Settling Up

Iran pays a $420 million claim

When it comes to haggling about old debts, Iranian officials give no quarter. Not many dollars either. For two years they hobbled efforts of U.S. bankers and lawyers to settle claims arising from Iran's seizure of U.S. hostages in 1979. So last week, when Iran paid $420 million owed to the U.S. Export-Import Bank, the announcement prompted speculation that the country may be seeking warmer business relationships in the West. State Department officials, though, warned against expecting any improvement.

With its latest decision, Iran has agreed to payments of $896 million to U.S. banks from a $1.42 billion escrow fund deposited in the Bank of England as part of the January 1981 hostage-release agreement. Iran had said it would repudiate its debts to American banks in late 1979, after Jimmy Carter froze Iranian assets in the U.S. Bankers from both countries now meet almost daily at the London branch of Iran's Bank Melli to allocate the fund, and participants say the talks have become increasingly free of polemics. The biggest settlement to a commercial bank came in July, when Iran agreed to repay $136 million to New York City's Manufacturers Hanover Trust.

Assistant Treasury Secretary John Walker Jr. viewed the payments as a new effort by Iran to demonstrate its trustworthiness and eagerness to conduct trade. Said he: "The Iranians are doing all they can to restore their credibility in the world banking community." Most observers, however, see no real changes taking place. "Politically, our relations are bad, and, if anything, they seem to be getting worse," said one State Department official. Indeed, progress remains glacial at the Iran-U.S. Claims Tribunal in The Hague, where a panel has settled only 65 claims, mostly by U.S. citizens and businesses against Iran, for $78 million. Still unsettled: 3,649 claims.

Iran's repayment to the Ex-Im Bank will be a boost to that federal agency, which makes loans and loan guarantees for the purchase of American exports with the aim of stimulating U.S. business and creating jobs. The bank has been coming under attack by budget cutters in the Reagan Administration. The $420 million payback will reduce the agency's need to borrow in the credit markets and thus may slightly ease pressure on U.S. interest rates. In addition, the settlement improves the agency's image by paring down its roster of deadbeats. Revolutions like Iran's have resulted in bad loans, including $26 million to pre-Mao China and $36 million to pre-Castro Cuba, that are unlikely ever to be paid off. sb This file is automatically generated by a robot program, so viewer discretion is required.