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

70. Summary of Conclusions of a Special Coordination Committee Meeting¹

Washington, November 29, 1979, 8:45–9:45 a.m.

SUBJECT

• Iran

PARTICIPANTS

• The Vice President

• State

  • Secretary Cyrus Vance
  • Warren Christopher
  • Richard Cooper**
  • Harold Saunders

• Defense

  • Secretary Harold Brown
  • W. Graham Claytor

• JCS

  • General David Jones
  • General John Pustay

• CIA

  • Admiral Stansfield Turner
  • Frank Carlucci

• Justice

  • Attorney General Benj. Civiletti**
  • John Shenefield**

• Treasury

  • Robert Carswell**
  • Anthony Solomon**

• White House

  • Zbigniew Brzezinski
  • Hamilton Jordan
  • Lloyd Cutler**
  • Stuart Eizenstat**
  • Charles Kirbo

• NSC

  • William Odom
  • Gary Sick

** Present only for discussion of domestic issues.

SUMMARY OF CONCLUSIONS

Domestic Issues:

1. Update. The Secretary General plans to continue with the scheduled Security Council meeting on Saturday² night whether or not the Foreign Minister comes from Iran. The U.S. filed its case with the International Court of Justice this morning and we anticipate that the ICJ will meet next week. We have two low level reports that indicate the Soviets will not interfere if we should intervene in Iran. This appears to be a signal and is quite unexpected. (S)

2. Economic Actions. Treasury presented a paper outlining options available to us to increase the financial squeeze on Iran (attached). Option 4 would be felt immediately upon adoption by foreign central banks and would have a significant impact. Options 5 and 6 would not have any noticeable impact for months. There will be considerable resistance from the British and others to option 4, and it will be necessary to twist their arms rather hard to insure their cooperation.³ Our best argument will be that this action is preferable to the more severe military actions necessary to pressure Iran, which would damage allied interests in Iran far more. All agreed it would not be desirable to approach the allies on this issue until we are ready to make a strong case at the highest level. That point is most likely to occur after Iran has rejected a Security Council resolution. State and Treasury will prepare Presidential messages to be available by Saturday for consideration and decision by the President. In the meantime, Secretary Vance believes strongly that we should take no additional actions toward Iran until after Ashura and the meeting of the Security Council.⁴ (S)

3. Iranian Assets. A number of court cases are building up, especially in London, challenging the legality of the freeze of Iranian assets in foreign branches of U.S. banks. The principal case, involving the Bank of America, will probably be heard in London next week. We are likely to lose the judgment, although appeals can stretch the process out for several additional weeks. This fact is an additional argument for going ahead with Option 4 in the relatively near future, to avoid the impression that our position is unravelling. (S)

4. Student Remittances. Licenses have been issued for $20 million in payments to Iranian students. Another $20 million will be licensed next week. The program is about $1 billion per year. All of this is new money being brought in for that specific purpose, consonant with the previous decision to license student remittances. (C)

5. Japan. Mr. Carswell will talk to the Japanese at a high level today and will make clear our displeasure at their lack of cooperativeness on financial matters regarding Iran. (C)

6. U.S. Payments. The SCC agreed that Treasury should issue licenses for about $100 million in new Iranian money to pay U.S. creditors for exports shipped before the freeze went into effect.⁵ (C)

7. Transfers out of Dollar Accounts. Iran has offered to pay interest on a loan for which Chemical Bank is the agent, if it is licensed to be paid in Switzerland in other than dollars. The amount of this payment is about $7 million. The SCC recommended that we insist on payment in this country in dollars as specified in the contract. We do not want to license moves away from the dollar, even though the company may not get its payment right away.⁶ (C)

8. Immigration. A total of 26,000 students have been interviewed; 20,650 are in status; 3,600 are technically out of status; 1,900 have been asked to provide additional information; 405 have chosen voluntary departure; 300 have requested asylum. There is some reluctance of many Iranians to choose asylum out of fear of retribution. An interpretation of INS regulations is being prepared which will specify the conditions for exception to deportation procedures in humanitarian cases.⁷ The legality of the original order will be tested in court next week; Justice feels that its legal position is good. (C)

Political-Military Issues:

1. Hostages. We will continue hammering away in every available public and private channel to get access by neutral observers to the hostages.⁸ (U)

2. The Shah now wants to leave and has asked us through intermediaries to make arrangements to go to Mexico. We approached the Mexicans at the Presidential level last night. Sunday is apparently the earliest date a transfer can be arranged, and more pressure on the Mexicans may be required. State is helping to arrange secure transport to the airport in New York. Secretary Vance took note of the President’s concern that the move take place before Khomeini can lock himself into an ultimatum linking the treatment of the hostages to the Shah’s departure. However, Secretary Vance does not believe the arrangements can be completed with the Mexicans before Sunday. (TS)

3. Saudi Arabia. Ambassador West is to see Crown Prince Fahd today to ask his views on the threat to Americans in Saudi Arabia. The SCC recognized that the possibility of a U.S. evacuation cannot be divorced from the larger question of U.S. strategic position in the region. Dr. Brzezinski noted that an evacuation could seriously destabilize the regime and undermine our strategic position in the entire region. It would be a signal to the Saudis that the U.S. is disengaging from the region—and that could have the gravest consequences for our vital interests.⁹ Accordingly, we should ask the Saudis to assure the security of our people (and not talk of evacuation), and we should even consider offering U.S. military assistance—including the 82nd Airborne if required—to insure the security of the Eastern Province, if the Saudis would welcome it. This question will be reviewed further after we hear Fahd’s response. (TS)

4. Reduction at U.S. Embassies. Dr. Brzezinski raised the question of the impact of the reduction order, particularly in Oman which appeared to be quite secure. Secretary Vance said that he was not confident of the security of any of the smaller states in that area. It is only a handful of people being removed in any event, and he was inclined to let the order proceed despite a few squawks of protest. The President’s meeting with American Moslem organizations next week will provide a useful forum to address the status of our relations with the Islamic states. (S)

5. Espionage Charges. We expect the Iranians to make a major case about U.S. espionage activities at the embassy in Tehran.¹⁰ In general, we would prefer to have that information come out in an international forum rather than in trials of our people. It is certain to be a major media event, and we will have to be carefully prepared in our responses. State and CIA are working on a strategy paper which will be ready for tomorrow’s meeting. The preliminary reactions of the SCC were to avoid any point-by-point defense of the charges, to claim that the information includes forgeries and suspect documents, and to avoid comment on specific allegations. (S)

Attachment

Paper Prepared in the Department of the Treasury ¹¹

Washington, November 28, 1979

ADDITIONAL OPTIONS
FOR FINANCIAL MEASURES
AGAINST GOVERNMENT OF IRAN

The following are a series of steps that could be taken in the financial area to interdict Iranian financial transactions. Options 4 through 9 (of which Options 4, 5 and 6 are potentially the most significant) could not be implemented without the wholehearted support of the government authorities of our key foreign allies. In our view, that support can only be obtained by forceful intervention at the political level to the effect that the assistance requested is necessary as part of the common defense of the Western alliance. In our view, the financial and central bank authorities will not act on their own because to act will cause difficulties and turmoil in their markets.

1. Continue the present policy of eliminating obstacles to setoff or attachment and maintaining neutrality as to whether defaults are declared and loans accelerated.

2. Encourage U.S. to declare defaults by Iran and vote for acceleration of their loans.

• We are currently somewhere between options 1 and 2 in our posture with the U.S. and other banks.

3. Have Eximbank publicly declare a default and accelerate its loans to Iran. [In addition, Eximbank could proceed to attach Iranian assets in a foreign jurisdiction.]

• This option would publicly reveal a U.S. decision on default and might be of some marginal assistance to U.S. banks and others in making setoffs or obtaining attachments.

4. Request the key foreign central banks to advise their banks to proceed with calling defaults on Iranian loans and collecting by way of setoff or attachment.

• This option would have the effect of cascading defaults and loan accelerations. It would tie up all Iranian financial transactions for some period of time. It might be difficult legally for some of our allies.

5. Obtain agreement from the major purchasers of Iranian oil that they will only purchase, or facilitate the purchase of Iranian oil, through dollar contracts.

6. Obtain the agreement of our major allies to prohibit their banks from opening new non-dollar accounts for Iranian entities.

• Options 5 and 6 are complementary and over the longer run would serve to buttress the position of the dollar and the international monetary system.

7. Obtain agreement from foreign banks that they will not consent to Iranian requests to conceal the identity of any Iranian party involved in financial transactions.

8. Obtain agreement from foreign banks that they will not consent to any Iranian requests to modify existing transactions to eliminate any U.S. party.

9. Obtain agreement from foreign banks and other foreign parties that they will not consent to requests to delay completion of existing Iranian transactions.

10. Obtain agreement from our major allies that they would not guarantee any export obligations for Iran.

1. Source: Carter Library, National Security Affairs, Staff Material, Office File, Box 17, SCC Meeting #213 held 11/29/79. Top Secret. The meeting took place in the White House Situation Room. Carter wrote “Zbig, J” in the upper right corner.
2. December 1.
3. In the left margin next to the first three sentences, Carter wrote: “Take the maximum possible positions.”
4. Carter approved this item with a checkmark and wrote in the left margin: “Be ready to move on Art 7 and calls for sanctions by individual nations.”
5. Carter approved this item with a checkmark and initialed in the right margin.
6. Carter approved this item with a checkmark.
7. Carter underlined the word “exception” and wrote in the left margin: “We should be fairly strict.”
8. In the left margin, Carter wrote: “We need to escalate P.R. It is not coming across at all.”
9. Carter wrote next to this sentence: “I agree.” Regarding the U.S. concern about the safety of Americans in Saudi Arabia, see Foreign Relations, 1977–1980, vol. XVIII, Middle East Region; Arabian Peninsula, Documents 204 and 205.
10. See Document 58.
11. Secret. Brackets are in the original.