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

82. Minutes of a National Security Council Meeting¹

Washington, December 4, 1979, 2:45–3:50 p.m.

SUBJECT

• Iran

PARTICIPANTS

• The President
• The Vice President

• State

  • Secretary Vance
  • Deputy Secretary Christopher

• Treasury

  • Secretary Miller

• Defense

  • Secretary Brown
  • Deputy Secretary Claytor

• JCS

  • Chairman Jones

• CIA

  • Admiral Turner

• White House

  • Zbigniew Brzezinski
  • Hamilton Jordan
  • Jody Powell
  • Lloyd Cutler
  • Charles Kirbo
  • David Aaron

• NSC

  • Gary Sick

MINUTES

The President opened the meeting, noting that it was an important meeting and that he wished to review his present thinking on the circumstances in Iran. The most serious question is how to handle the status quo. The domestic situation is okay, and he was not nervous or impatient about U.S. public support. He was concerned that our world wide posture could begin to deteriorate.² The time when we could get by without the help of our allies is past. The British, Germans, French and others must face the fact that they must decide either to help us actively or to stand aloof as the financial world chipped away at our position. Potential adversaries would begin to coalesce if they saw our common purpose wavering. The Soviets thus far have been seemingly helpful out of fear of aggravating us, although lately there was reporting about some bad press statements. Incidents in Libya and Kuwait were disturbing, and Saudi Arabia had been inflicted for the first time in the President’s memory with serious internal disruption.³ World opinion is on our side thus far, but the danger that it may decrease is growing. Lopez Portillo of Mexico has been critical of our economic measures.

Begging others will not help. We must be pragmatic and take into account other nations’ interests in Iran so long as they stay with us. If he were Schmidt, for example, he would try to stay out of this as long as possible. But if Schmidt had to choose between Germany’s relations with us on economic, military and political areas as opposed to their temporary interests in Iran, he would choose the U.S. Some economic matters must come to a head. If we cannot depend on others, the President wanted to know it. He wanted to insure that the status quo hurts Khomeini. He felt that Khomeini was benefiting from continued trade and diplomatic presence. The presence of our naval forces was a major factor in his reticence to do damage to the hostages.

We must act carefully, not lash out in a way that would embarrass us. We should leave no peaceful stone unturned, but we must have our allies on board—which they are not. The President had outlined his ideas in his comments on the SCC notes each day. No timing had been established yet for next moves. There was one thing he feared, that the status quo would be established on a permanent basis. Domestic support will not last. He had deliberately withheld some actions to have them in reserve. We do not know if they have moved the hostages. It is time to inform our three major European allies about the options we may take in the future. Eventually we will have to draw the line, through Chapter Seven sanctions and trade by our allies with Iran. It will be good to know their attitude. The President did not fear a rebuff if we are in the right and have a good case. We have worked to try to find a way out, but we have found no flexibility from Khomeini except for the release of the 13 hostages.⁴ In that case he chose only women and blacks to try and divide the country. We need to find a place for the Shah to go.

Dr. Brzezinski proposed discussion in the first, larger half of the meeting first of internal economic steps, then the status of political negotiations, and additional sanctions against Iranian diplomats. We should also discuss how to respond to Mexico. On economic matters, Secretary Miller could speak on possible collective actions—either a full embargo or cross default—as well as the status of court proceedings in London and the special problems with the French.

Secretary Miller said he had some good news. One case involving Citibank in London had resulted in an important legal step. The judge had ruled that all of these separate cases should be consolidated, and that they dealt with such grave matters that they deserved full preparation. He did not intend to hear the cases until after Easter. This was a hearing by Judge (Goff?) in chambers. He wanted to ascertain American interest in intervening in the case. We have counsel in London and are preparing a response. Bank Markazi had raised no objection. Our objective will be to hold to that calendar.

The President said that was the best news he had heard for some time. He wondered if they could have their case prepared by Easter.

Mr. Cutler responded that they would be prepared by Easter to go till the following Easter. This was a very good start.

Secretary Miller said he would not review the status of the New York cases. The next area was the French where the Iranians were seeking an order compelling transfer of funds. Our officials have sought a delay on the grounds that this is a grave matter which requires consultations. Should the Ambassador go to the Prime Minister? (The President said yes.) We will now be able to point to the British court ruling that this is not just a standard case of commercial law.

The President asked about Volcker’s position.

Secretary Miller said he now agreed, particularly since it was becoming very clear that Iranian withdrawals would have left our banks high and dry.

The President said he should tell that to the German Banks.

Secretary Miller then turned to the question of getting multilateral cooperation. The first step should be triggering cross default provisions to protect their own claims against Iran. This must not be just U.S. banks. This step is the easiest to do. It does not require a government decision to impose sanctions, but it would be very effective and would support the dollar. If instituted by the Germans, Japanese and others, the Iranians would have trouble finding a place to put their money and it would force them into using dollars.

The President asked what would prevent the Iranians from isolating us, since they had excellent relations with all of the other countries.

Secretary Miller replied that what was binding was the $15 billion of liabilities and the fact that they had their cash spread around in such a way that they would have extreme difficulty meeting claims quickly without moving money into the U.S. This option would make it more difficult to do what they are doing now, i.e., demanding that others pay them in currencies other than dollars and holding out the bait of substantial new deposits to cooperative banks. It would certainly hold them off for one or two months at least.

Secretary Vance asked whether we should also approach Italy, the Netherlands and Canada.

Secretary Miller went on with his explanation that loans were syndicated among many banks. If loan A was called, it was then proper to call loan B and so on. Declaration of default by the Export-Import Bank would reinforce this process some, but not add much since most American loans have already been triggered.

Secretary Brown noted that the trick is to get other countries’ banks to join in.

The President asked whether it takes action by the heads of state.

Secretary Miller replied that it differed by country. The French own the banks, so it is a government question, whereas in Germany the banks are private. However, it requires a head of state decision since without that kind of political judgment the banks will not do it. It is not a legal decision, it is policy. It will not be easy to get. He suggested proceeding in steps. First we should approach the various advisors through emissaries with written instructions. They should brief but not pull out all the stops. That would be premature until we have softened the turf. Treasury and State representatives should go to the UK and France, another team to Germany and Switzerland this week. There should be a Presidential message saying they are coming.

Dr. Brzezinski wondered if this message should preview economic sanctions? We would be using up a lot of ammunition on this initial step.

Secretary Miller said that the tougher message should be carried by Vance, who will be going to Europe for the NATO meeting.

Secretary Vance agreed.

The President agreed, noting that Vance should sit down with each of them for an hour or so. They must know the seriousness of the situation and the seriousness with which we regard their reluctance to help. In the letter he should say that Vance was coming later.⁵

Dr. Brzezinski said Vance should make the point that the only alternative to multilateral economic actions was unilateral action by the U.S.

Secretary Vance said the implications of an embargo were very serious. We must think how it would be received in the Arab world. The reaction could be violence in spades. It would be viewed as the Western Christian world ganging up on the Islamic world.

Secretary Miller said there were serious implications about continued oil delivery.

Mr. Cutler wondered about the legal ability to proclaim an embargo.

Secretary Vance said the alternative was to seek sanctions at the UN. That way it would not be just the West, but an international body. There was the possibility of a Soviet veto.

The President could foresee calling for sanctions and unilateral acts by our allies at the same time. Public opinion will work for us. He noted that Sadat and Clark were ready to go an extra mile. The others were not so sure.

Secretary Vance said that he thought it would be better to reverse the order. We should call for Chapter Seven sanctions and ask them to join in. Get a debate in the Security Council, especially if the World Court’s order has been ignored.

Dr. Brzezinski said that Secretary Vance’s idea had merit. We want to avoid a clash between Islam and the West. We want to build collective responsibility, which we could do by calling on the UN, even if there were a veto, which he hoped the Soviets would avoid.

The President said he did not want a six month debate which would leave the hostages there until after Easter.

Dr. Brzezinski said we could seek Chapter Seven sanctions next week.

Secretary Vance said he wanted to review briefly up to 20 steps which are available to us from now on. Some we are already taking, others would be helpful if the negotiations do not go well.

The President returned to the question of the teams and said they should go directly.

Secretary Miller noted that there was not much time, since pressure on the dollar was growing. The Europeans would be tough, that was why he wanted the teams.

Dr. Brzezinski summarized that the teams would go immediately, that Vance would go early next week,⁶ and that a Presidential message would go tomorrow.

The President said the message should simply say that the teams were coming and that Vance was coming. It should not pressure them.

Secretary Vance noted that we were completing our Security Council action. Now we will be bringing together a number of strands which will hopefully bring the release of the hostages.

The President wondered if we should tighten up more in the United States to bring more pressure on Iran.

Admiral Turner suggested that we might wish to encourage trade unions around the world to join with our own unions to boycott Iranian shipping.

Secretary Miller said that Iranian commerce is well contained for the moment. There is virtually nothing moving from the U.S. to Iran.

Secretary Brown agreed that it was a trivial trickle. Some corn was moving from the West Coast.

Admiral Turner noted that another step would be to have Navy ships interrogate all ships bound for Iran. This would not interefere with shipping, but it would raise insurance rates and increase apprehension about shipping to Iran.

Secretary Miller noted that Lloyds has already quadrupled insurance rates and declared Iran a war zone.

Secretary Vance noted that we need to generate additional pressure on the trial question. We need more public demands that there will be no trials.

Mr. Powell noted that the tickers were very heavy with news that there will be trials. That is an important question today. It has a short fuse.

Secretary Vance said we should go to various countries and have them weigh in.

The President said this concerned him. We need to get our timid allies to speak out. We must let them know what we would do if there are trials. He knew that the group was more timid than he was. We should get the EC Nine.

Dr. Brzezinski interjected a reminder that we had told them before what we would do.

Secretary Vance noted that the Ambassador of Sri Lanka has received a commitment for favorable action from the Iranians and he proposes to go to Tehran with a representative of the Secretary General. The Secretary did not know if the Ambassador had overstated Ghotbzadeh’s position. We can also ask for a freeze on military shipments. He could do this while he is abroad, as well as getting in touch with the Pakistanis, Turks and others who have been approached.

Admiral Turner noted that a Pakistani delegation is scheduled to go to Iran soon.

Secretary Brown said he would be seeing the Turks soon and would raise the issue.

Secretary Vance said we should pursue our case in the World Court. They will meet on Friday or Monday.⁷ In addition, we should continue with our channels through the UN, the PLO and others to seek release of the hostages. A representative of the Secretary General should leave for Tehran tonight or tomorrow. Crown Prince Fahd has asked Arafat to go. We have been in touch with Arafat. We called him today from Beirut. Arafat is timid about taking any action until he has an assured result, but Fahd has said to push him on the plane if necessary. In addition, there are possible intermediary efforts by Assad of Syria and Demirel of Turkey. Nothing will be lost if they can be persuaded to go, although he was not too sanguine about their prospects. President Zia of Pakistan has asked to talk to our Ambassador about this. Should we agree? (The President said sure.) We are also working on the departure of the Shah. Chapter Seven sanctions are available as well. These are all steps we should pursue.

The President asked for comments.

The Vice President observed that with the religious holidays over and the vote on the constitution behind us,⁸ if there is going to be a change we should see it soon. Our time runs out fairly rapidly. We should find some way—through Arafat to Ghotbzadeh to Khomeini perhaps—to tell them this is it. We have kept our tempers for thirty days. We need to know if they are going to start to move. We need to know if it will be another six months. We now see ourselves in an entirely different interval than before.

Mr. Jordan noted that the easiest course for the Iranians each morning was to say that they would wait till tomorrow. It is in their interest to prolong the situation. They keep world attention focused on their grievances and they are not paying a high price.

Mr. Powell asked to raise a new point. If they are not suffering and simply maintain the status quo, should we start to ratchet up? Should we wait for a few days to see while we prepare to heat up the situation? What posture do we want to be in and how long are we willing to stay in this new period? There is some public expectation that the next few days may provide an opening. We have a few days to see if something develops.

The President said that we cannot stand for the status quo to perpetuate itself. Thus far we have been balanced in our actions. We have lucked out in several instances by acting in the nick of time. We have to get our allies with us or tighten up ourselves. He sensed that in the past few days the support of our allies has been waning, and he feared that our adversaries would assess our weakness which would cause them to come together. We cannot abide keeping the hostages tied up for another six weeks or six months.

Mr. Jordan noted that we had hoped the vote on the constitution would bring things to a head. He thought there was no option but to get the hostages released.

Secretary Vance said we do not know the answer. We cannot be assured of a positive outcome. A fellow was just back from Tehran where he met with Ghotbzadeh and others.⁹ According to him, Ghotbzadeh badly wants a settlement. The Revolutionary Council wants a settlement. But they cannot affect Khomeini and the students. The Revolutionary Council is 100% against trials, and trials would be a defeat for them. Negotiations may prove to be a dead end.

The President said they need to know that we cannot stay on this road indefinitely. There is no immediate crisis at the moment. We need not act today. We need to strengthen ourselves.

(At that point the meeting was reduced to the statutory members of the NSC.)

1. Source: Carter Library, National Security Affairs, Staff Material, Office File, Box 2, NSC Meeting #023 held 12/4/79. Top Secret; Sensitive. The meeting took place in the Cabinet Room at the White House.
2. See Document 81.
3. For the incident in Libya, see footnote 10, Document 77. For the disruption in Saudi Arabia, presumably the attack on the Grand Mosque, see footnote 5, Document 43.
4. See footnote 2, Document 35.
5. The draft letter is in Carter Library, National Security Affairs, Staff Material, Office File, Box 17, SCC Meeting #219 held 12/5/79. The NAC Ministerial meeting was held in Brussels December 13–14.
6. Cooper and Solomon visited Bonn, Zurich, and Bern December 6–7. Carswell and Vest visited London, Rome, and Paris on the same dates. (Memorandum from Vance to Carter, December 5; Carter Library, Plains File, Box 15) Vance traveled to London (December 10), Paris (December 10–11), Rome (December 11–12), Bonn (December 11–12), and Brussels (December 12–14).
7. December 7 or 10.
8. The new constitution came into force on December 3 when the voting in the referendum concluded.
9. Richard Cottam; see footnote 3, Document 78.