(Part 4)

Strengthening the sanction assistance missions

Our first task was an expansion of the sanctions assistance missions. We instructed our embassies in all CSCE capitals to push for increased SAM personnel, resource and funding commitments. In May 1993, Fuerth and I, along with other members of the task force, went on a round robin mission to several European capitals to brief them on sanctions enforcement efforts and to win their support for greater SAM resources. Our SAM expansion plan called for the deployment of a minimum of 135 sanctions monitors in the front- line states. This would permit 24-hour coverage at the key border crossings. We eventually achieved pledges for 185 sanctions monitors coming from more than 20 different countries. For our part, we increased the U.S. SAM commitment from 10 to 27 customs officers. We also took a number of steps to upgrade SAM team communication and mobility capabilities with new vehicles, radio and facsimile equipment, and began to introduce secure computerized technology to link SAMCOM with the U.N. sanctions committee in New York.

A proposal was also formulated by our European partners in February 1993, to appoint a senior Italian diplomat as special sanctions coordinator. His principal role would be to chair and represent the sanctions liaison group in discussions with governments and other international organizations. After a short internal debate as to whether such a position would dilute U.S. influence in managing the SAMs, and a special interview held with the proposed candidate, Fuerth agreed to the arrangement. I developed a very close working relationship with the new sanctions coordinator and, thereafter, we worked hand in hand.

We also championed an increased U.S. effort to bolster the ability of the frontline states to implement the sanctions more effectively. This included the provision of equipment and customs and border control officer training locally, and in the United States and Europe. These measures had lasting benefits for the frontline states well beyond the termination of the Serbia sanctions program.

Curtailing Serbia’s access to oil, gas and other essential commodities

Despite the sanctions, Serbia continued to arrange oil import deals in Bulgaria, Greece, Romania, Ukraine and Russia. U.N. Security Council Resolution 787 had prohibited the transshipment through the FRY of key commodities such as iron, steel, chemicals, vehicles, aircraft and energy supplies, without prior U.N. sanctions committee approval. Such approval involved the issuance of special, case-by-case transshipment licenses that had to be prominently displayed and/or presented when crossing in or out of the FRY. Yet, despite these new requirements, the transit traffic exemption continued to constitute a major loophole used by Serbia and friends to circumvent the sanctions. We were determined to close this loophole and took steps to streamline and more closely control sanctions committee issuance of transshipment authorizations, and to insist that shipments to and through Serbia be carefully verified to assure they did not include contraband.

The Serbs were finding it too easy to circumvent the U.N. licensing system through the repetitive use or fraudulent replication of sanctions committee licenses. A license verification system was needed urgently and we immediately contracted the Volpe National Transportation Systems Center to develop such a verification system. We also pressed for and obtained U.N. sanctions committee approval for the installation and use of the system. We donated a series of computers to the sanctions committee, SAMCOM and the SAM teams for this purpose and securely linked the system through Inmarsat, an independent global mobile satellite company. Thereafter, each license granted by the sanctions committee was serially recorded in the system on issuance. The SAM teams could then access this information on a real time basis to determine the bona fides of any license or cargo. They also entered a notation in the system when such licenses were presented to prevent them from being used again or duplicated.

We won approval from the sanctions liaison group and the frontline states to restrict commercial road traffic to a few major border crossing points for verification. All commercial traffic was to be turned back by customs officers at any unapproved border crossing point. We also instituted the practice of turning back all Serbian-owned commercial vehicles and trains. Border control officers were instructed to closely inspect all vehicles, commercial or private, if the registration, insurance or other documents indicated possible Serbian ownership.

We paid special attention to the movement of barge traffic along the Danube. With increased resources SAM teams were deployed to the Ukraine where they could check cargo being loaded for transport upriver. SAM teams were also staged at the Danube locks in Romania, just below Serbia. Romania also agreed to close the Iron Gate locks to all Serbian owned tugs and barges.

At a meeting with the Western European Union (WEU) in Brussels in April 1993, Fuerth authorized me to press the WEU to take on direct responsibility for policing the Danube. They subsequently agreed to deploy a small WEU flotilla on the Danube in Hungary as well as in Romanian Danube waters just below Serbia. These riverboats added a new capability to stop and search suspect barges plying the Danube.

U.N. Security Council Resolution 820, which was adopted in April 1993, finally closed the transshipment exclusion by requiring that all transshipments receive prior sanctions commit- tee approval. Nevertheless, we still needed to apply great diplomatic pressure on Greece and Macedonia to stop the oil from f lowing north by rail from Thessalonica into Serbia. Reports received from the U.N. Preventive Deployment Force in Macedonia (UNPR EDEP) stationed along the border periodically indicated, however, that undeclared tank car trains were seen crossing the border in both directions. Nevertheless, we knew we were having some success by the number of oil-carrying mule caravans that were also spotted.

Cutting off maritime traffic to and from Federal Republic of Yugoslavia ports

Maritime traffic in and out of the Montenegro ports of Bar and Kotor continued to hamper the effective implementation of sanctions well into the fall of 1993, and periodically thereafter. Serbia used these ports to export some of its more important hard currency earners, such as textiles, lumber and specialized timber. It also used these ports to bring in oil and other essential industrial commodities.

NATO and the WEU deployed ships to the Adriatic beginning in July 1992, to implement the arms embargo and the sanctions measures contained in Resolution 757. These efforts were upgraded after the adoption of Resolution 787 in November 1992, which authorized the interdiction forces to “use such measures commensurate with the specific circumstances as may be necessary… to halt all inward and outward maritime shipping.” Nevertheless, it continued to prove extremely difficult to police the Adriatic Sea sufficiently to stop and inspect all such traffic. Sanctions-busting ships would regularly declare for other benign ports and then pull into Kotor or Bar at the last moment. Small tankers would hug the Albanian coast to prevent inspection by NATO or WEU ships whose operations were con- fined to international waters.

The opportunity to deal with this situation finally presented itself in April 1993, when the Security Council responded to the latest round of Serbian atrocities, including the Srebrenica massacre. It adopted U.N. Security Resolution 820 on April 17,1993, which reflected a number of measures we had worked on during the previous three months. These new measures reflected the most stringent sanctions measures ever adopted by the Security Council. Paragraph 28 put in place a blanket prohibition on all commercial maritime traffic entering the territorial sea of the Federal Republic of Serbia except when authorized on a case-by-case basis by the sanctions committee, or in case of force majeure. Any ship found in this area without a license was, ipso facto, violating the sanctions and could be detained.

Following up on this new measure NATO and the WEU agreed to combine their operations under a single command and control arrangement under the name “Sharp Guard.” Thereafter, only a few ships ran the NATO/WEU blockade and they remained blocked or scuttled in Bar or Kotor for the duration.

Targeting the Federal Republic of Yugoslavia’s maritime fleet and other modes of transportation

U.N. Security Council Resolution 820 also provided us with a firmer basis on which to move in common against all FRY vessels and other commercial means of conveyance.

Paragraphs 24 and 25 broadly directed that countries “impound all vessels, freight vehicles, rolling stock and aircraft,” belonging to the FRY, and authorized them to be seized and forfeited if they were found to be used to violate any of the sanctions measures. The Serbia sanctions task force devoted considerable time and resources following up on this directive. Every FRY owned or operated vessel, including Danube river barges, was traced and the information on its location passed to all relevant ports to assure that the vessels were either denied entry or impounded. This included impounding several FRY vessels in our own East Coast ports. However, this gave rise to a new set of issues with regard to the disposition of the crews on board, and the costs of maintenance. Local solutions had to be devised on case-by-case basis.

In response, Serbian bargemen threatened to block all Danube river traffic passing through Serbia, and were periodically able to do so. Such crises were only resolved under threat of possible military action.

Strengthening financial sanctions

We resolved to strengthen the impact of the financial sanctions imposed by Resolutions 757, 787 and 820. We were intent on hitting Milosevic and the financial backers of his regime in their own pocketbooks. Since we had blocked so much of Serbia’s domestic industrial activity our focus expanded also to Serbia’s extensive overseas business entities. We knew that the Milosevic regime relied heavily on funds generated by these offshore businesses, as well as from remittances from overseas FRY workers. Their activities had become Serbia’s principal source of hard currency badly needed by the FRY to finance its acquisition of key commodities such as oil, military equipment and other items in circumvention of the sanctions. The FRY also engaged in a widening range of illicit activities that included counterfeit goods, cigarette, drugs and arms smuggling. Part of this cash was used to finance regime activities while part lined the pockets of those involved.

But, getting a handle on Serbia’s international financial activities proved to be among the most difficult challenges the task force faced. Banking secrecy laws and the complexity of monitoring money laundering activities and international transfers posed major impediments for effective sanctions enforcement. At the time they underscored the need for greater international financial oversight and, in many cases, the lack of sufficient domestic authority to regulate such activities.

We asked the intelligence community to identify and trace Serbia-related financial transactions and accounts. The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), under the leader- ship of R. Richard Newcomb, played a major role in this effort.

Domestically, the Treasury Department acted quickly to identify and freeze FRY financial and other assets in the United States. And, task force resources were also used to quickly identify and designate the key FRY financial players (entities and individuals) in Serbia and abroad. A list of blocked persons and specially designated nationals was issued pursuant to U.S. executive order 12934 which included members of the Bosnian Serb military or paramilitary forces or civilian authorities, or those who were determined to be located in or controlled from the Federal Republic of Yugoslavia, or acting for or on behalf of the FRY government. This list was updated regularly.

Despite these efforts we knew that the FRY continued to conduct a substantial number of financial transactions using numbered and fictitious named bank accounts in Cyprus, Russia and elsewhere. While the U.S. banking system was generally susceptible to regulatory oversight and compliant with OFAC regulations, this was not the case, in the early 1990s, overseas, where strict bank secrecy was upheld. And, a number of overseas banks, including in Europe, did little to search for, or block, such FRY-related accounts. With these factors in mind we sought, in Resolution 820, to clarify and further broaden national obligations to block all Serbia related financial activities.

We made a special effort to limit the flow of worker and other family remittances to amount commensurate with normal family expenditures and humanitarian requirements. We knew that the regime required that all hard currency remittances be exchanged for growing worthlessness dinars, providing an important source of hard currency for the needs of the Milosevic regime and its support for the war in Bosnia. Electronic and other financial transfers of such remittances were severely limited by EU countries in frequency and amount, and instructions provided to border control officers to inspect and limit the amount of cash that could be conveyed across the border. But the latter was a largely futile technique for stopping such flows.

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