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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