How the Bargain Was Struck

By Edward E Scharff

Eventually, the reality of a deadline paid off

It was dinnertime on Monday in a Washington preparing to inaugurate Ronald Reagan, and nearly midnight in Algiers, where Deputy Secretary of State Warren M. Christopher was trying to nail down the last elements of the deal to free the 52 American hostages. Christopher picked up the phone that connected him directly to the White House. Using his code name, "Superman," he was immediately put through to the President, and, in comparing notes on the latest impasse in the bargaining, the two men came up with a ploy. When he hung up the receiver, Christopher ordered his State Department plane readied for takeoff at noon, Washington time, the next day, when the Carter Administration's term would end.

The Algerian officials, who were acting as middlemen in the negotiations, were dismayed. The straight-faced diplomat told them: "My authority expires then, and then I'm going." The Algerians swiftly notified Iran of this new development, and over the next 18 hours the 14 1/2-month hostage ordeal finally reached its denouement. Whether the small gambit helped nudge the deal into place no one but the Iranians will ever know, but at least one top State Department aide thinks so: "The exercise proved that deadlines work."

Throughout the first year of the hostages' captivity, any sense of deadline had been totally lacking. The Iranians treated the hostage issue with no urgency at all. State Department analysts now believe that Iran's leadership began to change its attitude toward the American captives about last August. By then, the hard-line Iranian clergy had consolidated their position in the new government and the American economic sanctions were beginning to hurt. And although the Ayatullah Ruhollah Khomeini had said that he was unwilling to negotiate with Carter or his "henchmen," the Iranians began to look for contacts with Washington.

In the first week of September, the West German government informed American diplomats that Iran wanted to open negotiations about the hostages through a secret emissary. The agent was Sadegh Tabatabai, a brother-in-law of Khomeini's son Seyyed Achmed and a former Deputy Prime Minister under Mehdi Bazargan.

Washington knew all about Tabatabai, who had been educated in West Germany. West German Chancellor Helmut Schmidt and Foreign Minister Hans-Dietrich Genscher had begun pressing Iran to release the hostages right after the embassy was seized. Genscher had his first secret contact with Tabatabai early last year in Belgrade at President Josip Broz Tito's funeral. Tabatabai subsequently, in February and March, made several trips to Bonn, one public and ostensibly on other business, the other secret, followed by additional secret trips by other Iranian envoys. West Germany's efforts were closely coordinated with Washington's, and by March it seemed serious negotiations on the hostages might be about to begin. Then came the aborted rescue mission, causing the Iranians angrily to break off the process. It was not until August that the West Germans were able to persuade the Iranians to resume exploratory talks.

Tabatabai in September offered a remarkable test of his credentials and Iran's willingness to get down to business. He sent the West Germans a message that within the next few days Khomeini would publicly spell out four demands in exchange for the hostages' release, and provided the text of those demands. As if he were reading a script, Khomeini interrupted a rambling anti-American speech on Sept. 12 to list the four conditions exactly as Tabatabai had detailed them. They were: a U.S. pledge not to interfere in Iranian internal affairs, the unblocking of Iran's frozen assets, elimination of all economic sanctions and U.S. claims against Iran, and the return of the Shah's wealth in the U.S.

A small working group headed by Christopher was immediately set up and started to prepare bargaining tactics. The group weighed two possible strategies: detailed negotiations that would resolve all the financial and trade issues before a hostage release or a "quick and clean" approach that involved only a simple statement of broad principles by the U.S., which would lead to an immediate release but leave the details for later. The group opted for the quick and clean tactic.

Genscher arranged for two days of meetings between Christopher and Tabatabai in an official guesthouse on the outskirts of Bonn on Sept. 18 and 19. Christopher presented the quick and clean solution, and the Iranian seemed open to the idea. Recalls one U.S. participant in the talks: "He was obviously interested. We thought we were very close to getting something done. At last we had a conduit to Khomeini." But the possible breakthrough was soon smashed. Iraq invaded Iran, and the leadership in Iran turned its attention away from the hostages. The American diplomats switched to the other alternative of detailed negotiations. After the American election, the possibility of a deal faced a new and strict deadline: Jan. 20, the Inauguration Day of Ronald Reagan.

On Nov. 10, Christopher flew to Algeria to present the first specific American response to the four Khomeini conditions, which had been adopted by the Iranian parliament on Nov. 2. Algeria was the natural intermediary because it had been representing Iran's interests in the U.S. since the closing of Tehran's embassy in Washington in April 1980. Two weeks after the Christopher mission, Iran sent a message that showed some curiosity about the U.S. proposals. On Dec. 2, Christopher arrived in Algiers with added detail on the American position and suggested ways of solving the toughest issue: the frozen Iranian assets.

The Iranian reply this time was a stunner. "It was outrageous," bellowed one U.S. official. On Dec. 21, Tehran demanded the payment of $24 billion in cash and gold. That amount was the Iranian estimate of the value of the assets frozen by the U.S. Government, interest owed to Iran and the holdings of the late Shah's estate. American officials seriously considered breaking off the talks as hopeless. Instead, they decided to ignore the bizarre $24 billlion figure and to push ahead with the discussions. The Iranians never again mentioned the $24 billion demand.

The negotiations returned to reality on Jan. 6, when Iran sent the U.S. a list of 15 questions about a new American proposal that had been relayed to Tehran four days earlier. U.S. officials noticed that Iran for the first time was using not only the language of the U.S. draft proposal, but also the American numbers. They had quietly dropped their own estimates of frozen assets in American banks, for example, from $14 billion to less than $10 billion. Working through the night in Washington, State Department officials compiled a lengthy response that was forwarded to Algiers the next day.

But the Algerians did not send the message on to Tehran. They complained that it was too complicated for the Iranians, contending that even they could not understand it. The Algerian action was an incentive to Christopher to come back to Algiers because serious negotiations appeared about to start.

Christopher returned to the Algerian capital on Jan. 8 with a new dispatch for Tehran. After transmitting the message, he decided to stay an extra day or two just in case something might happen. It did. More questions arrived from Tehran on Jan. 10, and then the rush of negotiations continued unabated.

American Ambassador Ulric Haynes Jr. and his wife Yolande hastily cleared out spare bedrooms at the embassy for Christopher and his colleagues. The sleeping arrangements hardly mattered. Over the next twelve days, the U.S. negotiators would rarely nap for more than two hours at a stretch.

As tension mounted, the Americans tried to divert themselves with crossword puzzles and, in spite of their lack of sleep, tennis on the embassy courts. Once, while waiting for a particularly critical Iranian reply, the Americans joshingly cast an imaginary movie of the negotiating drama. They agreed that Henry Fonda or Jason Robards should play the lead, poker-faced Christopher. Karl Maiden was their choice as soft-spoken Harold Saunders, the State Department's Near Eastern specialist. Peter Ustinov was assigned the role of Alec Toumayan, the team's balding, urbane interpreter.

Dinners at the embassy featured game from the Ambassador's personal backyard preserve, including duck, rabbit, chicken and lamb. Indeed, by the end of the negotiations, the Ambassador's stock was down to a desert fox, and that, said Arnold Raphel, a special assistant to the Secretary of State, "was probably not very tasty."

The deadline, set by Carter as Jan. 16 and later extended to Jan. 20, seemed out of reach, largely because of the issue of how to deal with the loans that the Iranians owed American banks. Just as the Americans were becoming discouraged about the issue, Tehran provided the solution. Iran said that it would return enough money to pay back the loans. Said one participant in the negotiations: "Suddenly it became very clear that we had a break. We got on the same wave length with the Iranians--a swap." Lawyers, bankers and Government officials quickly pushed to accelerate the development of new figures and accounting details to comply with the Iranian proposal.

The talks moved swiftly on all fronts. At 12:40 a.m. Sunday in Algiers, Christopher went to the Algerian Foreign Ministry to study the Iranian reply to a number of American reassurances concerning the passing of assets from the Algerian escrow account to the Iranians once the hostages were released. It appeared that the gap between the U.S. and Iran was now virtually eliminated, and Christopher phoned Washington. Speaking with lawyerly caution, he told Vice President Walter Mondale: "We do not yet have a final agreement, but we may be very close."

Nearly four hours later, Behzad Nabavi, Iran's chief hostage negotiator, said in Tehran that an agreement had substantially been reached. The Algerians were so certain that the ordeal was near an end that they dispatched a planeload of Algerian journalists to Tehran to cover and film the hostages' release.

By Monday morning in Algiers, there was evidence of further progress. At 7:17, Christopher met with Algerian Foreign Minister Mohamed Seddik Benyahia and signed two declarations that would set up a complex procedure for the return of Iran's frozen assets upon release of the hostages. At the same moment in Tehran, Nabavi was signing his copy of the declarations. "At last I can smile again," beamed Christopher after putting his name on the documents with a felt-tipped pen that he borrowed from Saunders as a sign of appreciation for his work on the accord.

Yet, as so often during the 14 months of the hostage crisis, an unexpected glitch soon developed. Until Monday afternoon, the Iranian Central Bank had not taken part in the talks. When Ali Reza Nobari, the director of the bank, finally saw the agreement, he rejected an eleven-page appendix relating, among other things, to Iran's right to claim deposits or interest that might surface in the future.

The entire settlement was again in question. Christopher worked through the night to keep the settlement on track. After frantic phone discussions between bankers, diplomats and the White House, Nobari's objections were overcome.

By 11:45 a.m. Tuesday Algerian time, some $7.9 billion in Iranian assets had been placed in an escrow account for the Central Bank of Algeria at the Bank of England. Christopher returned to the embassy, telling reporters as he walked in, "Just say I'm a happy man." Inside the building, embassy staffers were about to uncork 24 bottles of Mumm's Cordon Rouge champagne. --By Edward E Scharff.

Reported by Gregory H. Wierzynski and Roberto Suro/Washington

With reporting by Gregory H. Wierzynski, Roberto Suro

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