Message to the Congress Reporting on the National Emergency With Respect to Iran

To the Congress of the United States:

I hereby report to the Congress on developments since the last report of November 14, 1989, concerning the national emergency with respect to Iran that was declared in Executive Order No. 12170, dated November 14, 1979, and matters relating to Executive Order No. 12613 of October 29, 1987. This report is submitted pursuant to section 204(c) of the International Emergency Economic Powers Act (50 U.S.C. 1703(c)), and section 505(c) of the International Security and Development Cooperation Act of 1985 (22 U.S.C. 2349aa - 9). This report covers events through March 31, 1990, including those that occurred since the last report under Executive Order No. 12170, dated November 14, 1989. That report covered events through September 6, 1989.

1. Since the last report, there have been no amendments to the Iranian Assets Control Regulations, 31 C.F.R. Part 535 (the "IACRs"), or the Iranian Transactions Regulations, 31 C.F.R. Part 560 (the "ITRs"), administered by the Office of Foreign Assets Control ("FAC"). The major focus of licensing activity under the ITRs remains the importation of certain non-fungible Iranian-origin goods, principally carpets, which were located outside Iran before the embargo was imposed, and where no payment or benefit accrued to Iran after the effective date of the embargo. Since September 6, 1989, FAC has made 333 licensing determinations under the ITRs.

During the reporting period, the Customs Service has effected numerous seizures of Iranian-origin merchandise, primarily carpets, caviar, and pistachios, for violations of the Iranian Transactions Regulations. FAC and Customs Service investigations of these violations have resulted in forfeiture actions and imposition of civil monetary penalties amounting to $409,736. Numerous additional forfeiture and civil penalties actions are under review.

In the case of United States v. Ahmad Elyasian, the defendant was sentenced to 2 years' probation, a $3,000 fine, and the merchandise was forfeited. Criminal proceedings are pending in various jurisdictions involving several individuals and corporate entities. One arrest warrant is outstanding.

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 last report, the Tribunal has rendered 38 awards, for a total of 476 awards. Of that total, 341 have been awards in favor of American claimants: 210 of these were awards on agreed terms, authorizing and approving payments of settlements negotiated by the parties, and 131 were decisions adjudicated on the merits. The Tribunal has dismissed a total of 30 other claims on the merits and 65 for jurisdictional reasons. Of the 40 remaining awards, 2 were withdrawn and 38 were in favor of Iranian claimants. As of March 31, 1990, awards to successful American claimants from the Security Account held by the NV Settlement Bank stood at $1,296,219,879.08.

As of March 31, 1990, the Security Account has fallen below the required balance of $500 million 33 times. Iran has replenished the account 33 times, as required by the Algiers Accords, by transferring funds from the separate account held by the NV Settlement Bank in which interest on the Security Account is deposited. Iran has also replenished the account twice when it was not required by the Accords, for a total of 35 replenishments. This figure includes the transfer of $243 million to the Security Account on November 22, 1989, from Dollar Account No. 2 held at the Bank of England. The total amount in the Security Account as of March 31, 1990, was $643,268,583.07. The amount in the interest account as of March 31, 1990, was $118,520,896.63. The aggregate amount that has been transferred from the interest account to the Security Account is $695,648,999.39.

3. The Tribunal continues to make progress in the arbitration of claims of U.S. nationals for $250,000 or more. Over 70 percent of the nonbank claims have now been disposed of through adjudication, settlement, or voluntary withdrawal, leaving 145 such claims on the docket. The largest of the large claims, the progress of which has been slowed by their complexity, are finally being decided, sometimes with sizable damage awards to the U.S. claimant. Since the last report, eight large claims have been decided.

4. The Tribunal continues to process claims of U.S. nationals against Iran of less than $250,000 each. As of March 31, 1990, a total of 432 small claims have been resolved, 38 of them since the last report, as a result of decisions on the merits, awards on agreed terms, or Tribunal orders. Eight contested claims have been decided since the last report, raising the total number of contested claims decided to 36, 18 of which favored the American claimant. These decisions will help in establishing guidelines for the adjudication or settlement of similar claims. To date, American claimants have also received 72 awards on agreed terms reflecting settlements of claims under $250,000. The Tribunal's current small claims docket includes approximately 200 active cases.

5. In coordination with concerned government agencies, the Department of State continues to present U.S. Government claims against Iran, as well as responses by the U.S. Government to claims brought against it by Iran. Since the last report, the Department has filed pleadings in eight government-to-government claims. The Department defended a claim concerning standby letters of credit brought by Iran against the United States in a hearing before the Tribunal. In addition, 15 claims have been settled.

6. Since the last report, nine bank syndicates have completed negotiations with Bank Markazi Jomhouri Islami Iran ("Bank Markazi," Iran's central bank) and have been paid a total of $2,403,504.53 for interest accruing for the period January 1 - 18, 1981 ("January Interest"). These payments were made from Dollar Account No. 1 at the Federal Reserve Bank of New York ("FRBNY"). Moreover, under the April 13, 1988, agreement between the FRBNY and Bank Markazi, the FRBNY returned $1,748,999.00 of Iranian funds to Bank Markazi. This amount includes settlement amounts for two syndicates that made no claim to the funds held on their behalf in Dollar Account No 1. All such funds were consequently returned to Bank Markazi. That transfer represents the excess of amounts reserved in Dollar Account No. 1 to pay off each bank syndicate with a claim for January Interest against Bank Markazi.

On November 3, 1989, the United States and Iran agreed to the disposition of $810 million in Dollar Account No. 2 at the Bank of England that was not needed to pay remaining claims against that account. Pursuant to that agreement, on November 22, 1989, $243 million was transferred to the Security Account and $567 million was returned to Iran. The latter payment was made in accordance with the Algiers Accords, which calls for the return of excess funds in Dollar Account No. 2 to Iran.

7. Since the last report, there have been no amendments to the Iranian Assets Control Regulations, 31 C.F.R. Part 535, administered by the Office of Foreign Assets Control. There have been no amendments to the Iranian Transactions Regulations, 31 C.F.R. Part 560, since their publication on November 17, 1988.

8. 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 No. 12170 continue to play an important role in structuring our relationship with Iran and in enabling the United States properly to implement the Algiers Accords. Similarly, the Iranian Transactions Regulations issued pursuant to Executive Order No. 12613 continue to advance important objectives in combatting international terrorism. 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.

George Bush

The White House,

May 14, 1990.