A Special Investigative Report
from the Western Journalism Center
with the assistance of the Iran Brief

By Kenneth R. Timmerman

© 2000, Western Journalism Center

The Clinton administration is hoping to conclude a “package deal”
with the government of Iran in time for the November elections that
would resolve 20 years of hostility between the United States and Iran,
lead to renewed diplomatic relations, and give President Clinton a much
sought-after “legacy” in foreign affairs, according to interviews with
intermediaries directly involved in the negotiations and former U.S.

If successful, the deal would restore complete commercial ties
between the two countries, allowing U.S. oil companies to invest in Iran
and to buy Iranian crude oil while allowing President Clinton and Vice
President Gore to claim credit for “resolving” the current oil crisis,
all in time for the elections.

The move is also aimed at generating sizable campaign contributions
to the Democratic National Committee, as well as donations to the
Clinton Library in Little Rock, Ark.

To win the approval of the Iranian government — the main sticking
point for the scheme — the Clinton administration has taken
extraordinary steps to protect Iranian government assets in the United
States from being used to compensate the families of victims of
Iranian-backed terrorist attacks. In a series of successful lawsuits
brought under a 1996 anti-terrorism law, the families have won awards
totaling more than $1.6 billion against the Iranian government.

Although President Clinton personally told the families he would help
them win compensation from Iran, the families and their lawyers claim
the president has instead instructed the Justice Department to defend
the Iranian government position in U.S. courts.

“They have more Justice Department lawyers defending the Government
of Iran than they do working on the Microsoft anti-trust suit,” said
Thomas Fortune Fay, a lawyer for the family of Alisa Flatow, who was
murdered on April 9, 1995 when Iranian-backed terrorists drove an
explosive-rigged van into an Israeli bus in Gaza.

To deflect congressional support for the families, where a third bill
is now pending that would force the administration to turn over Iranian
government assets to the families, a top Treasury Department official
lied to Congress last year about the extent of Iranian government assets
in the United States.

The official, Deputy Secretary Stuart E. Eizenstat, failed to disclose under direct questioning the existence of a $400 million Pentagon account held in escrow for the government of Iran since 1979, which Senate aides say they discovered by “pure chance” in discussions with low-level Pentagon employees.

On June 23, the Treasury’s Office of Foreign Assets Control, which is
responsible for Iran’s blocked assets in the United States, admitted in
response to a subpoena from the families that it had destroyed an
estimated 800-900 licensing records related to Iran’s assets during an
office move beginning this April. Some of the records dated from 1979
and had been stored since then without incident.

“At best, destroying the records could be construed as obstruction of
justice,” said Fay.

Secretary of State Madeleine Albright has personally called several
members of the House-Senate conference committee, threatening to have
President Clinton veto the entire budget just before the elections to
keep the anti-terrorism provision from becoming law, according to
congressional aides.

On March 17,

Albright told a pro-Iranian lobbying group
that the proposed law would “destroy prospects for a successful dialogue with Iran.” In announcing a partial lifting of the ban on trade with Iran, she told the group that the administration was seeking “a global settlement of outstanding legal claims between our two countries.”

The proposed “global settlement” comes at a time when the Clinton administration is sending conflicting signals on Iran. On Thursday, Sept. 14, the Financial Times of London reported that a Houston-based oil firm, CONOCO, was facing investigation by the U.S. Department of Treasury for a potential violation of the U.S. trade embargo on Iran, while just 24 hours later Albright sat down with Iranian Foreign Minister Kamal Kharazzi in New York as part of a small United Nations forum to discuss Afghanistan. It was the first such meeting between a U.S. Secretary of State and an Iranian foreign minister since the seizure of the U.S. Embassy in Tehran by Islamic revolutionaries in November 1979. The U.S. severed diplomatic relations with Iran shortly afterwards.

The State Department was quick to downplay the meeting.

“This was a 6+2 forum aimed at resolving the crisis in Afghanistan,” a spokesman for the department’s near eastern affairs bureau said on Sept. 15. “It was hosted by the United Nations and was not a one-on-one session between the U.S. and Iran.” Nevertheless, until now the Iranian government has refused any public show of cooperating with the United States, and bowed out of a similar meeting with Albright two years ago.

Since then, the Iranian government has realized it needs technology available only from U.S. or British oil companies in order to maintain production at its aging on-shore oil fields. This has forced hard-liners in Tehran, including Supreme leader Ayatollah Ali Khamenei, to soften their stance on talking to the U.S.

“The Iranians now see an interest in a global settlement because they would get cash back from the U.S.,” said Patrick Clawson, an Iran scholar with the Washington Institute for Near East Policy. “This would allow them to describe the settlement as a political victory.”

Secretary of State Albright bent over backwards to make personal contact with her Iranian counterpart, to the point of appearing foolish.

“But while Albright lingered at the conference door after the meeting ended, Kharrazi waited inside,” the Washington Post noted. Hossein Nosrat, spokesman for Iran’s mission to the United Nations, told reporters dryly: “I’m not aware of any U.S.-Iranian dialogue in this meeting.”

Ever since the Tehran hostage crisis, both governments have placed a taboo on public meetings. Even back-channel talks have led to disaster. In 1980, then-National Security Adviser Zbigniew Brzezinski consulted secretly in Algeria with Iranian Foreign Minister Sadegh Ghotbzadeh to negotiate an end to the hostage crisis. When their meeting was exposed in Tehran by a press report appearing in the U.S., Ghotbzadeh was fired, arrested, and eventually executed.

In November 1986, clandestine efforts by the Reagan administration to swap arms for U.S. hostages held in Lebanon by pro-Iranian groups backfired when a rival faction in Tehran leaked word of the contacts to a leftist newspaper in Lebanon. The Iran-contra affair triggered a seven-year investigation by Independent Counsel Lawrence Walsh – — the longest independent counsel investigation in U.S. history — but resulted in few indictments or findings of actual malfeasance. Key participants, such as former National Security Council staff member Oliver North, were granted immunity in exchange for public testimony.

The Clinton administration sought to distance itself from the secret back-channel negotiations of its predecessors by offering publicly to talk to Iran, either directly or through “authoritative” emissaries.

“The United States has been open to a government-to-government dialogue with Iran since the Bush administration,” National Security Council aide Bruce Reidel told the Jewish Institute for National Security Affairs Nov. 5, 1997. “We remain interested in sitting down face to face with the Iranian leadership to discuss all issues of concern to both states. We have no preconditions. We only insist that the dialogue be authoritative.”

Iran never responded to these offers — at least, not in public. But behind the scenes, messages continued to be exchanged, threats delivered and deals crafted, according to former U.S. officials, foreign diplomats and intermediaries involved in the exchanges. Only once, when an expatriate Iranian journalist writing in a Kuwaiti newspaper last year alleged that President Clinton had sent a secret letter to Iranian President Khatami offering warmer ties between the two countries, did the mainstream press get a glimmer of what was really going on. The State Department eventually confirmed that President Clinton had sent the letter, but refused to describe its contents, except in general terms.

Intense U.S. rhetoric against Iran’s support for international terrorism and its acquisition of ballistic missiles and nuclear weapons technologies has helped deflect press attention from the Clinton administration’s secret dialogue with Tehran for the past seven years.

President Reagan’s arms-for-hostages swap was generally perceived as misguided and was widely condemned as bad policy. But even Reagan’s critics agreed that it was intended to serve a clear humanitarian goal: obtaining the release of U.S. citizens held captive in Lebanon. Reagan’s supporters claimed that the initiative also served America’s long-term strategic interests because it helped parry a Soviet thrust then under way to infiltrate and influence the Iranian government.

Documents obtained from the Iranian intermediaries working on the current back-channel efforts show that President Clinton’s efforts are ultimately aimed at far more mundane goals: securing campaign donations for the DNC from U.S. oil companies, and leveraging contributions to the Clinton Library in Little Rock, Arkansas, where the President plans to spend time after leaving office in January 2001.

And for Clinton inner circle members, such as Lanny Davis, now a trade lawyer with the gold-plated Washington lobbying law firm Patton Boggs, it could mean six-figure commissions and legal fees.

“Lanny Davis is taking the lead in lobbying the president on lifting sanctions,” one source involved in the complex negotiations said.

(Davis was traveling overseas this week, but left a message in response to calls that he “hasn’t done anything on Iran” and suggested that “you may have the wrong person.”)

According to a Sept. 14 letter intended to authenticate the intermediaries to the Iranian government, “a concerted, behind-the-scenes effort between now and President Clinton’s departure from office can lead to the removal of U.S. trade sanctions on Iran.”

The letter boasts that the intermediaries “will have the assistance of experts with direct access to the president and his top appointees for international trade,” and cited Patton Boggs and the rival law firm of Steptoe & Johnson as actively involved in the lobbying effort. Former Clinton political appointees work at both firms.

“Clearly this president is hoping to make an overture to Iran before he leaves office,”

a top Clinton donor said
late last year. “This decision has been taken. Now it’s just a question of how to engage Iran with our eyes open.”

Washington Institute Iran expert Patrick Clawson agreed. “Clinton would love to open an embassy in Iran. He sincerely believes in reconciling peoples and resolving long-standing disputes.”

Both Clawson and former administration officials who spoke on condition of anonymity believe political considerations will keep the Iran deal on hold until just after the November elections.

“Clinton dearly wants to take a trip around the world during the interregnum between the elections and the inaugural in January,” Clawson said. “Cuba, Vietnam, Iran — and why not Libya on the way back? He’d love to do that. That’s his ideal trip.”

But recent signs, including the administration’s surprise decision to allow Iranian Foreign Minister Kamal Kharrazi to embark on a lobbying tour across the United States last week —

as first reported by WorldNetDaily.com on
— suggest that parts of the deal could be announced within days.

Behind the scenes, a secret Iranian government emissary has been in the United States since the end of August, quietly making contact with Iranian-American groups to win their approval for a global settlement between the United States and Iran. The emissary, Iran’s only Jewish member of parliament, Maurice Motamed, has been quietly urging Iranian-American Jews and American Jewish leaders to drop their opposition to ending U.S. trade sanctions on Iran. He argues that opening trade will benefit all Iranians, including Iran’s beleaguered Jewish population, according to sources approached by Motamed in Los Angeles.

“Motamed told us that the decision to renew relations with the United States has been taken at the highest level in Iran,” the sources said.

“This is not President Khatami’s initiative: it has been decided by the Supreme Leader, Ayatollah Khamene’i.”

Known for his vehement anti-American rhetoric, Ayatollah Khamene’i is a hard-line cleric who has repeatedly scoffed at the notion of a dialogue with the U.S. But he is also perceived as a realist who prefers compromise to defeat.

President Clinton can lift the U.S. ban on trade with Iran with a simple stroke of the pen, by annulling

Executive Order 12959,
which he signed on May 6, 1995. Lifting the sanctions would allow U.S. oil companies to purchase crude oil from Iran, thus alleviating any shortfall that may result from a decision by Iraq to withhold its oil from the market.

While most oil industry experts argue that there is no shortage of oil on today’s market, and that other factors including maintenance problems at U.S. refineries have contributed to high home heating oil costs in the U.S., President Clinton would be sure to claim a political victory if oil prices go down.

But for Clinton’s October Surprise to be a success, another key part of the puzzle must fall in place.

TOMORROW: Part 2 — “Israel, Pollard and Iran’s ‘Jewish spies’: How a complex, 3-way diplomatic deal fell through”

Editor’s note: The

Western Journalism Center
is a non-profit, tax-exempt organization that sponsors independent investigative reporting projects into government fraud, waste, corruption and abuse. The charity was founded by Joseph Farah, now editor and chief executive officer of WorldNetDaily.com, but is an entirely autonomous company.

If you would like to support more journalism like Kenneth Timmerman’s “October Surprise” series with tax-deductible contributions, you can do so by calling 1-800-952-5595, by writing to the center at P.O. Box 2450, Fair Oaks, CA 95628, or by making your donation




Kenneth R. Timmerman
is a veteran investigative reporter who has published three books on the arms trade and intelligence issues.

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