Thursday’s action was also the first time the United States has used the authority to seize foreign assets that it gained under the 2001 USA PATRIOT Act.
Some of the assets, which the U.S. government said would be used to help rebuild Iraq after the war, have been frozen since the first Gulf War more than a decade ago.
Treasury Secretary John Snow said Thursday that President Bush had issued an executive order to confiscate the assets, which will be gathered from some 20 U.S. banks and placed into an account at the Federal Reserve Bank of New York.
“The order authorizes Treasury to marshal the assets and to use the funds for the benefit and welfare of the Iraqi people,” Snow said at a press briefing Thursday.
The Iraqi government has remained under U.S. economic sanctions since its invasion of Kuwait on Aug. 2, 1990.
While the United States has imposed sanctions prohibiting trade with several countries or groups, those sanctions usually involve only freezing assets, meaning that access to those funds is denied. Interest is still required to be paid on assets while they are frozen in U.S. banks and ownership does not change hands.
The only other post-World War II case in which the United States has taken another nation’s assets was in 1996 when Cuban funds were seized. That money was used to compensate the families of three Americans who were killed when their planes were shot down by the Cuban military.
Snow said the United States was urging other countries to freeze all assets of Saddam Hussein and his regime. “It’s clear the world must find, freeze and return Iraqi money to the Iraqi people for their future and their benefit,” Snow told the media briefing.
Snow also warned that banks or countries could face tough penalties if they did not cooperate with U.S. efforts.
“The United States is committed to helping to enforce these international obligations and for that reason we reserve the right to take countermeasures and sanctions against any institution that does not comply with the international objectives, including cutting off access to the U.S. financial system under provisions of the U.S. PATRIOT Act,” he said.