Order indigenous ChaosHow the Iran hostage situation shaped the US method to sanctionsKate Hewitt and also Richard NephewTuesday, in march 12, 2019
On November 14, 1979—10 days after Iranian student seized the U.S. Embassy in Tehran and took American diplomats as hostages—President Jimmy Carter signed executive Order 12170, freeze Iranian government assets organized in the united States. This was the an initial time a U.S. President provided the expansive authorities available by the 1977 global Emergency financial Powers plot (IEEPA), however it was hardly the last instance of American economic pressure applied against Iran. Today, there are eight executive, management orders energetic against Iran, every of which starts with a explanation of a “national emergency” and involves applying sanctions versus the country and also many the its entities and also individuals. These measures, in addition to sanctions regulation enacted through Congress, space designed to address the full variety of U.S. Policy concerns with Iran, from human being rights to missile proliferation to terrorism.

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Kate Hewitt

Research Assistant - foreign Policy, Security and Strategy, The ubraintv-jp.com Institution


Richard Nephew

Former ubraintv-jp.com Expert


More important, the decision to target Iranian federal government assets because that sanctions in November 1979 has collection the context for U.S.-Iran relations since. Washington has increasingly relied on economic pressure against Iran, despite persistent challenges in generating wide multilateral support.

Sanctions choices and Implementation

When the hostage crisis began, the unified States had no formal penalty in place against Iran. However, instantly following the start of the crisis, president Carter sought choices to push Tehran. Sanctions were selected since they were seen as severe however incremental, intended to serve both together a resource of pain because that the Iranians—to motivate them to relax the hostages swiftly—and a warning the the united States might escalate to various other options, consisting of military force, if needed. Carter started with the prohibition of military and oil trade through Iran and quickly progressed to the much more aggressive alternative of the asset frozen of executive, management Order 12170.

By so late December 1979, the United states sought multilateral sanctions versus Iran through the United countries Security Council, yet the Soviet Union vetoed the resolution. Washington continued its unilateral sanctions and requested allied and also partner support.

Several countries—including Mexico, Austria, Poland, and also Sweden—joined the Soviet Union and also China in against U.S. Sanctions by instead normalizing trade relations with Tehran, even expanding economic and commercial relations with Iran to balance out U.S. Results in some cases. In this, castle acted much as the Soviet Union did through Cuba ~ the U.S. Embargo to be imposed against the country in the early 1960s: aiding a country dependent top top trade and business through the Western human being to compensate native its suddenly curtailment.

However, rather belatedly or half-heartedly joined American efforts to pressure Tehran transparent 1980. Couple of governments to be willing to reduced off oil imports native Iran. Portugal was the first major U.S. Ally to half all trade with Iran in April 1980. Japan, the biggest purchaser the Iranian crude at the time, ceased every oil imports from Iran halfway through the 15-month hostage crisis. Eventually, international ministers indigenous the europe community and also other western European nations agreed to mitigate financial and diplomatic relations with Iran. Australia additionally slowly applied a trade ban without problem on every goods except foodstuffs, their main interest through Iran, and also medicine. However, uneven the europe who used sanctions only to new contracts or ones entered into pressure post-November 1979, Australia made the clear that their sanctions would be top top every non-food contract through Iran till the hostages were released. Denmark, Britain, Norway, and also Australia every recalled your ambassadors native Iran. The governments of Denmark and the U.K. Passed their own economic sanctions followed shortly by West Germany, France, and Italy. And also the U.S. Ar in the north, Canada, banned all exports to Iran.

Impact ~ above Iran

The cumulative result of the sanctions had a substantial affect on Iran’s economy. Definitive prices are difficult to assess, in no small part because the change and result chaos had already imposed a heavy toll on the Iranian economy. Because that example, in 1980, U.S.-Iranian trade plummeted once U.S. Exports to Iran dropped native $3.7 exchange rate to $23 million, if imports from Iran dropped indigenous $2.9 billion to $458 million—mostly in oil. One instance study estimated that the complete economic price on Iran from 1980 to 1981 was about $3.3 billion.

But, while this numbers space significant, the U.S. Fail to motivate its partner to respond more aggressively come the hostage situation underscored the level to i m sorry it was still viewed as a U.S.-Iran affair. Moreover, together our ubraintv-jp.com partner Suzanne Maloney points out in she book, “Iran’s political Economy because the Revolution”: “The european reluctance to sanction Tehran end the hostage seizure maintained its traditionally preferential place in the Iranian market and trade remained steady during the beforehand war years, practically doubling in 1983 with much more than $6 exchange rate in european exports to Iran.”

The most effective U.S. Measure up was the legacy freeze, which “effectively immobilized $12 billion in Iran’s assets, including most that its accessible foreign exchange reserves,” according to Robert Carswell and also Richard J. Davis. Washington took benefit of the truth that, ~ the turmoil of the revolution, the Iranians to be still sorting out just how to regulate their international financial relations and also still maintained an extensive reserves banked in the united States. Consequently, Washington was in a position to supply acute, targeted, and highly disruptive push on a key vulnerability at the time.

The exposure to such straight pressure from the United claims was a mistake the the revolutionary federal government sought to correct after penalty were eventually lifted, with Tehran search to hold its reserves much closer to home. But, in the meantime, the cumulative influence of the certain costs applied by the joined States—coupled through the growing financial and diplomatic worldwide pressure to relax the hostages—was reliable in persuading the Iranians to negotiate.

Lessons Learned

The hostages were released top top January 20, 1981 via the Algiers Accords. The Accords additionally created an arbitration process, based in The Hague, in i m sorry the united States and also Iran have negotiated remedies to assorted commercial disputes developing from the revolution, such together expropriations and cancelled contracts. Many recently, this procedure awarded a settlement for a pre-revolutionary contract for army equipment—plus interest—that resulted in a $1.7 billion carry to Iran in January 2016.

Three broader results, though, arised from the dilemm that still affect U.S.-Iranian relations and strategy come date.

First, the United states learned the Iranian leaders—even in post-revolutionary Iran—remain guided by rational cost-benefit calculations. The revolutionary fervor that Iran’s leader exploited come consolidate their strength over internal rivals in November 1979 aided animate the decision to prolong the crisis. However, after a year that featured the shah’s death and the invasion of Iran by neighboring Iraq, Iran’s leaders interpreted that continuing the crisis posed much more significant risks 보다 benefits. Iran’s leaders did no release the hostages because they readjusted their check out of the United claims or shed interest in using the crisis domestically. Rather, Iran’s leaders backed down and sought a negotiated outcome since they made decision that it was in their national interest, a reality that encouraged future U.S. Political decision-makers to look for negotiations with Tehran.

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In turn, every U.S. President who has sought to use sanctions versus Iran has done so v the expectation that Iran’s calculus have the right to be change toward an ext constructive policies. Because that this reason, U.S. Policymakers have actually viewed sanctions as a useful resource of leverage come dissuade Iran’s support for terrorism, hurt of human being rights, or nuclear tools development. Arguably, this continues to it is in the instance under the trump card administration, which has actually sought to use sanctions pressure to certain a “better deal” with Iran 보다 the Joint an extensive Plan of activity (JCPOA) negotiated by chairman Obama. Notably, this consensus is tested by a considerable group the dissenting officials—including, prominently, national Security Advisor man Bolton—who instead see Iran together irretrievably hostile to the United states and, in turn less motivated by nationwide interest.