The U.S. government is keeping about $2 million in Iranian Embassy deposits frozen in American banks--in addition to holding on to the Iranian Embassy and its consulate offices--pending the turnover of the American Embassy and U.S. government money held in Iran, a State Department official says.
An American lawyer for the Iranians termed the continued freeze of Tehran's money "a clear and unequivocal violation" of the Jan. 20 agreement that led to the release of 52 American hostages.
Under that agreement, the United States committed itself to "insure the mobility and free transfer of all Iranian assets within its jurisdiction."
According to Thomas G. Shack Jr., a Washington lawyer who represents the Iranian government, the State Department says it does not consider the Iranian consular and embassy accounts, which were frozen after the hostages were seized, covered by the hostage release agreement.
The State Department official, who requested anonymity, said this weekend that holding onto Iranian Embassy money was a "matter of reciprocity" and "not a matter of trying to welsh" on the hostage agreement.
"We have released over $9 billion in Iranian assets," the official said. He termed holding onto the embassy accounts a "small, side issue we would like to get resolved."
The Iranians did not know about the freeze until they tried to withdraw $1 million in a certificate of deposit about 10 days ago, according to Shack. The money was for the Iranian interest section at the Algerian Embassy, the only Iranian representation left here since relations between the United States and Iran were broken in April 1980.
The Iranians were operating their interest section with $4 million they had obtained with U.S. Treasury permission, through a legal document called a license, from a frozen account, according to Shack. Only 10 days ago did they try to withdraw more.
Once the hostage agreement was concluded last January, Shack said, the Iranians believed all their money had been unfrozen and no more licenses would be needed.
What Shack and the Iranians did not know, the State Department official said, was that a decision had been made "at the highest levels" in April 1980 that the United States would hold onto Iran's Washington embassy, its consulate offices and their bank accounts until Tehran released the American Embassy in Tehran and U.S. government money in that country.
Shack said he had never heard of this position but that the hostage agreement superseded it.
Tehran was informed of the freeze a week ago and has yet to respond.
The State Department holds that Iran can bring in money under a license to pay for its lawyers and operate the interest section, but that the embassy money will remain tied up here until Tehran acts.
The Iranian Embassy and its money here would be released, the State Department official said, if Tehran unfroze $1 million in American money and turned the U.S. Embassy in Tehran over to the Swiss, who represent American interests.
"We'd like to dispose of the entire matter in a single exchange," the official said.
Shack, however, described Washington's approach as "unfair and improper," and added that the United States was trying to change the terms of an international agreement.
If Tehran sees the money tie-up as a sign of U.S. bad faith, Shack said, the process of settling more than $1 billion in American corporate and individual claims against Iran could break down.
He said the additional, now frozen, money is needed to pay his own and others' legal fees and experts he has assembled to aid the Iranians in the complex claims settlement process.
It is expected that Algeria's ambassador to the United States, Redha Malek, who helped negotiate the hostages' release, will ask the State Department this week to order the money freed before it becomes a new irritant between Tehran and Washington.
Within the last week the State Department ordered the release of a half million-dollar account maintained by the Iranian U.N. mission in New York. Tehran had attacked the U.S. government's freezing as a violation of rights of a member of the United Nations.
Despite the continued hostility between the U.S. and Iranian governments, the provisions of the hostage agreement have been working relatively well except for a few delays, according to officials working on behalf of both countries.
Some claims are being worked out directly between the Iranians and Americans involved, and the rest are to be heard before an international tribunal established under the hostage agreement at The Hague.
After the first transfer of $7.5 billion when the hostages were released Jan. 20, $2 billion more were transferred to the U.S. Federal Reserve Bank of New York. In early August, under the agreement, a $1 billion escrow account was established in the National Bank of the Netherlands to be used to pay claims decided by the tribunal, and the remainder was transferred to the government of Ayatollah Ruhollah Khomeini.
Both sides have agreed to take conflicts over the claims process to the tribunal.
For example, the Iranians want the interest accrued by the escrow account to be transferred to Tehran, while the U.S. wants it kept in the Netherlands to pay claimants.
Claims settled privately--not by the tribunal--should not be paid from the escrow account, the United States contends. Iran believes otherwise, and even the State Department, an official said, calls this a "tough issue."