Foreign Relations of the United States, 1977–1980, Volume XI, Part 1, Iran: Hostage Crisis, November 1979–September 1980

307. Summary of Conclusions of a Special Coordination Committee Meeting¹

Washington, July 1, 1980, 9–10:30 a.m.

SUBJECT

• Iran

PARTICIPANTS

• State

  • Warren Christopher
  • Roberts Owen*
  • Harold Saunders
  • Richard Cooper*

• Treasury

  • Robert Carswell*

• OSD

  • W. Graham Claytor
  • Frank Kramer

• Justice

  • Benjamin Civiletti*
  • Charles Renfrew*

• JCS

  • John Pustay

• DCI

  • Stansfield Turner

• OSTP

  • Frank Press**
  • Benjamin Huberman**

• White House

  • Lloyd Cutler*
  • Hedley Donovan

• NSC

  • David Aaron
  • Gary Sick
  • Al Friendly*

*Not present for last two items.

**Present for first item only.

SUMMARY OF CONCLUSIONS

Mr. Aaron opened the meeting by noting that there had been no SCC meeting on Iran for a month. He reminded all participants to brief agencies on the importance of continued cooperation and coordination since many of the issues involving Iran were of considerable political sensitivity. (U)

1. Iranian Attendance at Scientific Conference. Frank Press summarized the case of a legitimate Iranian scientist who is to present a paper at a recognized scientific conference in Colorado. The National Academy of Science has asked that he be allowed to attend. Dr. Press pointed out that we have used the rules of the International Scientific Union to persuade the USSR to permit Israelis and Taiwanese to attend conferences in the USSR. We have been criticized for refusing access of Soviet scientists to conferences here after the Afghanistan crisis. If we reject Iranians for political reasons, we will again be subject to criticism. The numbers of Iranian cases are extremely small (only two known cases this year), and he felt that the U.S. national interest was served by granting visas in these cases. The SCC agreed that the specific case he raised should be approved. Other cases in the future which differed significantly from this case would be reviewed on a case-by-case basis.² (C)

2. Iranians With Third Country Nationality. Iranians who are also nationals of a third nation (Italy, France, etc.) have been denied visas to enter the U.S. on the grounds that they are Iranian nationals, even though they carry legitimate passports of another nation. This rule has been enforced in order to prevent Iranians from simply buying passports of convenience from nations such as Monaco, Bahamas, Dominica, etc. and using them to circumvent U.S. rules. The SCC agreed unanimously that individuals with legitimate third country nationality (e.g. someone who has acquired British citizenship) should be treated as a citizen of that country, even if born in Iran or of Iranian parents. However, visas should continue to be denied in cases of “convenience” passports for circumvention. (C)

Agree that an Iranian dual national who presents a third country passport shall be treated as a third country national unless the passport was acquired illegally or otherwise does not reflect a bona fide acquisition of third country nationality.³

No. Continue to deny visas to Iranian dual nationals.

3. Payment of Interest on Blocked Iranian Accounts. Banks and other institutions holding blocked Iranian accounts have the use of this money without paying interest on it, which is a clear case of “unjust enrichment.” The Treasury Department believes that interest should be paid into these blocked accounts in order to increase the amount available for claims by hostage families and others at some future point rather than letting the holding institutions reap the benefits. The amount of interest on these blocked funds is very large, up to about $1 billion per year. The SCC agreed that it would be preferable to have the interest available to claimants rather than oil companies and banks; however, the public perception would probably be that we were forcing U.S. companies to pay interest to Iranians. In fact, Iranians might acquire some or all of this interest at some future date depending on the negotiations leading to release of the hostages. The SCC agreed that there was no logical basis for starting accrual of interest at this point, eight months after the freeze. Beginning at this point would constitute a windfall of about $600 million for the institutions holding blocked accounts. The Attorney General believes that a retroactive order will be tested in court and will probably fail eventually. However, all agreed that the outcome of litigation was uncertain, and there was no adequate explanation for why we should begin accrual of interest today as opposed to last month or next month. It would be better to make it retroactive and take our chances in court. Treasury has already informally advised companies that interest would probably be required. (S)

All agreed that those institutions holding blocked Iranian accounts should be notified that they are required to pay interest on the Iranian funds retroactive to the date of the freeze, with the interest to remain in the frozen accounts. Treasury will take all possible steps to insure that this is understood as making these funds available to future claimants rather than the banks and oil companies holding these funds and explain that the timing of our decision is related to the preliminary completion of our census of frozen assets. (C)

Approve.⁴

Disapprove payment of interest.

Disapprove retroactive payment of interest.

4. Sanctions Against Iran. Through intelligence, we have identified 132 cases of material being transshipped to Iran via third countries as a means of circumventing the sanctions.⁵ Six of these involve U.S. companies. We are unable to determine from the intelligence the size of these transactions. Also, because of legal rules on use of intelligence, NSA will not provide the names of the U.S. companies to Treasury for possible enforcement without a prior ruling by Justice. The SCC agreed that the DCI should make available to the State Department the names of foreign companies involved in this trade, and State will raise the issue on a classified basis with the governments concerned. The SCC also agreed that Treasury should be provided the names of the companies for purposes of a preliminary investigation to determine the magnitude of the trade by U.S. entities. Based on this preliminary investigation, a further decision will be taken by the SCC about any possible enforcement action. (TS)

Approve.⁶

Disapprove contacting foreign governments.

Disapprove use of intelligence information for a preliminary investigation of illegal U.S. trade by Treasury.

5. Security Council Resolution on ICJ Decision.⁷ Ambassador McHenry has been conducting consultations in New York about the possible introduction of a SC resolution incorporating the ICJ decision ordering Iran to release the U.S. hostages. McHenry believes that, if we are willing to press the issue, we can probably get nine votes in the SC for such a resolution. However, he has been advised against such a resolution by the Chinese, the British and Bangladesh. The Soviets have also indicated that the SC debate—and possibly the resolution—would have to deal with the U.S. rescue attempt as well as the ICJ decision. Other nations have also mentioned the likelihood of the rescue mission being discussed. Mr. Christopher said, based on these findings, he would not recommend going ahead with a SC resolution at this time. Such a resolution would almost certainly do nothing to help the hostages, and there is nothing which would justify proceeding at this time. We might wish to proceed with a resolution in the event of an action-forcing development such as the Iranians starting trials. Mr. Cutler said it had been five weeks since the ICJ decision. That was surely long enough for the Iranians to act if they intended to. If we do nothing, we run the risk of sleeping on our rights and of trivializing the ICJ decision by not following up in the SC. Mr. Donovan commented that since the Iranians did nothing in response to the previous SC resolution, he anticipated no public question about why we were not going to the SC again in this case. Mr. Claytor said he would prefer to stand on the ICJ decision; we could be worse off if we went to the SC. All agreed that we should not introduce a SC resolution at this time. (S)

Agree.⁸

Introduce a SC resolution based on the ICJ decision.

6. Iranian Claims to the ICJ. Mr. Cutler pointed out that we could suggest the ICJ as a proper forum for Iran to present claims against the U.S. Mr. Saunders noted that the problem was not the lack of a forum—it was Iranian unwillingness to take advantage of the forums available to them. Mr. Owen, the Legal Advisor of the State Department, noted that he opposed encouraging use of the ICJ for such claims. If the Iranians decide to use the ICJ, we could only accept. However, there is always the chance that we would lose a case charging us with illegal interference in Iran’s internal affairs. This could set an unfortunate precedent and could even involve massive reparation judgments. All agreed that this was not something we should suggest to the Iranians at this point. (S)

Agree.⁹

Other.

At that point the meeting was reduced to the restricted membership.

7. Diplomatic Strategy. Mr. Christopher summarized the results of our recent contacts as indicating that “All roads lead to the Parliament.” We now have the most active acknowledged channel we have had through the Swiss. Ambassador Lang meets with Bani-Sadr and Ghotbzadeh, but both of them say nothing will happen until the Majlis convenes. That will probably be around the end of July. We are trying to analyze the composition of the Majlis, but it is likely that any decision will come as a result of internal dynamics, not because of what we can do from the outside. The Iranians have to sort out their own power struggle, including the choice of a Prime Minister, before they can address the hostage question. Even if a decision is taken, it will probably have to go back to Khomeini. The formula they are considering is for the Majlis formally to empower the government to work out the problem, rather than the Majlis itself working out the details. Most of the Iranians—even Beheshti—now say that the hostage crisis should be put behind them; but they cannot figure out how to do it. We are poised to play an active role, including good working contacts with European governments, but we are unable to act until the Iranians have sorted out their problem. (S)

Mr. Aaron noted that the hostage situation is a very serious problem in this country. A total of 70% of the American people believe that the foreign policy of this Administration is not successful, and that can be traced directly to the hostages and to the Cuban situation. It appears the Iranians are learning to live with the problem indefinitely. If we can think of any additional action, we should try. Mr. Christopher doubted we could help the situation by increasing the visibility without a solution. Mr. Aaron said the problem now is there is no hope. There is the feeling the hostages have vanished. We should do everything possible to locate them.¹⁰ Admiral Turner said that we suspect many of the hostages remain in Tehran. We are fairly confident some of them are at two former U.S. consulates, although they may be at 5–6 other places. We are using all our capabilities to locate them. (S)

8. Shah’s Illness. Ghotbzadeh believes that the Shah’s death would improve the political situation. Others think it would be of no significance. We have a series of decisions to make about our public posture and response in the event of his death. State was preparing a cable to Roy Atherton, and State and the NSC staff would coordinate on working out a public position.¹¹ (S)

1. Source: Carter Library, National Security Council, NSC Institutional Files (H–Files), Box 114, SCC 223 Iran 07/01/80. Top Secret. The meeting took place in the White House Situation Room. Carter wrote “Zbig, J” in the upper right corner.
2. Carter approved the item with a checkmark and initialed “J” in the right margin.
3. Carter approved this option with a checkmark, underlined the words “bona fide,” and wrote in the right margin: “Do not permit abuse.”
4. Carter approved this option with a checkmark and wrote in the right margin: “Do not specify too tightly ultimate use of accrued funds. Ok not to go to banks and/or oil companies.”
5. According to Turner’s talking points for the July 1 meeting, the allies were not intentionally allowing violations of sanctions, but “loose wording, liberal translations, and outright clandestine circumvention is resulting in a large-scale continuation of shipments to Iran from sanction participants. We doubt the Allies would take the steps necessary to effectively close or substantially narrow these loopholes.” (Talking Points for 1 July 1980 SCC Meeting, “Allied Honoring of Sanctions Against Iran,” undated; Central Intelligence Agency, Office of the Director of Central Intelligence, Job 81B00401R: Subject Files of the Presidential Briefing Coordinator, Box 13, Folder 3: SCC Meeting Iran)
6. Carter approved this option with a checkmark and initialed “J” in the right margin.
7. See footnote 7, Document 291.
8. Carter approved this option with a checkmark and initialed “J” in the right margin.
9. Carter approved this option with a checkmark and initialed “J” in the right margin.
10. Carter wrote in the left margin: “I agree with Aaron. Explore every possibility.”
11. Turner’s talking points for the July 1 meeting emphasized that the Shah’s death would neither change the balance of power within Iran nor lead to release of the hostages. However, the United States could use his death advantageously as a decisive break with the past relationship, a way to persuade world opinion that the rationale for holding the hostages was gone, or as a starting point for a new round of negotiations. The talking points also suggested that the United States “be prepared to counter charges that we killed the Shah or that he is not really dead.” Lastly, the talking points recommended working with Sadat to guarantee that the funeral did not require government representatives. (Talking Points for 1 July 1980 SCC Meeting, “The Hostages and the Shah’s Health,” undated; Central Intelligence Agency, Office of the Director of Central Intelligence, Job 81B00401R: Subject Files of the Presidential Briefing Coordinator, Box 13, Folder 3: SCC Meeting Iran) The CIA also prepared a paper, “U.S. Options Toward Shah’s Funeral,” July 7. (Carter Library, National Security Affairs, Staff Material, Office Files, Box 65, Outside the System File, Iran Non-Meetings Hostage Crisis 4/80–11/80)