Iran has agreed to pay the Manufacturers Hanover Trust Co. of New York $136 million to settle claims stemming from the 1979 Iranian revolution that ousted the U.S.-backed government of Shah Mohammed Reza Pahlavi and installed Ayatollah Ruhollah Khomeini's fundamentalist regime, the Treasury Department announced yesterday.
The agreement is one of a series of U.S.-Iranian banking settlements, and involves the largest sum to date. The settlements have led Western trade and government officials to speculate that Iran is seeking a significant increase in its commercial dealings with the West and Japan.
Underscoring this perception is the recent deterioration in relations between Iran and the Soviet Union, climaxed by the banning of Iran's Communist Party, the jailing of its leaders and the expulsion of 18 Soviet diplomats from Tehran in May.
Commerce Department figures show that U.S. exports to Iran in the first five months of this year totaled $72.5 million, nearly double the level for the same period in 1982.
"Iran is anxious to restore its credibility," a top Treasury official said yesterday. "Iran is anxious to redevelop its economy, to acquire military hardware and reestablish themselves commercially."
The official, largely echoing the statements of other banking and government representatives, said that "there is some evidence" that Iran's economic managers have set aside their ideological and religious encumbrances in an effort to bolster their war-torn economy by purchasing Western goods.
The settlement, signed in London Thursday, stipulates that Manufacturers Hanover will receive $136 million from a special account funded by Iran to pay U.S. banks for loans and assets frozen in 1979 and 1980. In return, the New York bank, which is the third U.S. bank to reach a settlement with Iran in three weeks, will pay the Iranian government $86.5 million in interest on its frozen U.S. accounts. Manufacturers Hanover, which ends up with a net gain of $49.5 million, is the 18th American bank out of 38 to reach an agreement with Iran.
Treasury and banking officials associated with the negotiations said the talks with Iranian representatives have been "businesslike," "realistic" and "pragmatic"--devoid of any political overtones, according to one top banking officer--and most attributed this to an Iranian effort to renew commercial relations with the West. Iranian trade with the West and Japan was severely restricted after the 1979 revolution and was virtually halted after Iran took 66 Americans hostage in Tehran in November 1979.
Yesterday's settlement follows an agreement announced Tuesday giving the Wells Fargo Bank of San Francisco $2.9 million from the Iranian escrow account, and one concluded July 5 that granted the Chase Manhattan Bank of New York $92 million from the special fund while it returned $121 million to Iran in interest on frozen accounts. The April agreement between Iran and Citibank of New York was previously the largest, entailing an Iranian payment of $125 million to the bank and receipt of $132 million in interest on its frozen reserves.
A spokesman for Chase Manhattan bluntly said that his bank's settlement is "a step toward normalized commercial and financial relations with Iran." An informed State Department official said that the United States is no longer a "source of last resort" for Iranian purchasers.
"In the last few months there has been a weakening in that policy," said the official, who agreed to speak on the condition that he not be named.
The same official said flatly, however, that resumption of normal diplomatic relations with Iran is not to be expected. "There's been absolutely nothing to indicate Iranian interest in changing our relations," he said.
The recent flux in Iran's position toward the West in general and the United States in particular is viewed by some as flowing partly from the collapse of Iranian-Soviet relations. During the spring, slogans in Tehran represented the Soviet Union as a worse enemy than the United States--a significant development, Western observers say.
Another explanation, though, is that the Iranian economy and armed forces rely heavily on Western supplies left over from the shah's regime, and must be replenished by Western countries.
Treasury officials and banking officers suspect that Iran is concluding claims agreements with American companies and banks in an effort to induce those particular companies to resume trade. One State Department official said that "there are a couple of agreements where I am almost sure" that such motives were involved. He refused to name the companies or banks concerned.
The prevailing view seems to be that Iran, spurred by pragmatic economic managers, is willing if not eager to improve trade relations with the West and Japan, but that there are limits and dangers involved. The pragmatists, said one State Department official, "don't want to open themselves to criticism" from radicals who deeply resent Americans and are suspicious of anyone who seeks to improve contacts with the United States.
Taking note of this situation, a top Treasury official said that the agreements being reached between Iran and the U.S. banks do not directly involve the U.S. government. Under the complicated agreement that provided for the release of the U.S. hostages in January 1981, the U.S. government does not represent banks seeking restitution from the Iranian government. Thus, the banking negotiations are essentially independent of the government and have proceeded smoothly, the official said. In contrast, individuals and corporations other than banks generally are represented by the government and negotiation of their claims has proceeded more slowly, the official said.
Treasury officials estimate that the remaining 20 banks with claims against Iran will settle "within the next year." So far a total of $466.5 million has been paid to American banks out of an escrow account of $1.4 billion that Iran was required to establish under the hostage agreement in which Algeria was the broker. About $70 million has been paid from a separate $1 billion account for corporate and individual claims, a State Department official said. The largest amount to date went to Pfizer, Inc., a pharmaceutical company, which received $7.6 million.
A State Department official said that about 60 out of 550 claims for more than $250,000 have been settled, while very few of the several thousand claims for amounts of less than $250,000 have been settled.