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

To the Congress of the United States:

1. I hereby report to the Congress on developments since former President Reagan's last report of January 11, 1989, concerning the national emergency with respect to Libya that was declared in Executive Order No. 12543 of January 7, 1986. This report is submitted pursuant to section 401(c) of the National Emergencies Act, 50 U.S.C. 1641(c); section 204(c) of the International Emergency Economic Powers Act, 50 U.S.C. 1703(c) ("IEEPA"); and section 505(c) of the International Security and Development Cooperation Act of 1985, 22 U.S.C. 2349aa - 9(c).

2. Since the last report on January 11, 1989, there have been no amendments to the Libyan Sanctions Regulations, 31 C.F.R. Part 550 (the "Regulations"), administered by the Office of Foreign Assets Control ("FAC") of the Department of the Treasury. Additionally, since January 11, 1989, there have been no amendments or changes to orders of the Department of Commerce or the Department of Transportation implementing aspects of Executive Order No. 12543 relating to exports from the United States and air transportation, respectively.

3. During the current 6-month period, FAC has issued a limited number of specific licenses to individuals and corporations to permit them to engage in activities that would otherwise be prohibited by the Regulations. Under FAC licensing procedures, 12 individuals registered to remain in Libya with immediate family members. Less than ten licenses were extended authorizing transactions in connection with U.S. persons' filings or renewals of Libyan patents, copyrights, and trademarks.

On January 19, 1989, President Reagan authorized the Treasury Department to modify specific licenses of five U.S. oil companies holding concessions in Libya to permit their resumption of operations in Libya or sale of their concessions to controlled or independent foreign nationals. The decision was made in order to protect U.S. interests from forfeiture or expropriation and to avoid the financial windfall that Libya has been receiving from the sale of U.S.-owned oil under the standstill agreements between the oil companies and Libya. Those agreements, which expired June 30, 1989, provided for a suspension of U.S. oil company operations in Libya to protect the companies from default on their contractual obligations to work their concessions in Libya. The decision to license reentry of the oil companies did not alter the sanctions against Libya; the U.S. trade embargo and the freeze of Libyan assets remain in effect, as do the bans on travel-related transactions and the use of U.S. passports for travel to Libya.

4. Various enforcement actions mentioned in previous reports continue to be pursued. In addition, during the last 6-month period, FAC received payments of a $7,000 civil penalty from a U.S. broker and a $3,000 civil penalty from a Mexican exporter for their respective roles in an attempted transshipment in June 1988 of canned tuna through the United States to Libya.

5. During the 6-month period, the London Commercial Court directed the London branch of Manufacturers Hanover Trust Company to pay to a Libyan bank funds deposited in London and blocked pursuant to Executive Order 12544. In light of the rulings in this case and the 1987 Bankers Trust Company case, previously reported, FAC licensed Manufacturers Hanover Trust Company to pay the Libyan bank. Two further licenses were issued permitting payment of Libyan funds similarly blocked in the London branches of U.S. banks, as to which litigation was pending before the same London court.

6. The expenses incurred by the Federal Government in the 6-month period from January 11, 1989, through the present time that are directly attributable to the exercise of powers and authorities conferred by the declaration of the Libyan national emergency are estimated at $449,471.60. Personnel costs were largely centered in the Department of the Treasury (particularly in the Office of Foreign Assets Control, the Customs Service, the Office of the Assistant Secretary for Enforcement, the Office of the Assistant Secretary for International Affairs, and the Office of the General Counsel), the Department of State, the Department of Commerce, the Department of Justice, the Federal Reserve Board, and the National Security Council staff.

7. The policies and actions of the Government of Libya continue to pose an unusual and extraordinary threat to the national security and foreign policy of the United States. I shall continue to exercise the powers at my disposal to apply economic sanctions against Libya as long as these measures are appropriate, and I will continue to report periodically to the Congress on significant developments as required by law.

George Bush

The White House,

July 19, 1989.