January 21, 1987

To the Congress of the United States:

1. I hereby report to the Congress on developments since my last report of July 30, 1986, 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); and section 505(c) of the International Security and Development Cooperation Act of 1985, 22 U.S.C. 2349aa - 9(c).

2. As set forth in detail in my July 30, 1986, report, in Executive Order No. 12543 I prohibited, with effect from February 1, 1986: (1) the import into the United States from Libya, and (2) the export from the United States to Libya, of any goods or services; (3) transactions relating to transportation to or from Libya; (4) the purchase by U.S. persons of goods for export from Libya to any country; and (5) the performance by U.S. persons of any contract in support of an industrial or other commercial or governmental project in Libya. I further prohibited, with effect from January 7, 1986: (6) the grant or extension of credits or loans by U.S. persons to the Government of Libya (including government-controlled entities); (7) transactions by U.S. persons relating to travel by U.S. citizens or permanent resident aliens to Libya, or activities within Libya, other than for the purpose of: (a) effecting such persons' departure from Libya, (b) performing acts listed in items (1) through (5) above prior to February 1, 1986, or (c) travel for journalistic activity by professional journalists. On January 8, 1986, in Executive Order No. 12544, I augmented the transactional prohibitions contained in Executive Order No. 12543, and ordered the immediate blocking of all property and interests in property of the Government of Libya (including the Central Bank of Libya and other government-controlled entities) then or thereafter located in the United States, or then or thereafter coming within the possession or control of U.S. persons, including their overseas branches.

3. The declaration of national emergency with respect to Libya was made, and the above-noted actions were taken, pursuant to the authority vested in me as President by the Constitution and laws of the United States, including the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.), the National Emergencies Act (50 U.S.C. 1601 et seq.), sections 504 and 505 of the International Security and Development Cooperation Act of 1985 (22 U.S.C. 2349aa - 8 and 9), section 1114 of the Federal Aviation Act of 1958, as amended (49 U.S.C. 1514), and section 301 of title 3 of the United States Code.

4. Since my July 30, 1986, report, the only additional amendment to the Libyan Sanctions Regulations administered by the Office of Foreign Assets Control of the Department of the Treasury was an announcement that the Office of Management and Budget had approved the information collection provisions contained in the Regulations. The announcement was published at 51 Fed. Reg. 28933, August 13, 1986, and a copy is enclosed. Additionally, since July 30, 1986, 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.

5. During the 6-month period ending July 7, 1986, the Office of Foreign Assets Control issued specific licenses to five (5) U.S. oil companies and thirteen (13) service companies, authorizing them to complete the winding down of their Libyan operations after the effective dates of the prohibitions in Executive Orders No. 12543 and 12544. These licenses expired on or before June 30, 1986, and the companies' reports under their specific licenses indicate that they completed their operations in Libya by the June 30, 1986, expiration date. During the current 6-month period, additional specific licenses were issued to the oil companies to authorize them (a) to pay taxes and expenses to the Libyan Government for the period prior to June 30, 1986, and (b) to enter into ``standstill'' and ``operator'' agreements with Libya. These agreements provide, inter alia, for the Government of Libya's recognition of continued American ownership of immovable and inactive assets; call for continuing negotiations for the sale of assets to Libyan entities; suspend the oil companies' contractual obligations to the Government of Libya; and enable Libyan companies to assume operating functions formerly performed by the U.S. companies. Additional licenses have been issued to several of the U.S. service contractor companies authorizing them to pay pre-June 30, 1986, tax obligations out of dinar accounts in Libya and to sell assets in Libya to Libyan-controlled companies.

6. The expenses incurred by the Federal government in the 6-month period from July through December 1986 that are directly attributable to the exercise of powers and authorities conferred by the declaration of the Libyan national emergency are estimated at $1,528,791.00, of which approximately $1,428,791.00 represents wage and salary costs for Federal personnel, and approximately $100,000.00 represents expenses for travel. 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.

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 will continue to report periodically to the Congress on significant developments, pursuant to 50 U.S.C. 1703(c).

Ronald Reagan

The White House,

January 21, 1987.