U.S. Sanctions on Iran mean freezing assets: Are there any left to freeze?
With President Trump’s reinvigorated sanctions on Iran, the freezing of Iran’s assets anew would affect any ongoing or pending terrorism litigation. Usually when the media talks about victims of terrorism, they are referring only to Americans, when in fact, many of the victims of terrorism concerning Iran are members of the Iranian diaspora, people who have migrated from the Middle East in general and have been attacked by their native country while living in the US or Europe. The other issue left out of mainstream media is that there is legislative overlap: Foreign Sovereign Immunities Act (FSIA), the Terrorism Risk Insurance Act (TRIA), and the Joint Comprehensive Plan of Action (JCPOA) known as the nuclear agreement.
Most people think that sanctions on Iran began with the American Hostage Crisis during the Islamic Revolution in 1979, but actually started earlier leading to the taking of the hostages. To explain this and the interplay between the FSIA, the TRIA, and the JCPOA, it is necessary to go back further than the hostage situation. After the overthrow of Prime Minister Mossadegh in 1953, Mohammad Reza Pahlavi became the sole figurehead of power in Iran and the last monarch. The overthrow was lead by the British and American intelligence operations: Operation Boot and Operation Ajax. This event sealed a firm alliance with the Shah followed by the creation of Iran’s nuclear energy program, Iran’s membership in the Nuclear Non-proliferation Treaty, and a friendly trade agreement known as the Treaty of Amity.
The Foreign Military Sales Account
As the 1960s and 1970s progressed so did Iran’s nuclear program. Iran saw an increase in the quantity of military equipment, particularly American-made aviation and weaponry. This equipment was purchased from private contractors through a Foreign Military Sales (FMS) account with the US. This was largely paid for with income from oil exports which was Iran’s main source of income, and Iran eventually became a member of OPEC. The Shah also instituted an intelligence arm called SAVAK which was based on the American CIA.
However, with the overthrow of the democratically elected prime minister, leftist opposition to the Shah and militant Islamic groups active in the region were targeting the Shah and his allied western affiliates. These leftist and anti-western sentiments can actually be traced back to the end of the 1800s and early 1900s, but with the 1953 coup of Dr. Mossadegh, this opposition came into full flower in the form of underground nonviolent political intelligentsia and violent professionalized guerrilla groups.
The First Frozen Assets
By 1978, Iran was in the throes of revolution and defaulted on payments to the FMS fund. Emerging Iranian leaders canceled orders on major weapons systems. The US continued to carry the FMS and paid some contractors with funds diverted from other areas. While in default the revolution in Iran progressed, foreign-owned properties were confiscated and nationalized. Foreign investors like Pak Dairy sued Iran in the Hague. In 1979, 52 Americans were taken hostage from the American Embassy in Iran. US President Carter declared a national emergency and blocked removal or transfer of all property and interests in property of Iran subject to jurisdiction in the US. In turn, the US Treasury Department issued restrictions and newly installed Iranian officials repudiated Iran’s foreign obligations.
At the same time, the Iranian revolution instituted the Ministry of Information and Security (MOIS) and revolutionary courts in Iran to purge internal opposition to the Khomeini regime. Some members of the Shah’s government were being assassinated and others tried in the revolutionary courts and executed. Saddam Hussein chose this moment to invade the much weakened Iran but Iranians rallied behind the Islamic regime in solidarity. Some Iranians who opposed the new regime or for safety fled the country and headed for the US, Europe, or other safe havens. The US supported Iraqi aggression, because Iran continued to hold Americans hostage. By 1981, Iran filed a claim against the US and the US filed a counterclaim for $817m. The US Department of Defense froze the FMS account at 400m. With payments to US contractors not being issued, motions were made to pay contractors with assets in Iran’s FMS account controlled by DoD. Iran continued to execute member’s of Mohammad Reza Pahlavi’s regime in Iran and abroad.
Diplomatic Immunity Granted
With his inauguration, President of the United States Reagan bartered for the release of the 52 American hostages. This deal was known as the Algiers Accord which in exchange for the hostages’ release granted Iran diplomatic immunity. In 1982, Israel invaded Lebanon, and Iran sent forces there for the fight against Israel. The UN put forth a peace-keeping mission of American Marines with some European support. With the trade embargoes in place and Iran granted diplomatic immunity, more American hostages were taken in Lebanon by Iranian terrorist proxies and exchanged for cash payments and embargoed material needed to fight Iran’s war with Iraq. Terrorist attacks were also executed on American military and civilians in Lebanon including the US Marine Barracks and the American Embassy in Beirut amidst the hostage exchange known as the Iran Contra affair. During this time, the Iranians restarted their nuclear program in response to Saddam Hussein’s WMD program. Underground material assistance came from the AQ Khan network, Pakistani models known as the P-1s. Iran’s main ally during the Iran-Iraq War was Syria.