News

31 October 1997

TEXT: TREASURY OFFICIAL RICHARD NEWCOMB ON IRAN-LIBYA SANCTIONS

(Statement to October 30 Banking Committee hearing) (900)



Washington -- Richard Newcomb, director of the Treasury Department's
Office of Foreign Assets Control (OFAC) outlined for the Senate
Banking Committee October 30 his office's role in administering
"economic embargoes and sanctions programs against certain foreign
countries, governments, and groups to advance U.S. foreign policy and
national security objectives."


Newcomb described U.S. sanctions programs instituted in response to
aggressive actions by Iran in 1979, 1987, 1995 and 1997.


Following is the text of his statement.



(Note: In the following text, "billion" equals 1,000 million.)



(Begin text)



Text as Prepared for Delivery

October 30, 1997



TREASURY OFFICE OF FOREIGN ASSETS CONTROL

DIRECTOR R. RICHARD NEWCOMB

SENATE BANKING, HOUSING AND URBAN AFFAIRS COMMITTEE





Chairman D'Amato, and members of the Committee, good morning. My name
is Richard Newcomb and I am the Director of the Treasury Department's
Office of Foreign Assets Control, also known by its acronym "OFAC."


OFAC is the Treasury Department office that administers economic
embargoes and sanctions programs against certain foreign countries,
governments, and groups to advance U.S. foreign policy and national
security objectives. In performing our function, we rely principally
on the broad authority granted to the President under the
International Emergency Economic Powers Act ("IEEPA"), the Trading
with the Enemy Act, and related statutes. We also enforce a number of
Congressionally-mandated programs, including certain sections of the
Antiterrorism and Effective Death Penalty Act of 1996 affecting
terrorism sponsoring countries, and the Cohen-Feinstein Amendment
affecting Burma. OFAC may be called on to assist in administering
available sanctions provided in the Iran and Libya Sanctions Act
("ILSA").


The President invokes authority contained in IEEPA by declaring a
national emergency with respect to an extraordinary and unusual threat
arising from outside the United States to the national security,
foreign policy, or economy of the United States. Once invoked, IEEPA
grants the President broad powers to deal with the threat.
Presidential emergency declarations are usually contained in an
Executive order which also describes the sanctions and typically
delegates authority to the Secretary of the Treasury, in consultation
with the Department of State, to issue rules and regulations to
enforce the prohibitions contained in the order.


OFAC's current programs include comprehensive asset freezes and/or
trade embargoes against North Korea, Iran, Cuba, Iraq, Libya, certain
terrorist groups, and the Cali Cartel. We also enforce prohibitions on
certain financial transfers under the Antiterrorism and Effective
Death Penalty Act of 1996 from Syria and Sudan, new investment in
Burma as required under Cohen-Feinstein (Section 570 of the Foreign
Operations, Export Financing, and Related Programs Appropriations Act
of 1997) as implemented under IEEPA, and the supply of petroleum or
arms to the UNITA faction in Angola, in addition to residual blocking
controls on Iran and the Federal Republic of Yugoslavia. Other
programs we have administered in the recent past include sanctions
against South Africa, Vietnam, Cambodia, Panama, and Haiti.


I would like to describe briefly the sanctions programs we now have in
place against Iran. In November 1979, in response to Iran's taking of
U.S. hostages and its threat to default on billions of dollars of
loans from U.S. banks, President Carter froze approximately $12
billion in Iranian assets. This blocking action immobilized the bulk
of Iran's foreign exchange reserves. This action, along with onset of
the Iran-Iraq War and other pressures on Iran, resulted in the 1981
Algiers Accords. This settlement resulted in freeing the U.S.
hostages, the payment of outstanding loans to U.S. banks, and the
establishment of the Iran-U.S. Claims Tribunal at The Hague to
adjudicate U.S. claims and Iranian counterclaims arising from the
Iranian revolution. The Tribunal's work is ongoing and has resulted in
the successful resolution of billions of dollars of U.S. claims.


In 1987, following Iranian attacks on neutral shipping in the Gulf and
other aggressive actions, President Reagan imposed a ban on Iranian
imports that continues to this day.


In 1995, as a result of Iranian sponsorship of international terrorism
and Iran's active pursuit of weapons of mass destruction, President
Clinton issued two Executive orders. Executive Order 12957, issued on
March 15, 1995, prohibited U.S. persons from entering into contracts
for the financing or the overall management or supervision of the
development of petroleum resources located in Iran or over which Iran
claims jurisdiction. Executive Order 12959, issued on May 6, 1995,
substantially broadened the 1987 sanctions. The Executive Order of May
6 imposed prohibitions on the exportation of U.S. goods, technology,
and services to Iran, new investment in Iran, the reexportation of
certain goods, technology and services to Iran, the brokering or
trading in goods or services of Iranian origin, and the facilitation
of certain Iran-related trade or investment. This effectively ended
U.S. commercial activity with respect to Iran.


On August 19, 1997, the President signed Executive Order 13059
clarifying the earlier orders and confirming the prohibition on trade
and investment activities with respect to Iran by U.S. persons,
wherever located.


Should OFAC be asked to implement any of the specific sanctions
identified in the Iran and Libya Sanctions Act, we stand ready to
faithfully execute all responsibilities falling on us. I would be
pleased to answer any questions you have concerning our current
restrictions.


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