The Point: Iran fund should benefit ex-hostages

There is a pot of gold in Washington that ought to be awarded to the Americans who were kidnapped in 1979 and held hostage for more than a year by the Iranian government.

In a happier period of friendship between the United States and Iran, the shah was buying U.S. military hardware and services at such a rate that a Defense Department bank account was set up to facilitate payment. The shah's government deposited $750 million quarterly; it paid out almost as fast as it came in. When the great Islamist revolution occurred in 1978 and that cozy military relationship abruptly ended, $340 million was stranded in the account, called an FMS (Foreign Military Sales) Trust Fund.

It was frozen by President Carter and has been accumulating interest ever since. Estimates of its value today range from $400 million to more than $1 billion.

Air Force Col. Chuck Scott paid a visit in 1979 to Iran's newly appointed defense minister, Ayatollah Ali Khamenei (now the supreme leader of Iran), to see about what should be done with that money. Khamenei, full of the disdain for all things American that would come to typify the new regime, dismissed Scott out of hand. He said the new government of Iran had no interest in doing business with the United States under any circumstances, so they had nothing to discuss.

"So let me get this straight," Scott said, ". . . we should just donate those millions to the U.S. Treasury?"

There had been no resolution of what to do with the money when the U.S. Embassy in Tehran was seized months later, and 52 Americans, including Scott, were taken hostage. The Iranian pot of gold is still there and has grown much larger. It is now administered by the State Department, which may help explain why State successfully contested a 2000 lawsuit by the former hostages to claim it in return for the pain and suffering they endured in captivity.

Some time in the next month, the former hostages will refile their lawsuit in U.S. District Court. It is high time their erstwhile colleagues let them have it.

The seizure of a nation's foreign mission, which serves in any country by invitation of the host government, is a crime against not only the country whose embassy is taken, but also against the entire world. It is an assault on diplomacy itself, a blow to anyone who believes in an international mechanism to resolve disputes between nations short of war.

The Americans taken hostage at the height of Iran's revolutionary fervor were held for 14 months, many of them in dreadful conditions. Some of them (including Scott) were extensively interrogated and severely mistreated by their student captors - part of a group of religious zealots called "Strengthen the Unity" that included Mahmoud Ahmadinejad, the current president. He and Khamenei and many others complicit in this crime are now the leaders of a country the Bush administration has labeled the most significant state sponsor of terror in the world.

In the past, victims of terrorist violence, such as Associated Press reporter Terry Anderson and families of those killed in the Sept. 11, 2001, attacks, have received large monetary payments out of the public treasury. The principle of individuals' suing for damages from states that sponsor terror was established in 1996 by Congress with the Antiterrorism Act, which removed the usual immunity accorded foreign governments. That act was pointedly made retroactive to November 1979 - the date the embassy was seized - to enable the hostages to sue Iran.

They won their initial lawsuit by default when Iran, unsurprisingly, failed to contest the charges. But then the State Department challenged the decision, citing the Algiers Accords of 1981, signed by Carter to secure the hostages' release.

In those accords, Carter agreed to return a sum mutually agreed to be the value of Iranian assets he had frozen when the embassy was taken. (This sum did not include the FMS account.) He also agreed to bar any effort by the hostages to sue for damages from Iran and pledged that the United States would not interfere in Iran's domestic affairs. The State Department has insisted that the United States must honor the Algiers Accords, or the country's credibility in future agreements with foreign states will be suspect.

Yet, to me, the FMS Trust Fund seems tailor-made for the former hostages. It is a U.S. bank account, all but repudiated by Iran; it has not been in any real sense Iranian money for three decades and is unlikely ever to be returned. A lawsuit that involves no Iranians and attaches none of that country's present assets would be, at worst, a technical violation of the accords. Still, State holds firm.

Federal District Court Judge Emmet G. Sullivan ultimately dismissed his previous ruling in favor of the hostages, but in doing so excoriated the government's hypocrisy. "Both Congress and the president have expressed their support for these plaintiffs' quest for justice," Sullivan wrote, "while failing to act definitively to enable these former hostages to fulfill that request."

Ambassador John Limbert, a former hostage who spent a long and distinguished career in the State Department, said his feelings about his former employer's attitude were "unprintable."

Iran would, of course, accuse us of breaking the agreement, but this is a country that has been calling us The Great Satan for years. We have weathered far worse, not the least the demonstrably false accusation that all of our diplomats in 1979 were spies. Should any government be bound by an agreement signed with a gun to its head? This is not an overstatement. Throughout the 444-day hostage crisis, the Iranian authorities had threatened to put the captives on trial and execute them. This in a country where public hangings were and remain commonplace. Carter did what he had to do to get the kidnapped Americans safely out of Iran. If courts in the United States recognize the hostages as victims of an international crime - which they clearly were - what will the embassy-takers' argument be? That the United States has too little respect for international diplomacy?

The Bush administration has hardly been a stickler for this agreement, especially the part about noninterference in Iran's domestic affairs. The White House has been openly encouraging and funding efforts to promote democracy in that country for years, efforts we can only hope will succeed, but that betray at best a selective interpretation of the Algiers Accords.

Congress has done its part to further the hostages' case. It once again amended the Defense Authorization Bill this year, specifically to allow the lawsuit to be reinstated, citing the case by its file number. The act was signed by President Bush and was voted up by each of those now in the running to succeed him - Sens. John McCain, Hillary Clinton and Barack Obama.

"We have until March 28 to file the suit," said Bill Coffield, a lawyer representing the hostages. "The State Department doesn't have to do anything. If they feel they have an obligation to continue contesting it, I suppose they will."

They should not. Awarding the hostages that FMS account would be more than justice. It would be poetic.