Letter to the Speaker of the House of Representatives and the President of the Senate Reporting on the Economic Sanctions Against Nicaragua

Dear Mr. Speaker: (Dear Mr. President:)

I hereby report to the Congress on developments since President Reagan's last report of November 9, 1988, concerning the national emergency with respect to Nicaragua that was declared in Executive Order No. 12513 of May 1, 1985. In that order, the President prohibited: (1) all imports into the United States of goods and services of Nicaraguan origin; (2) all exports from the United States of goods to or destined for Nicaragua except those destined for the organized democratic resistance; (3) Nicaraguan air carriers from engaging in air transportation to or from points in the United States; and (4) vessels of Nicaraguan registry from entering United States ports.

1. The declaration of emergency was made pursuant to the authority vested in the President by the Constitution and laws of the United States, including the International Emergency Economic Powers Act, 50 U.S.C. 1701 et seq., and the National Emergencies Act, 50 U.S.C. 1601 et seq. This report is submitted pursuant to 50 U.S.C. 1641(c) and 1703(c).

2. The Office of Foreign Assets Control (FAC) of the Department of the Treasury issued the Nicaraguan Trade Control Regulations implementing the prohibitions in Executive Order No. 12513 effective May 7, 1985, 50 Fed. Reg. 19890 (May 10, 1985).

3. Since the report of November 9, 1988, fewer than 40 applications for licenses have been received with respect to Nicaragua, and the majority of these applications have been granted. Of the licenses issued in this period, some authorized exports for humanitarian purposes, covering donated articles beyond the scope of the exemption to the export ban to assist in the rebuilding of houses and churches that were destroyed by Hurricane Joan in 1988. Many more exports intended to relieve human suffering caused by Hurricane Joan were deemed to fall within the exemption to the export ban and were cleared for export without application for or receipt of a specific license from FAC. Other licenses extended authorizations previously given to acquire intellectual property protection under Nicaraguan law. Certain licenses were issued that authorized the exportation of equipment to La Prensa, the major opposition publication in Nicaragua, as well as to other opposition press groups.

4. Since the last report, the Department of the Treasury completed two significant enforcement actions. The U.S. Customs Service seized a U.S.-controlled Panamanian-flag oil tanker for its role in transshipping U.S.-origin aviation fuel to Nicaragua. A second seizure of the same tanker was effected on the basis of a separate transshipment of aviation fuel from the United States to Nicaragua. Civil forfeiture action against the vessel has been initiated in the United States District Court for the District of Puerto Rico.

The second action involved four principals of two U.S. trading and investment firms who pleaded guilty to criminal charges related to the operation of several front companies that exported computer software and other commercial goods to Nicaragua through Panama. The case was brought in the United States District Court for the Southern District of Florida. One principal received 4 years' incarceration (3 - 1/2 years suspended), 5 months' attendance at a community training center, and 225 hours of community service. The other three individuals were each sentenced to 3 years' incarceration (2 - 1/2 years suspended), 5 months' attendance at a community training center, and 225 hours of community service.

5. The Treasury and State Departments were sued in the United States District Court for the Southern District of Texas by an organization and certain individuals seeking to donate food, medicine, clothing, vehicles, and other items to Nicaragua. Under the International Emergency Economic Powers Act, articles such as food, clothing, and medicine, intended to be used to relieve human suffering, are exempt from export prohibitions. The Government took the position that vehicles, such as passenger cars, trucks, and buses, are fit for a variety of uses and thus do not automatically fall within the exempt category for food, medicine, clothing, and other articles whose intended use is confined to the relief of human suffering. Consequently, Treasury would not permit the transfer of the vehicles to groups in Nicaragua without a specific license. The trial court rejected the Government's position and on September 29, 1988, issued a judgment declaring that the President has no authority to regulate or prohibit, directly or indirectly, donations to an embargoed country of articles that the donor intends to be used to relieve human suffering and that can reasonably be expected to serve that end. The Government has decided against seeking an appeal of this adverse decision and is currently conducting a policy review of the humanitarian relief area.

6. The trade sanctions are an essential element of our policy that seeks a democratic outcome in Nicaragua by diplomatic means. The Sandinista regime made numerous commitments to democratization and national reconciliation when it signed the Esquipulas Agreement in 1987. The Government of Nicaragua reiterated these commitments February 14 at Tesoro Beach, El Salvador, and, in addition, promised to hold free, fair, and open elections in February 1990. I do not believe that current conditions in Nicaragua justify lifting the trade sanctions. If Nicaragua implements its Esquipulas commitments and holds free, fair, and honest elections, I believe the emergency that prompted the prior administration to impose the trade sanctions would largely be resolved.

7. The expenses incurred by the Federal Government in the period from November 1, 1988, through May 1, 1989, that are directly attributable to the exercise of powers and authorities conferred by the declaration of the Nicaraguan national emergency are estimated at $213,577.62, all of which represents wage and salary costs for Federal personnel. Personnel costs were largely centered in the Department of the Treasury (particularly in the Customs Service, as well as in FAC and the Office of the General Counsel), with expenses also incurred by the Department of State and the National Security Council.

8. The policies and actions of the Government of Nicaragua 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 Nicaragua as long as these measures are appropriate and will continue to report periodically to the Congress on expenses and significant developments pursuant to 50 U.S.C. 1641(c) and 1703(c).

Sincerely,

George Bush