3), in
which Iran agreed to pay the claimants $3,150,000, and Lilly Mythra
Fallah Lawrence v. The Islamic Republic of Iran (AAT 577-390/391-1),
in which Iran agreed to pay the claimant $1,000,000.


5. The situation reviewed above continues to implicate important
diplomatic, financial, and legal interests of the United States and
its nationals and presents an unusual challenge to the national
security and foreign policy of the United States. The Iranian Assets
Control Regulations issued pursuant to Executive Order 12170 continue
to play an important role in structuring our relationship with Iran
and in enabling the United States to implement properly the Algiers
Accords. I shall continue to exercise the powers at my disposal to
deal with these problems and will continue to report periodically to
the Congress on significant developments.


WILLIAM J. CLINTON



THE WHITE HOUSE

May 13, 1997



(End text)




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