FROM THE OFFICE OF PUBLIC AFFAIRS

Chairman D’Amato, and members of the Committee, good morning. Mynameis 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 embargoesand sanctions programs against certain foreign countries, governments, and groups toadvance U.S. foreign policy and national security objectives. In performing our function,we rely principally on the broad authority granted to the President under theInternational Emergency Economic Powers Act ("IEEPA"), the Trading with theEnemy Act, and related statutes. We also enforce a number of Congressionally-mandatedprograms, including certain sections of the Antiterrorism and Effective Death Penalty Actof 1996 affecting terrorism sponsoring countries, and the Cohen-Feinstein Amendmentaffecting Burma. OFAC may be called on to assist in administering available sanctionsprovided in the Iran and Libya Sanctions Act ("ILSA").

The President invokes authority contained in IEEPA by declaring a nationalemergency with respect to an extraordinary and unusual threat arising from outside theUnited 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 alsodescribes the sanctions and typically delegates authority to the Secretary of theTreasury, in consultation with the Department of State, to issue rules and regulations toenforce the prohibitions contained in the order.

OFAC’s current programs include comprehensive asset freezes and/ortrade embargoes against North Korea, Iran, Cuba, Iraq, Libya, certain terrorist groups,and the Cali Cartel. We

also enforce prohibitions on certain financial transfers under theAntiterrorism and Effective Death Penalty Act of 1996 from Syria and Sudan, new investmentin Burma as required under Cohen-Feinstein (Section 570 of the Foreign Operations, ExportFinancing, 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 toresidual blocking controls on Iran and the Federal Republic of Yugoslavia. Other programswe 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 inplace against Iran. In November 1979, in response to Iran’s taking of U.S. hostagesand its threat to default on billions of dollars of loans from U.S. banks, PresidentCarter froze approximately $12 billion in Iranian assets. This blocking action immobilizedthe bulk of Iran’s foreign exchange reserves. This action, along with onset of theIran-Iraq War and other pressures on Iran, resulted in the 1981 Algiers Accords. Thissettlement 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 adjudicateU.S. claims and Iranian counterclaims arising from the Iranian revolution. TheTribunal’s work is ongoing and has resulted in the successful resolution of billionsof dollars of U.S. claims.

In 1987, following Iranian attacks on neutral shipping in the Gulf andother aggressive actions, President Reagan imposed a ban on Iranian imports that continuesto this day.

In 1995, as a result of Iranian sponsorship of international terrorism andIran’s active pursuit of weapons of mass destruction, President Clinton issued twoExecutive orders. Executive Order 12957, issued on March 15, 1995, prohibited U.S. personsfrom entering into contracts for the financing or the overall management or supervision ofthe development of petroleum resources located in Iran or over which Iran claimsjurisdiction. Executive Order 12959, issued on May 6, 1995, substantially broadened the1987 sanctions. The Executive Order of May 6 imposed prohibitions on the exportation ofU.S. goods, technology, and services to Iran, new investment in Iran, the reexportation ofcertain goods, technology and services to Iran, the brokering or trading in goods orservices of Iranian origin, and the facilitation of certain Iran-related trade orinvestment. This effectively ended U.S. commercial activity with respect to Iran.

On August 19, 1997, the President signed Executive Order 13059 clarifyingthe earlier orders and confirming the prohibition on trade and investment activities withrespect to Iran by U.S. persons, wherever located.

Should OFAC be asked to implement any of the specific sanctions identifiedin the Iran and Libya Sanctions Act, we stand ready to faithfully execute allresponsibilities falling on us. I would be pleased to answer any questions you haveconcerning our current restrictions.