forget about politics, 28 years were all about net profit and interest

CLINTON REPORT TO CONGRESS ON IRAN NATIONAL EMERGENCY

May 14, 1997

TO THE CONGRESS OF THE UNITED STATES:

I hereby report to the Congress on developments since the lastPresidential report of November 14, 1996, concerning the nationalemergency with respect to Iran that was declared in Executive Order12170 of November 14, 1979. This report is submitted pursuant tosection 204(c) of the International Emergency Economic Powers Act, 50U.S.C. 1703(c) (IEEPA).

This report covers events through March 31,1997. My last report, dated November 14, 1996, covered events throughSeptember 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 InflationAdjustment Act of 1990, as amended by the Debt Collection ImprovementAct of 1996, by adjusting for inflation the amount of the civilmonetary penalties that may be assessed under the Regulations.

The amendment increases the maximum civil monetary penalty provided in theRegulations from $10,000 to $11,000 per violation.The amended Regulations also reflect an amendment to 18 U.S.C. 1001contained in section 330016(1)(L) of Public Law 103-322, September 13,1994, 108 Stat. 2147. Finally, the amendment notes the availability ofhigher criminal fines for violations of IEEPA pursuant to the formulasset 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 tomake progress in arbitrating the claims before it. Since the periodcovered in my last report, the Tribunal has rendered eight awards.This brings the total number of awards rendered to 579, the majorityof 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 SecurityAccount held by the NV Settlement Bank was $2,424,959,689.37.

Since my last report, Iran has failed to replenish the SecurityAccount established by the Algiers Accords to ensure payment of awardsto successful U.S. claimants. Thus, since November 5, 1992, theSecurity Account has continuously remained below the $500 millionbalance required by the Algiers Accords. As of March 24, 1997, thetotal amount in the Security Account was $183,818,133.20, and thetotal amount in the Interest Account was $12,053,880.39. Therefore,the United States continues to pursue Case A/28, filed in September1993, to require Iran to meet its obligation under the Algiers Accordsto replenish the Security Account.

Iran filed its Rejoinder on April8, 1997.The United States also continues to pursue Case A/29 to require Iranto meet its obligation of timely payment of its equal share ofadvances for Tribunal expenses when directed to do so by the Tribunal.The United States filed its Reply to the Iranian Statement of Defenseon October 11, 1996.Also since my last report, the United States appointed Richard Mosk asone of the three U.S. arbitrators on the Tribunal. Judge Mosk, who haspreviously served on the Tribunal and will be joining the Tribunalofficially 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 StatesGovernment claims against Iran and to respond to claims broughtagainst the United States by Iran, in coordination with concernedgovernment agencies.On December 3, 1996, the Tribunal issued its award in Case B/36, theU.S. claim for amounts due from Iran under two World War II militarysurplus property sales agreements. While the Tribunal dismissed theU.S. claim as to one of the agreements on jurisdictional grounds, itfound Iran liable for breach of the second (and larger) agreement andordered Iran to pay the United States principal and interest in theamount of $43,843,826.89. Following payment of the award, Iranrequested the Tribunal to reconsider both the merits of the case andthe calculation of interest; Iran's request was denied by the Tribunalon March 17, 1997.

Under the February 22, 1996, agreement that settled the Iran Air casebefore the International Court of Justice and Iran's bank-relatedclaims against the United States before the Tribunal (reported in myreport of May 17, 1996), the United States agreed to make ex gratiapayments to the families of Iranian victims of the 1988 Iran Air 655shootdown and a fund was established to pay Iranian bank debt owed to U.S. nationals. As of March 17, 1997, payments were authorized to bemade to surviving family members of 125 Iranian victims of the aerialincident, totaling $29,100,000.00. In addition, payment of 28 claimsby U.S. nationals against Iranian banks, totaling $9,002,738.45 wasauthorized.

On December 12, 1996, the Department of State filed the U.S. HearingMemorial and Evidence on Liability in Case A/11. In this case, Iranalleges that the United States failed to perform its obligations underParagraphs 12-14 of the Algiers Accords, relating to the return toIran of assets of the late Shah and his close relatives. A hearingdate has yet to be scheduled.On October 9, 1996, the Tribunal dismissed Case B/58, Iran's claim fordamages arising out of the U.S. operation of Iran's southern railwaysduring the Second World War.

The Tribunal held that it lackedjurisdiction over the claim under Article II, paragraph two, of theClaims Settlement Declaration.

4. Since my last report, the Tribunal conducted two hearings andissued awards in six private claims.

On February 24-25, 1997, ChamberOne held a hearing in a dual national claim, G.E. Davidson v. TheIslamic Republic of Iran, Claim No. 457. The claimant is requestingcompensation for real property that he claims was expropriated by the Government of Iran.

On October 24, 1996, Chamber Two held a hearing inCase 274, Monemi v. The Islamic Republic of Iran, also concerning theclaim 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), awardingthe claimants $510,000 plus interest for Iran's interference with theclaimants' property rights in real property in Velenjak. The claimantsalso were awarded $15,000 in costs. On December 10, 1996, ChamberThree issued a decision in Reza Nemazee v. The Islamic Republic ofIran (AWD 575-4-3), dismissing the expropriation claim for lack ofproof.

On February 25, 1997, Chamber Three issued a decision in DadrasInt'l v. The Islamic Republic of Iran (AWD 578-214-3), dismissing theclaim against Kan Residential Corp. for failure to prove that it is an"agency, instrumentality, or entity controlled by the Government ofIran" and dismissing the claim against Iran for failure to proveexpropriation or other measures affecting property rights. Dadras hadpreviously received a substantial recovery pursuant to a partialaward.

On March 26, 1997, Chamber Two issued a final award in Case389, Westinghouse Electric Corp. v. The Islamic Republic of Iran AirForce (AWD 579-389-2), awarding Westinghouse $2,553,930.25 plusinterest in damages arising from the Iranian Air Force's breach ofcontract with Westinghouse.

Finally, there were two settlements of claims of dual nationals, whichresulted 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), inwhich Iran agreed to pay the claimants $3,150,000, and Lilly MythraFallah 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 importantdiplomatic, financial, and legal interests of the United States andits nationals and presents an unusual challenge to the nationalsecurity and foreign policy of the United States.

The Iranian AssetsControl Regulations issued pursuant to Executive Order 12170 continueto play an important role in structuring our relationship with Iranand in enabling the United States to implement properly the AlgiersAccords. I shall continue to exercise the powers at my disposal todeal with these problems and will continue to report periodically tothe Congress on significant developments.

WILLIAM J. CLINTON
THE WHITE HOUSE
May 13, 1997