Me:

You're right, I didn't justify the claim. I was discussing the book, and I raised the Chase Manhattan debate as an illustration of what it offers. It was not my intent to summarize the argument.

You've raised a lot of points here. Let me try to answer them all:

[1] First and foremost, I don't think "conspiracy theory" is an accurate label for what we're discussing here. Even if all the accusations are true, they don't show a conspiracy in the usual sense of the term. Rather, they show a rich and powerful lobby exerting influence on public policy in a way that serves the financial and legal interest of the corporation (Chase Manhattan) at the expense of the public interest. Although it includes its share of deception (as lobbying generally does), as well as some actions which were legally and ethically dubious (as is, alas, not uncommon in high finance), the initiative was not primarily a criminal activity, unless you count it as a crime to have held the new Iranian government accountable for the Shah's borrowing. This scandal is more along the lines of the Savings & Loan debacle of the late 1980s, not the Kennedy assassination.

[2] Your objection that the schemers would have to be "supremely intelligent" is essentially the same as that offered by James A Bill (the author whose book I was reviewing) and by George Ball, whom he quotes approvingly. I disagree.

My description of the theory in question was "Rockefeller and his allies precipitated the November 1979 crisis (ie, the hostage taking) in order to give Chase Manhattan Bank legal cover to seize enough Iranian assets to erase $4 billion in bad loans which threatened to destroy the bank's credibility." The goal was to seize the assets and what was needed was a crisis. As it turned out, that crisis was the hostage taking, but it didn't have to be hostages. It only needed to be anything sufficient for the President to invoke the IEEPA to freeze Iranian assets and then grant the banks special permission to use those assets to offset outstanding government loans.

The idea that admitting the Shah into the United States to might lead to seizure of the U.S. embassy in Tehran was not a daring prognostication. President Carter had been warned of exactly that as early as March, and throughout the summer the danger of seizure of the embassy was part of the Administration's official reason for not admitting the Shah. Gary Sick and Hamilton Jordan both report that Carter raised the question in the October cabinet meeting in which admission was first seriously considered, and hostage Barry Rosen reported that when the embassy staff heard the news of the admission they were all immediately concerned for their safety.

In raising the week delay between the seizure of the embassy and the freezing of the assets, you seem to be implying that it was necessary for the timing to be just right. (Bill makes a similar implication.) It was not necessary, and in fact, the timing wasn't perfect for Chase Manhattan. The interest payment which was used to trigger the confiscation was due Nov 15. On Nov 5, one day after the embassy seizure, Chase received the instruction from the Iranian Central Bank to transfer funds from a surplus account in a London branch to cover the payment. For reasons never explained (except by us "conspiracy theorists"), Chase shelved the order for ten days. Then, after Iranian assets were frozen, Chase attempted to process the order and found the London branch funds "unavailable" due to the freeze. The following day, when the payment was due, they declared the loan in default, and invoked cross-default clauses to declare all other Iranian loans in default, too. Once the loans were officially in default, these same funds which were not available for making an interest payment, thanks to some happy legal wizardry and an assist from the White House, suddenly were available for confiscation against the defaulted loans.

Some theorists offer the timing of the freeze, conveniently close to the Nov 15 payment deadline, as evidence of perfect timing for Chase Manhattan. I read it as just the opposite: To me it looks like the crisis was precipitated too soon, making it necessary for them to misplace the payment order for ten days. The fact that they were able to adapt to their miscalculation in timing shows that there was room in the plan for the unpredictable vagaries which are inevitable for such an initiative. In other words, it is not necessary to believe, as you suggest, that the "conspirators" were able to plan out every detail with precision.

[3] I'm honestly not sure what corpses you're referring to here. The Revolution as a whole included violence, but the specific crisis in Iranian-American relations triggered by the Shah's entry to America was pretty much bloodless. The hostages were all taken alive, weren't they? Later, there were the servicemen killed in the failed rescue attempt. Who else? This doesn't look like "piles of corpses" to me.

But aside from that, I do "believe in a group of people" who are "completely willing to leave piles of corpses behind in their pursuit of money". There's no need for any conspiracy theory here. Just look at any number of foreign interventions, going back to 1898 if not earlier, not to mention financial support of violently oppressive regimes around the world, and plenty more deaths due to gross negligence regarding safety both at home and abroad. I see no evidence that regard for human life outweighs profit in the large scales of corporate decision-making. Heck, in many cases, the cost-benefit analysis is spelled out right in the corporate memos. Does that make me a UFO nut?

[4] You're right that I didn't spell out all the details that justify my calling the debts "bad" and the confiscations "theft". Your points would be valid if (1) the debts were really in default, and (2) the owners of the confiscated funds were legally liable for those debts. In fact, neither was the case.

The real problem with Chase Manhattan's Iran debts was not just their size, but the shady way in which they were obtained. Even before the Revolution, Iran had a government and a constitution, and the authoritarian Shah at least respected the fiction that his government was accountable to the law. Many of the loans made by Chase Manhattan to Iran were negotiated by the Shah without proper authorization from parliament. In 1977, when a series of large loans were being negotiated with the Shah, Chase's own lawyers in Iran advised that under Iranian law the Shah lacked the authority to incur those loans. In spite of various attempts by Chase to satisfy their legal objections, including securing contrary declarations from various representatives of the government, the lawyers refused to back down from their opinion that the loans were illegal. Eventually, Chase went ahead and signed them anyway, assuring their syndicate partners that all the legal objections had been taken care of.

After the Revolution, the prospect facing Chase was not just that a rogue regime would disown the legal debts of its predecessor, but rather that those debts would be found to have been illegally obtained, leaving Chase liable for the whole amount without recourse and exposed to claims of breach of fiduciary responsibility from its partners as well. The Revolutionary government had every intention of legally nullifying the debts, but they had to move carefully because as long as Chase Manhattan held the cash, they were vulnerable to confiscation. Until November, the Iranian Central Bank played its delicate position perfectly. All interest payments were scrupulously met so that Chase would have no cause to declare default. Meanwhile, Iran was steadily drawing down all of its accounts held in banks controlled by Chase. At the time of the Revolution this amounted to about $12 billion, and by October about $6 billion had been transferred, mostly from the U.S. branches of the multinational bank.

If you accept the claim that the loans made by the Shah were illegal and not binding on the Iranian government, or if you acknowledge that the loan was never really in default at all and Chase Manhattan enngineered a technical default through trickery, then the seizure of funds to cover the loans -- not just its own loans, but also those of its syndicate partners (who advised against the maneuver) -- was illegitimate. I accept both claims, and that's why I characterize it as "theft".

Even after all this discussion, I've still left out a lot of the details. For those who want to follow up, in addition to Bill's book (pp. 328-348) I offer a bibliographic footnote therefrom:

7:10:10 PM  [permalink]  comment []