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 May 23, 1989, concerning the national emergency with respect to Iran that was declared in Executive Order No. 12170 of 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 September 6, 1989, including those that occurred since the last report under Executive Order No. 12170, dated May 23, 1989. That report covered events through March 28, 1989.

1. Since the last report, there have been no amendments to the Iranian Assets Control Regulations, 31 C.F.R. Part 535 (the "IACR"), or the Iranian Transactions Regulations, 31 C.F.R. Part 560 (the "ITR"), administered by the Office of Foreign Assets Control ("FAC"). The major focus of licensing activity under the ITR 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 March 28, 1989, FAC has made 151 licensing determinations under the ITR.

During the reporting period, the Customs Service has effected numerous detentions and 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 more than $2.6 million. Numerous additional forfeiture and civil penalties actions are under review.

In the case of United States v. Benham Tahriri, the defendant (who is also subject to forfeiture and civil penalty actions) was sentenced to 90 days in a halfway house and 2 years' probation. Criminal proceedings in eleven (11) additional cases involving several individuals and corporate entities are pending in various jurisdictions. One arrest warrant is outstanding. Indictments have been issued in the case of United States v. Ahmad Elyasian, which is now pending in the United States District Court for the Western District of North Carolina.

Finally, FAC has issued a Directive License to the Federal Reserve Bank of New York ("FRBNY") authorizing disbursement to the Iran-United States Claims Tribunal by FRBNY of $316,361.17, plus accrued interest. This amount represents an award granted by the Tribunal in December 1987 in favor of a U.S. national. An FAC investigation revealed the award had been obtained by fraudulent means. The return of this award to the Tribunal demonstrates to Iran the commitment of the United States to the continued viability of the Tribunal as a legal forum for the resolution of claims arising from the Iranian hostage crisis.

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. In the period since the last report through September 6, 1989, the Tribunal has rendered 20 awards, for a total of 438 awards. Of that total, 321 have been awards in favor of American claimants: 197 of these were awards on agreed terms, authorizing and approving payment of settlements negotiated by the parties, and 124 were decisions adjudicated on the merits. The Tribunal has dismissed a total of 26 other claims on the merits and 59 for jurisdictional reasons. Of the 32 remaining awards, two were withdrawn, and 30 were in favor of Iranian claimants. As of September 6, 1989, awards to successful American claimants from the Security Account held by the NV Settlement Bank stood at $1,282,257,009.20.

As of September 6, 1989, the Security Account has fallen below the required balance of $500 million 30 times. Iran has replenished the account 29 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 once when it was not required by the Accords, for a total of 30 replenishments. The total amount in the Security Account as of September 6, 1989, was $496,118,287.84. The amount in the interest account as of September 6, 1989, was $112,138,515.00. The aggregate amount that has been transferred from the interest account to the Security Account is $667,998,999.39.

On July 7, 1989, Mohammad K. Eshragh resigned from his position as Iranian agent to the Tribunal. He had served as the Iranian agent since the Tribunal's inception. He was replaced by Ali Heyrani-Nobari, who had been serving as Iran's deputy agent.

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 153 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, 16 large claims have been decided. One U.S. company received a judgment of $110 million.

4. The Tribunal continues to process claims of U.S. nationals against Iran of less than $250,000 each. As of September 6, 1989, a total of 394 small claims have been resolved, 32 of them since the last report, as a result of decisions on the merits, awards on agreed terms, or Tribunal orders. Four contested claims have been decided since the last report, raising the total of contested claims decided to 28, 17 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 56 awards on agreed terms reflecting settlements of claims under $250,000.

The Tribunal's current small claims docket includes approximately 160 active cases. It is anticipated that the Tribunal will issue new scheduling orders later this fall to bring its active docket to approximately 225 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 my last report, the Department has filed pleadings in ten government-to-government claims. The Department defended a claim brought by an Iranian individual against the United States in a hearing before the Tribunal. In addition, two claims have been settled.

6. Between March 28, 1989, and October 17, 1989, seven bank syndicates have completed negotiations with Bank Markazi Jomhouri Islami Iran ("Bank Markazi," Iran's central bank) and have been paid a total of $2,016,007.17 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 $2,961,225.28 of Iranian funds 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.

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,

November 14, 1989.