Not Much Left to Seize

In business terms, both sides have fired their big guns: oil cutoff, attempted bank withdrawal, asset freeze. What further economic weapons can the U.S. use against Iran--and vice versa?

The obvious U.S. tactic might be to embargo food exports to Iran, which amounted to nearly $500 million in the fiscal year ended last September. The American Farm Bureau Federation would support President Carter if he should cut off grain shipments, as he could do under the International Emergency Economic Powers Act. Cries of "Food for crude!" are starting to be heard. The White House, however, has no present intention of halting food supplies. If the U.S. later plugs up this cornucopia, Iran will be less vulnerable than it once was. As a Persian grain trader says, "We are earning $24 billion a year from oil. We can buy food any place we want."

U.S. exports of all kinds to Iran have fallen dramatically: from $3.7 billion in 1978 to under $1 billion this year. Iran gets about 25% of its food imports from the U.S., having bought 816,000 metric tons of American wheat in the past fiscal year. In September the Khomeini government signed a contract to double wheat purchases from Australia, to 520,000 metric tons over the next six months. The price is about $20 higher than America's $185 a ton. Meat from Australia and New Zealand, eggs from Turkey and poultry from Rumania are flowing into Iran. The country has also been going to Thailand for about 15% of its imported rice, and the Thais have plenty more where that came from. Were the U.S. to embargo shipments to Iran, food produced elsewhere would simply move from one international middleman to another and end up in the bazaars of Tehran.

U.S. leverage is also weak because all commercial activity with Iran has declined since the revolution last winter brought about the nationalization of the banks and most private industry. A few years ago, the membership of the Iran-American Chamber of Commerce was a Who's Who of U.S. business. From A (Allis-Chalmers Overseas) to X (Xerox), the list numbered close to 250 and included practically every major U.S. company in international trade.

Now, almost all have shuttered their plants and offices, or turned them over to local workers to run, and brought their U.S. employees home. Johnson & Johnson's plant in Tehran, which made baby products, was expropriated in August. GM still claims a minority interest in a Tehran auto factory, but it has been run by Iranians since GM pulled out the last five Americans and a Swiss a year ago. Last December Du Pont closed its fiber plant in Isfahan.

However, PepsiCo is still shipping concentrate to its Iranian bottlers, and Continental Telephone is proceeding with building a phone cable network for Tehran. One of the largest projects had been the joint venture between California's Fluor Corp. and West Germany's Thyssen to build a $750 million, 200,000 bbl.-a-day oil refinery at Isfahan for the National Iranian Oil Co. The refinery has been a high-priority item for the Iranian government, which fears shortages of kerosene and diesel fuel during the winter. Last week, when the refinery was a month away from partial operation, Fluor called home its 52 remaining American employees, leaving Thyssen to finish the job. The few U.S. businessmen who remain in Iran represent a couple of banks and a computer company, and they are lying low.

There are not many physical assets for either the U.S. or Iran to expropriate. Many U.S. businessmen preferred to export products to Iran or to provide services in exchange for cash on the barrelhead. The Commerce Department estimates that U.S. real estate and other assets in Iran amount to only about $300 million. U.S. businessmen can file claims against the Tehran government's frozen $6 billion to compensate for the assets they stand to lose in Iran.

Iranian properties in the U.S. are even more meager. The most conspicuous among them is the 36-story skyscraper on Manhattan's Fifth Avenue at 52nd Street. It is owned by the tax-exempt Pahlavi Foundation, created by the Shah but now controlled by the Ayatullah's supporters. The Iranians also own some U.S. military spare parts stored in a warehouse at New Jersey's McGuire Air Force Base and awaiting shipment. But, says David Bauer, an economist for the Conference Board, a New York-based research group, "I can't think of a single Iranian investment in a factory operating in the U.S."

In any event, economic sanctions have a dismal record of failure. The long U.S. trade embargo against Cuba has hurt the island economy, but Castro has managed to acquire most basics from the Soviet Union and other suppliers. In the mid-1960s, certain Latin American governments turned to Europe for the military weapons the Americans refused to sell them. There is very little that the U.S. sells to Iran that other countries could not supply.

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