95. Telegram From Secretary of State Vance to the Department of State and the White House1

Secto 12022. Eyes only for Dr. Brzezinski and Mr. Christopher From the Secretary. Subject: Memcon With Foreign Minister Francois-Poncet.

Following is conversation of December 10, 1979 at the Quai d’Orsay with Minister of Foreign Affairs, H.E. Jean Francois-Poncet.2 The subject was my talks on Iran (and NATO communiqué). Other participants: M. Bruno de Leusse, Secretary-General, MFA; M. Jean-Claude Paye, Director, Economic Affairs, MFA; M. Henri Servant, Deputy Director for the Middle East, MFA; Ambassador Arthur A. Hartman; and Richard N. Cooper, Under Secretary of State for Economic Affairs.

The Secretary began his presentation by saying that he wished to outline the current negotiating situation on Iran, the history of our contacts and the current status of these exchanges.

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First, after the passage of the UN Resolution in the Security Council,3 Waldheim got in touch with the Iranians to see whether he, Waldheim, should send someone to Tehran or whether they would send someone to New York. Waldheim thought of sending Rafiuddin Ahmed, his Chef de Cabinet. As an alternative, Ghotbzadeh said he would prefer that discussions continue with the man he planned to send as Iran’s new representative in New York. This man’s name is Mansour Farhang and he was the Cultural Attaché in Washington after the revolution, but really no. 2 in the Iranian Mission in Washington. The Secretary said that he knows that Farhang has always opposed the taking of the hostages and has argued strongly with his own government that this would only isolate Iran from the rest of the world. [1 line not declassified] For example, we know that when he was asked to take the job in New York, he said he would do it only if he were allowed first to return to Tehran and talk to the Revolutionary Council and go to Qom and talk to Khomeini. He only decided to take the job, he has said to his friends, when these conditions were accepted. He has said that he wanted to convince the people in Qom that the Shah would never be returned by the United States.

Our current information on the hostage situation is ambiguous. There seems to be a move to assemble what has been referred to as a “grand jury,” which will examine US policy from 1953 to the present and “investigate the crimes of the US”. Farhang has reported that the question of trying the prisoners is “dead.” Our view is that if he gets to New York, it will be a plus rather than a minus.

Waldheim has also authorized the Foreign Minister of Sri Lanka to pick up again in Tehran talks he had on the way to the US and continue those discussions, once again looking toward the specific proposal of getting in to see the hostages themselves and verifying their condition. Waldheim is no longer considering sending his own representative to Tehran at this time.

Second, today we have gone into the World Court asking that they grant us immediate interim relief by ordering the release of the hostages. We assume that Iran will boycott this proceeding and ignore its results. We will then face a situation in which Iran will have refused to obey a Security Council resolution and a World Court order—thus totally flouting international opinion.

Third, we have been attempting to use the PLO. The Secretary said that he had been in almost daily contact with Arafat, who had been very helpful on gaining the release of the first thirteen hostages. We continue to work this channel and exchange views. There is still some [Page 250] possibility of Arafat going to Tehran, but he is hesitant to go if he is not likely to succeed. Fourth, we have been in contact with a number of Islamic leaders—heads of state—who have expressed a willingness to go to Qom and see Khomeini directly. We have also got members of the Islamic clergy to weigh in, but unfortunately not senior Shia leaders.

That is the sum and substance of our contacts. We expect an Arafat decision in the next two or three days and he has been pressed very hard by Prince Fahd, plus the Islamic Council.

The Secretary said he would like to discuss military options in a smaller group and thus did not wish to say anything more than that we had placed adequate forces in the area and that he felt this was a useful step. We intend to pursue and exhaust all peaceful means, but we cannot allow the situation to continue indefinitely as it is and, in effect, freeze the status quo. We believe there is only a small chance of the steps already taken having an effect, so therefore we have added economic pressures as the main element, along with our diplomatic activities.

In that area, we will soon face the question of Chapter 7 sanctions. We cannot sit by and see the Security Council and the World Court ignored. The world must recognize that this indeed constitutes a threat to the peace and, therefore, Chapter 7 would be appropriate. We hope and expect the support of the world community and, of course, particularly of our friends and allies if that action becomes necessary. In the meantime, we would like to have international actions to help with the economic pressures we have already begun. The time for collective action is now. We know that even the economic action that we have taken thus far is beginning to hurt because we know that one of Farhang’s instructions will be to get the removal of the freeze on assets. Therefore, we know they are having a negative impact. The Secretary then turned to his discussions with Prime Minister Thatcher and Foreign Secretary Carrington.4 In those discussions, it was agreed that the best way to support our actions would be for our allies to join us in freezing Iranian assets. This would be the most direct means and it would be related directly and solely to the hostages. Thus the freeze could be lifted if the hostages were released. Second, another means could be used short of a total freeze, which would be to invoke the cross-default clauses in outstanding loans. The Secretary said that such steps were necessary to make our action effective in putting on pressure for the release of hostages and also to prevent any undermining of the [Page 251] dollar by the Iranian authorities. He asked Dick Cooper to explain these measures in more detail.

Cooper explained the cross-default situation. He said that these clauses existed in one way or another in most of the loan agreements and permitted any participant in a loan to call for immediate repayment if evidence of a default on another loan was presented. We are not certain of the situation in all cases, but we do know that Iran is currently in default to American banks even though our freeze would have allowed them to continue payments under those loans. We carefully drew our regulations on blocking in order to permit such repayments and they could have been made to Chase and others. We know that these clauses exist in most of the international consortia loans. We are not sure whether the French are participants in these. If they are, the clauses could be used to trigger cross-defaults. This would snarl up even further the Iranian payment situation. The attraction of such a course of action would be that it would not require government action, but rather private or public advice to banks that they invoke these clauses. It would give the right signal and bring home to Iranian authorities that others are as concerned as we are over the taking of hostages and threats to the international monetary system.

The Secretary said that the British were leaning toward a general freezing action. They were checking their law to see if there was a legal basis. At first, the UK Treasury thought there was not a legal basis, but we have presented an opinion to the Prime Minister from a top British lawyer saying that under a 1947 act the Treasury can freeze assets. There is as yet no firm British Government decision, however.

The Secretary went on to say that the firmer and more tangibly we and our allies and friends act today, the more likely we will be able to get the hostages out and prevent a situation from developing in which military means might have to be used, which, of course, would lead to unpredictable and certainly serious political and economic results. He wanted to state quite clearly, however, that if any of the hostages were harmed, we would have to react and he would discuss the various possibilities for our action in a smaller group at the end of the meeting. If we want to avoid that situation, now is the time to act.

The Secretary said he wanted to speak for a moment about the situation with respect to the Shah. He said that his treatment had been completed and that he can now travel. He wants to find a place where he can stay indefinitely. There seemed to be two realistic possibilities at the moment. One was Panama and the other was South Africa, where his father had lived for some time. Although Sadat continues to hold open his offer of refuge in Egypt, no one thinks that this is a good idea since it would present a real danger to Sadat and open up a whole new set of issues.

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The Secretary said that there was another area he would at least like to flag. We all need to look at the longer-term options. It was certainly possible that Khomeini might not endure. We had to see what are the real alternatives. We very much appreciate the exchanges of views that have already taken place and we think it would be a good idea to continue these exchanges about future developments. For example, are you in touch with any of these forces and how do you evaluate them? We know that none of them seems to be perfect, but on the other hand, some may be worse than others. Should we try to influence the situation or not? We ought to put these things on the table.

Francois-Poncet said that the Secretary would be getting an authoritative response from the President at dinner in the evening. We could be sure of French Government sympathy and support. They have been looking at the various alternatives. Legally, on the question of the freezing action by US banks, there was every chance that a court would decide that the US could not apply its order to American banks in France. They recognize that this decision would have importance, but their researches had led them to the conclusion that on the straight legal point, there could be no doubt about how the case would go. They were, however, looking into the question and also the possibility of delays. He said that they would also look at the question of outstanding loans, the possibility of a French freeze and the cross-default clause situation. They would have to examine French law to see if there was a basis.

Francois-Poncet said that they had great understanding for the situation that we face and they recognize that this is of concern to all of us. What is at stake here is the whole international order. We should be in no doubt about their basic philosophy. “We want,” he said, “to take the most effective action and to help avoid reactions in other parts of the world.” He wondered whether Chapter 7 action might not be the next step. If we decided to move in that direction, France would have a positive attitude and that would then give them the legal basis for action on their part. The problem as they saw it now was that they needed some UN decision as they did, for example, in the case of Rhodesia. He then made a side reference to the Mozambique situation in which the “no answer” was a “yes answer.” He said they would continue to look into the legal situation.

Francois-Poncet went on to say that there was a link here to the internal Iranian situation. Was it disintegrating and how fast? We don’t want to do anything that would prevent this disintegration, e.g., taking action that might unify internal forces and, therefore, we had to weigh that against the bad effects of inaction. Clearly, international action is most desirable. In answer to a question, the Secretary said that he had been in contact with Dobrynin on the Soviet response. He had [Page 253] specifically put to Dobrynin, who has now returned to Moscow, the question of whether the Soviets would veto a Chapter 7 action in the Security Council. He had in fact said to Dobrynin that we would assume the Soviets would not veto, and Dobrynin had replied that he would have to check this in Moscow.5

The Secretary said that he would like to discuss another aspect of the economic situation, namely, the effort of the Iranians to open new accounts and thus get around our blocking action. Dick Cooper explained in some detail the variety of means which this was taking. He had been surprised at the slowness of the Iranians in moving to get either new accounts in dollars or other currencies set up to make their payments. They were beginning to get cooperation from others and this was giving a mixed signal to the Iranians. What they were seeing on the economic front in many cases was business as usual. We know that it is being interpreted this way because, for example, the Daily Telegraph reported that certain British, French, Austrian and Japanese banks have cooperated and that the Iranians are concluding that, therefore, their governments are “with us.” It was important to eliminate this ambiguity. The Iranians are attempting to handle normal trade by the creation of new accounts, sometimes using coded numbers or false names. Francois-Poncet said that, as we knew, the French were not taking any more oil than they had normally from Iran and wondered what we wished them to do—not pay at all or only pay in non-dollar currencies or to open new accounts, the French should refuse. Then the Iranians will begin to get the right signal.

The Secretary said that the lower level reaction in the Federal Republic was that they will insist on dollars and not allow any payment in Deutschmarks. Jean-Claude Paye said that he knows there has already been a request to pay in Deutschmarks in one case. Francois-Poncet concluded that perhaps this is something that should be discussed in the “four-power meeting” in Brussels later this week.

[1 paragraph (11½ lines) not declassified]

Both Cooper and the Secretary said that there were important risks to the international monetary system and, therefore, it was important to proceed. He has asked Mr. Carswell to go to Japan. We have already talked to the Germans, British, Italians and Swiss6 and he would be [Page 254] seeing the Japanese Foreign Minister immediately after this meeting. The Secretary said that the Japanese had behaved abominably. They had bought between 20 and 30 million barrels of oil—almost all that we had freed up—at an average price of about $40. The Japanese claim that Japanese firms had violated MITI instructions, but we know also that firms have used coded accounts and that Japanese banks have agreed to this. The government had also advised about ten days ago that the Japanese banks should not call any loan. The Secretary said that this was not only business as usual, but actually taking advantage of the situation. Francois-Poncet said that this confirms their information and that it was very disturbing. It makes others look ineffective.

Cooper said that the question is really a psychological one, since we know that the real economic effects of our actions will only come much later.

Francois-Poncet said that they too had information that Iran was worried about these measures. We could count on full collaboration from the French. The question was when and how, and particularly getting the necessary international basis from the Security Council. The Secretary said that even pending such sanctions, he thought that it ought to be possible to take action because we have a clear case that international law is being flouted. Paye thought that, in France at least, only in the case of war could action be taken without that international sanction.

Francois-Poncet concluded that we need, as he had said to the Ambassador the other day, to have more exchanges of information in order that all of us can act intelligently. He recognized the necessity to act to put pressure on Tehran and also to meet US domestic pressures, but we also need to exchange our assessments. For example, he had received a telegram yesterday (this is the one we were shown by Giscard that evening) giving the assessment by their Ambassador, who is a good man, of the measures as seen from Tehran. The conclusion was that pressures could be counter-productive in the current situation. He recognized that that was only one view and, of course, it was a view from the point of view of someone right on the spot in Tehran and he was not sure it was a balanced appreciation. Therefore, we had to have continuing exchanges. The Secretary said he agreed and wished to express appreciation for all the French had done, both in giving us information and in trying to be helpful in Tehran.

(There followed a discussion by the Secretary of military options with only Francois-Poncet and the Ambassador present.)

The meeting concluded with Francois-Poncet alone as he raised several questions with respect to the NATO communiqué.7 He said [Page 255] that his first problem was that from the French point of view they had no difficulty in talking about the necessity to modernize TNF, but they would have a problem of linking that with arms control discussions. Therefore, it was very important that the two parts of the communiqué be clearly separated. The French would only associate themselves with the general parts of the communiqué, leaving for the other members of NATO to discuss and agree on TNF and arms control.

A second difficulty was with our desire to include Iran in the communiqué. Here Francois-Poncet suggested that a better way would be to have a separate statement by the fifteen Ministers on the occasion of their getting together in Brussels. He thought that this would give it added importance and avoid the NATO tag to such a position. (The Secretary agreed to this proposal and the Ambassador passed it on to NATO).8 Francois-Poncet also said that there would probably be the usual difficulty finding Middle East wording, but that they would find something.

On the question of arms control in general, Francois-Poncet said that it was important for us to continue discussions on our approaches to these problems—this was later picked up by the President. The Secretary said that he had said in his Berlin speech, being read by George Vest, that we thought the French proposals on arms control were useful and should be pursued. End Memcon.

  1. Source: Department of State, Records of the Secretary of State, 1977–1980, Lot 84D241, Vance NODIS Memcons 1979. Secret; Immediate; Nodis; Cherokee.
  2. Vance was in Paris December 10–11. For the itinerary of his European trip, see footnote 6, Document 82. The talking points for his trip, which were personally edited by Carter, are in Department of State, Official Files of [P] David D. Newsom, Under Secretary of State for Political Affairs, Lot 82D85, Iran 1979. Vance’s trip was discussed at the December 6 SCC meeting. In the left margin of the meeting notes, beside Item 2, “Vance Trip,” under “Domestic Issues,” Carter wrote: “Make talking points complete & detailed for benefit of all of us.” Beside Item 1, under “Political-Military Issues,” Carter wrote: “I do not want to be hostage to European views.” (Carter Library, National Security Affairs, Staff Material, Office File, Box 17, Meetings File, SCC Meeting #221 held 12/6/79)
  3. See footnote 2, Document 87.
  4. As reported in telegram Secto 12007 from Paris, December 10. (National Archives, RG 59, Central Foreign Policy File, D790569–1090)
  5. Vance and Dobrynin met on December 5 (see Document 86) but apparently did not discuss Chapter 7 action.
  6. Vance met with Okita on December 10 in Paris. (Telegram Secto 12020 from Brussels, December 12; National Archives, RG 59, Central Foreign Policy File, P840171–0028, P840171–0028, P840125–1129) Vance met with Genscher and Schmidt on December 11 in Bonn, and with Pertini and Cossiga in Rome on December 12. (Telegrams Secto 12023 and Secto 12024 both from Brussels, December 13; Department of State, Records of the Secretary of State, 1977–1980, Lot 84D241, Vance NODIS Memcons 1979)
  7. For text of the NATO communiqué issued on December 14, see Department of State Bulletin, February 1980, pp. 20–22.
  8. The declaration on Iran issued by the Ministers attending the NATO meeting is ibid., pp. 53–54.