Administration Blocks Ex-Hostages' Bid for Damages From Iran

By Glenn Kessler
Washington Post Staff Writer
Sunday, March 19, 2006

At an emotional meeting this month at the State Department, steps from the office of Secretary of State Condoleezza Rice, a group of former American hostages released by Iran a quarter of a century ago, accompanied by lawyers and some relatives, confronted two of Rice's most senior aides.

The families' grievance: Why has the Bush administration, which has labeled Iran one of the world's most dangerous regimes and has called the hostages American heroes, fought their efforts to win damages for their ordeal from the Islamic republic?

The answer is rooted in diplomatic obligations and a wariness about favoring one set of terrorism victims over others. U.S. officials express sympathy for the former hostages. But the administration has thwarted every effort in the courts or in Congress to win a monetary judgment against Iran, even as other victims of Iranian-linked terrorism have secured hundreds of millions of dollars in compensation.

Those attending the March 2 meeting said that Undersecretary of State R. Nicholas Burns and legal adviser John B. Bellinger III tried to keep the discussion civil but that anger spilled over. The wife of a former hostage exclaimed at one point: "You are bloodless!" The meeting broke up with Burns acknowledging the difficulty of the issues and saying he would be open to further discussions.

But last week the State Department objected when Rep. Brad Sherman (D-Calif.) tried to address the issue in a House bill that would maintain sanctions against Iran for its links to terrorism, forcing the lawmaker to withdraw his proposal.

"We have 52 of our finest Americans who were held hostage," Sherman said. "They go to court, and you know who appears against them? The State Department."

The former hostages have long tried to sue Iran over being blindfolded, tortured and held in dank cells during 444 days in captivity. Earlier lawsuits were dismissed because other countries generally cannot be sued in federal court. But in 1996 Congress amended the foreign sovereign immunity law to allow suits against countries listed as state sponsors of terrorism. The former hostages sued under the new law, seeking $33 billion in compensatory and punitive damages, and won a default judgment against Iran in 2001.

But on the eve of a hearing to consider damages, the Bush administration intervened, saying the suit violated an agreement with Iran that had secured the hostages' release. The judge threw out the suit in 2002 after Congress twice tried to intervene by passing legislation favoring the hostages. The Supreme Court declined to hear an appeal in 2004. Now the former hostages are seeking relief from Congress.

"Every one of us has spoken the same line for 26 years: The Iranians cannot get away with what they did because it sends the wrong message," said Richard H. Morefield, a former hostage and 50-year State Department veteran who was the embassy's consul general when it was seized in 1979 and who still works at State, declassifying records for the archives.

Beyond the plight of these hostages, the case raises difficult issues.

Even if a victim of terrorism wins at trial, it is almost impossible to collect damages. Iran's assets in the United States, for instance, are worth only about $20 million, mainly diplomatic property, according to State Department officials. So Congress in 2000 passed legislation authorizing the payment of $380 million in U.S. Treasury funds to claimants in cases involving 14 victims who were held hostage or killed by Iranian-supported groups such as Hezbollah, according to the Congressional Research Service. Lawmakers ordered the State Department to try to get that money reimbursed by Iran someday.

Other victims of terrorism, however, have received nothing, leading some lawmakers to conclude that it is inequitable -- and costly to U.S. taxpayers -- to carve out exceptions on a piecemeal basis.

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