124. Memorandum From the Director of the Policy Planning Staff (Lake) to Secretary of State Vance 1

This memorandum suggests possible steps to be taken on Iran, covering the three tracks we have been pursuing:

—pressures on Iran;

—public statements on our position; and

—private approaches.

It draws on a number of thoughts suggested by Dave Newsom, and is based on a meeting he held with Iran experts from various bureaus and with Dr. [name not declassified]2

It does not look at Iran in the context of our concerns on Afghanistan. We should, however, in making decisions on our military posture—and on our longer term relations with Iran—bear the Afghanistan angle in mind.

The course we have been pursuing in Iran has positioned us very well, both domestically and in international opinion. We have shown [Page 326] the right combination of firmness and discipline. We have made Iran an international issue. Going for UN sanctions is logical and potentially the most effective next step.

As you are all too aware, however, our national strategy has thus far foundered on the rocks of Khomeini’s personality and the near anarchy in Iran.

In thinking about next steps, therefore, it is important that we keep looking at the situation not only in terms of what makes sense to us (and our public and friends abroad), but also what might move Khomeini. I always find it easy to slip into assumptions and reasoning based on what we would do were we in his shoes.

Experience of past weeks suggests that:

—Actions and statements conveying strength are respected. But threats and signs of impatience do not help.

—The prospect of physical attack on Iran or Khomeini himself tends to make him more obdurate. He is vitally concerned, however, about the future of the revolution and Iran’s integrity as a nation. Good relations with the U.S. are not an important factor for him. But his and his circle’s concerns about U.S. mischief making in Iran are probably sincerely felt. The Revolutionary Council, but not Khomeini, is concerned about international opinion.

—We are not in a “negotiation,” and most likely cannot enter into one with Khomeini. We should not think of strategy in those terms. Our concessions will simply be pocketed and taken as signs of weakness, not taken as signs of good faith or reciprocated.

—The hope has to be that, at some point, he will simply make the decision that conditions require the release of the hostages, and order/persuade the compound captors to do so.

—Our double task is thus a complex one:

a) to create the kinds of pressures that have meaning for him and will make him look for such an out; and

b) without seeming to plead or concede, make it clear that if the hostages were released, some of his concerns could be met.

As suggested below, I believe we are doing better in the first task than in the second.

I. Pressures

We continue to have a range of external pressures we can exert with increasing force against Iran, although we will soon have undertaken most of those on our earlier list.

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A. Diplomatic: We can progressively restrict Iranian diplomatic and consular activity in the U.S.3 through closing some or all of the consulates, concluding by breaking relations. The continued Iranian diplomatic presence in the U.S. has two major roles: to provide assistance to Iranian students in the U.S.; and to communicate public and private views and messages both to Iranian officials and to the hostages. While closing the consulates and/or severing diplomatic ties may effectively signal our growing impatience to Iranian moderates and to Khomeini, breaking relations also could cut off one communication channel, could aggravate the student captors and could undermine the efforts of Iranian moderates.4

A break in diplomatic relations could be important symbolically. We might want to use it later, however, if there is a worsening of the hostages’ situation and at a time when we may want other governments to intensify their pressure through a parallel severing of diplomatic ties. Severing diplomatic ties now or in the immediate future could also deprive Iran of one element of a face-saver in the final resolution of the crisis. At this point in the stalemate we may instead want to advise Agah to look for a protecting power, without giving him a deadline. This move would underscore our growing impatience without incurring the costs of an actual break in relations.

We could send a visible emissary to Iraq to consult on regional developments. This may serve to increase Iran’s concern about its own security and feed the reservations of those in the Revolutionary Council and around Khomeini as to the impact on Iran and on the revolution of Khomeini’s policies. Our interests would in any event be served by a further effort to strengthen our dialogue with Iraq, even if this does not lead to normalization of relations.

B. Economic: Beyond the economic measures we are now taking with our allies, and beyond limited UN sanctions, we could:

1. Move to intensify pressure on Iranians in the U.S. by eliminating the present assets freeze exemption for students. This might be welcomed by the public but may also be open to challenge in the courts. Indigent students might be forced to stay in the U.S. and fall back on local [Page 328] welfare programs, becoming an increased burden on domestic program budgets.

2. A comprehensive U.S. embargo on food to Iran would signal a further toughening of U.S. policy but may have a relatively minor impact on Iran at this time. Iran appears to have found alternate sources for much of the food we had been providing, although the cost to Iran of relying on alternative supplies is likely to be high. U.S. success in persuading other countries (Western Europe, Australia, New Zealand, Thailand and Japan) to halt food shipments in the absence of UN sanctions relating to food would be uncertain. A food embargo would also hit poor Iranians and could lead to retaliation against the hostages—both physically and in denial of adequate food.

3. Alternatively, we could ourselves, or perhaps through the UN, impose a selective food embargo, focusing on items such as meat (25% imported), edible oil (80% imported) and sugar (50% imported) which would impact primarily on the middle class, not the poor, and would thus be easier to defend; would emphasize the decline in living standards for a major component of Khomeini’s support, the Bazaar merchants; and would be relatively easy to monitor in view of the limited sources of supply of these goods (except for sugar). The U.S. has been the principal supplier of edible oil; Australia, New Zealand, and the Bloc provide meat, and sugar comes from a variety of sources (but not the U.S.).

4. We could also ask the Security Council to impose the widest range of economic sanctions against Iran, including food and medicine exports to Iran and all exports from Iran except oil. While such a boycott on trade would bring severe pressure to bear on Khomeini, we are unlikely to get such extensive sanctions through the Security Council.

5. We could impose an indemnity on Iran of some large amount of money per hostage per day, as long as they are held. We could seek such an indemnity either in the next few weeks as part of a campaign of increasing pressure on Iran, or we could wait until the hostages were released and impose the indemnity as a punitive measure.

Seeking the indemnity payment from blocked assets as part of a pressure campaign has certain advantages: it would receive widespread U.S. public support and it would place direct financial pressure on Iran which would mount as long as the hostages were kept; it is a highly visible step which is easily publicized through the media, including VOA. On the other hand, Khomeini and the students so far seem unmoved by the various financial measures we’ve taken and may thus be unmoved by the imposition of an indemnity payment.

6. An international boycott of Iranian oil would severely impair Iranian sources of funds. The consequent shutting down of most of Iran’s oil pumping capacity might in some instances permanently dam[Page 329]age Iran’s oil production capacity. The impact on the Iranian economy and the future recovery of Iran would be serious. This might bring home to Khomeini and the students the costs to the revolution of the present policies; but it would also be damaging to the international economy. An international oil surplus in the next two months might make possible a reallocation of crude oil and facilitate gaining international support for a boycott, but it would be very difficult to achieve under any circumstances. Success would depend on the cooperation of other major OPEC producers in not shutting down production or increasing prices. If Iran decided to sell its oil below the general market price in an effort to break a boycott, it would be difficult to sustain any common front we might manage to create and severe tensions could be created in relations with several of our key allies and third world states.

7. A naval embargo of shipments to and from Iran would enforce not only an oil boycott but all trade sanctions and intensify economic pressures on Iran. It would provide visible evidence of U.S. power which could have a major impact in Iran—both in reminding the ordinary Iranian of U.S. strength and in emboldening those who oppose Khomeini’s policies, including the military, to attempt more direct action. An embargo would probably be welcomed in the U.S. At the same time, it could be difficult to enforce, given the heavy commercial traffic in the Gulf and Arabian Sea; could result in tense exchanges with other countries whose commerce was affected; and potentially could lead to a military confrontation with Iranian or other naval forces which might attempt to force a blockade. It might also galvanize Iranian nationalism against the U.S., including the military.

While I cannot judge this in technical terms, there are a number of advantages to mining the harbors and perhaps channels rather than imposing a blockade with our ships.

C. Political

1. We could intensify current efforts to convey the message that Iran is being weakened by its present policies. Aside from VOA, we could ask cooperating governments, particularly those in Middle Eastern countries and Europe, to include this theme in radio broadcasts in Persian and Arabic. The object would be to strengthen internal doubts in Iran as to the wisdom of holding the hostages and confronting the international community. We could urge all cooperating governments and groups to seek to convey the same message directly to Khomeini through every channel of communication available.

[1 paragraph (18 lines) not declassified]

D. Military: Finally, there are the whole range of military options which are not reviewed here. One early measure could be a display of force but without the actual use of weapons. This could include high-[Page 330]level, high-speed reconnaissance aircraft (such as the SR–71) which would be audible and reflect a U.S. presence to citizens of Tehran; or a fly-over of Iranian territory by a large number of naval aircraft to symbolize U.S. power. The display of force could imply an imminent U.S. intention to use force and thus jeopardize the safety of the hostages. It could also increase Khomeini’s intransigence. It could, however, bring home to the Revolutionary Council that the U.S. has enormous power and that U.S. patience is wearing thin, and thus reinforce the views of those in Iran who are urging Khomeini to find a quick face-saving way out. The display of power would be welcomed domestically but, if we did nothing more, it could actually add to an impression of impotence.

II. Conditions for Release

Out of a proper concern that we stand firm on principle and avoid making concessions that convey weakness, we have not been able to give the Iranians a very clear notion of what would happen if the hostages were released.

Iran (primarily the students and Khomeini) has made three basic demands: the return of the Shah, the return of his assets, and a condemnation of the Shah and the United States for past “crimes” against Iran. Two other issues are also raised: U.S. intervention in the current affairs of Iran and whether U.S. policy after the hostages are released will be one of reconciliation or retribution.

Except to say that the Shah will not be returned, the United States has not tried to answer these demands with any specificity. We have said that the courts are available to address the question of the Shah’s assets and that we will not stand in the way of an airing of Iran’s grievances, once the hostages are released. Our fundamental position remains that the hostages are the issue and their release must precede any discussions. We have avoided commenting on post-hostage policy, except by inference in our accepting language on restraint in both the UNSC and ICJ resolutions.

Now is a good time to convey a fuller message. The Revolutionary Council seems to be moving towards a consensus on the need to resolve the crisis. Khomeini himself may have made encouraging noises to McBride.5 And if there is a gap between a Security Council vote and the time sanctions come into force, the Iranians should know our position as they ponder their course of action.

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If we decide to address Iranian concerns more fully we need to a) define our position and b) find a way of conveying it that does not also convey a weakening of our position.

Bearing in mind the concerns listed on page two, I suggest you consider the following approach.

A. Our Position

We cannot, in any way, condone the involuntary return of the Shah, from Panama or elsewhere.

This leaves five issues:

—A hearing on the “sins” of the Shah and the U.S.;

—Trials of the hostages;

—The Shah’s assets;

—U.S. intervention in current Iranian affairs; and,

—Our future relations.

On the first three, we must not appear to accept the principle of hostage trials or our culpability for past events in Iran. Nor should we imply that, once the hostages are released, we can wipe the slate clean in our relations with Iran.

Within these constraints, however, the following message could be passed to Khomeini and members of the Revolutionary Council:

“—No one should doubt American unity and resolve on this issue.

—But the elements of a resolution of the crisis are available. It is certain that if the hostages were released, the U.S. would:

• Cooperate with the Secretary General in the simultaneous formation of, and subsequent work of, an international commission ‘to investigate allegations of grave violations of human rights and other illegal acts in Iran’ under the Shah. (Note: Ideally the commission should also investigate violations under Khomeini, but this is a non-starter.)

• Also cooperate with Congressional hearings on U.S. relations with Iran. The U.S. would grant visas to representatives of Iran who wished to present their case at such hearings.

• Continue to recognize the right of the Government of Iran to assert in U.S. courts its claims to assets which, in Iran’s view, have been illegally taken out of Iran by those connected with the former regime, as well as Iran’s claims to all other such assets as might later be transferred to the United States. The U.S. would not interfere with this process and would to the extent possible support it by providing information in accordance with U.S. laws under the Freedom of Information Act. The U.S. would not interfere with an attachment of funds but would indicate, if requested by the court, that such a measure was appropriate. The U.S. would also assist with accounting actions in other countries as appropriate.

• When the hostages have been released, the U.S. would lift its freeze on all Iranian assets held overseas by U.S. entities and all assets in this country with the exception of central bank funds. The latter [Page 332] would remain frozen pending settlement of claims between the Governments of the United States and Iran.

• Assuming the Government of Iran would likewise agree, the U.S. would abide strictly by the provisions of the Declaration of Principles of International Law concerning Friendly Relations and Cooperation among States in accordance with the Charter of the United Nations, and by the provisions of the Vienna Convention on Diplomatic Relations.

• [Flatly guarantee that the U.S. will not intervene in Iran’s internal affairs.]6 Guarantee that there will be no military reprisals if the hostages are released.

• Agree to meet with Iranian officials in any appropriate forum to seek a resolution of all issues between us. It would be clear that while the U.S. would be prepared to hear Iran’s grievances, the United States would present its grievances as well. U.S. relations with Iran will inevitably suffer from the events that have taken place. The U.S. and Iran can try to limit the damage and perhaps begin to build for a better future, once the hostages are released.

• [The U.S. would not maintain formal diplomatic relations with Iran, but would agree to the establishment of a joint commission with Iran under the auspices of a protecting power. The joint commission would review bilateral differences, including such issues as settlement of claims, disposition of the ICJ action, spare parts for military equipment purchased by Iran, commercial relations, etc.]

—This is an opportunity Khomeini should seize. It is unclear whether, more weeks down the road, this would still be the U.S. position.7

—Every day that the crisis continues, and the situation in Iran erodes, foreign perceptions of the revolution in Iran erode as well.”

The method of conveying such a position is as important as the position itself. If portrayed as concessions in advance of knowledge the hostages would be released, the hands of the Revolutionary Council might be strengthened, but Khomeini would still be likely simply to conclude that we were weakening.

However, a combination of carefully drawn public statements and direct approaches would have a chance of getting to him.

B. Private Approaches

The purpose of an approach would be to get across to Khomeini the point that there is a way out for him, if he seizes it. It need not be to initiate a negotiation. And, to avoid giving Khomeini an impression of the U.S. as demandeur, I believe the message should not be directly from us.

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I would suggest, therefore, that a non-American of standing in Iranian eyes (McBride? al Madhi?)8 be asked by Waldheim (not by us) to see Khomeini, Beheshti, and other leading members of the Revolutionary Council. He should make it clear that he has an important message for Khomeini himself. Of course, if Waldheim himself goes to Iran, he could convey such a message.

Alternatively, an American with standing in Iranian eyes, either a clergyman or a prominent private citizen, could deliver such a message. The advantages of having an American transmit our views would be that the message would have greater credibility in Khomeini’s eyes. (Khomeini is more likely to be responsive to a clergyman than to a private citizen.) The disadvantage of having an American deliver our message is that the more the message is specifically American, the more we appear to be the demandeur. For this reason, I believe a non-American is far preferable.

To support such an approach, we could make a greater effort to ask concerned Europeans to seek out their own channels to Iran and especially Khomeini to emphasize, on their part, the grave danger to Iran and to the peace of the area of the prolongation of this conflict. The French, for example, might approach Benjadid to suggest a renewed Algerian/Muslim/Arab effort to talk with Khomeini. Now is the time for us to pull out all stops in getting to all the members of the Revolutionary Council that we can, with a special focus on Beheshti.

We could also make a special effort to encourage Islamic representatives to get to Khomeini or those about him. The emphasis in such messages should be on the damage Khomeini is doing to his own revolution and the opportunities he is providing for the left.

C. Public Statements

Such a private approach could be reinforced by a calculated series of public statements by US officials.

These public statements should not concede any points in advance of a decision that the hostages will be released—for example, by simply ruling out interference in Iran’s internal affairs. They should avoid specific threats as well as characterizations of the Iranian position on specific issues, which almost automatically produce denials. And, while never in any way granting the legitimacy of trials or tribunals, they should not focus primary attention on the kinds of general “investigations” the Iranians are hinting at. To do so may only lock the Iranians in. I believe it is better, tactically, to focus our pressures on the main issue of release, and to belittle non-trial “investigations” as charades.

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Our statements could emphasize themes of strength and the implicit advantages of release, along the following lines:

—The holding of hostages is the central issue; there cannot be a resolution of other issues without their release.

—This is far more than an issue between the United States and Iran. A principle of deep concern to every nation is involved. But the United States reserves the legal right, and indeed responsibility, to take necessary unilateral actions in defense of its citizens and international principles.

—The United States is prepared to seek a resolution of all issues between it and Iran, once the hostages are released.

—With the hostages’ release, the way will be clear for Iran to present simultaneously its grievances in any appropriate international forum.

—The restraint of any nation cannot be limitless when its people are held captive and humiliated. The U.S. will continue pressures against Iran and continue to expect international support for those pressures until the hostages are released.

—The United States does not exclude restoring good relations with Iran. Our relations with Iran will inevitably suffer from the events that have taken place. But we can try to build a better future, once the hostages are released.


Strictly in terms of the hostage situation, the best policy might be one of very slowly escalating pressures while events within Iran demonstrated to Khomeini that the hostage situation diverts from rather than assists the process of consolidating his revolution. But we do not have that kind of time. The effect of Iran on other issues including SALT; the danger that the international community could get used to the idea of the hostages’ being held there; the onset of the primary season here; and the well-being of the hostages . . . all argue for trying to resolve the situation more quickly.

I therefore believe we should move relatively soon after Security Council action to further pressures, perhaps including:

—Advising Agah to look for a protecting power (now);

—Seeking to send an emissary to Iraq (now);

—Studying now a selective food embargo (for use in ten days to two weeks); and

—Intensifying efforts (now) to convey the message that the revolution is being weakened. This should be coupled with emphasis on the dangers to Islam of the Russian action in Afghanistan.

I also believe that we should convey now the kind of message outlined above. It might not work. Rational calculations are difficult [Page 335] about an irrational situation. But, if conveyed in the manner suggested, I don’t think we would lose anything by trying. And whatever happens, we might later feel remiss not to have made such a move at about this stage.

  1. Source: Department of State, Records of David D. Newsom, Under Secretary of State for Political Affairs, Subject Files, 1978–1981, Lot 81D154, Diplomatic Strategy for Iran. Secret; Sensitive; Nodis. In a December 28 covering memorandum to Vance, Lake noted that Newsom, Tarnoff, Constable, and Raphel had “gone over this and generally agree.” Copies of the covering memorandum were sent to Christopher, Newsom, Saunders, Tarnoff, Raphel, and Constable.
  2. Memorandum from Newsom to Lake, December 26. (Department of State, Records of David D. Newsom, Under Secretary of State for Political Affairs, Subject Files, 1978–1981, Lot 81D154, Miscellaneous Document)
  3. On December 29, Carter sent a handwritten note to “Cy and/or Warren” that reads: “Push to legal limits the immediate expulsion of Iranian diplomats in accordance with my previous directions. J.C.” Copies were sent to Powell and Brzezinski. (Carter Library, National Security Affairs, Brzezinski Material, Country File, Box 30, Iran 12/10/79–12/31/79) For Carter’s earlier directives, see footnote 10, Document 77 and footnote 6, Document 91.
  4. In a December 26 memorandum to Carter, Vance outlined the pros and cons of breaking diplomatic relations with Iran and suggested that the United States wait to see the results of the Security Council vote on Chapter VII sanctions. (National Archives, RG 59, Central Foreign Policy File, P800011–1018)
  5. Sean McBride, former head of Amnesty International, met on December 23 with members of the Revolutionary Council. (Edward Cody, “Captors Set Festivities for Hostages,” Washington Post, December 24, 1979, p. A1)
  6. These brackets and those in the paragraph below are in the original.
  7. An unknown hand struck through an additional point following this one: “—No one should doubt American unity and resolve on this issue.”
  8. Possible channels are being reviewed for you today by NEA. [Footnote is in the original.]