The Algiers Accords: The Way the Crisis Was Resolved

Abstract

The US government took a series of actions in order to exert both economic and political pressure on Iran to release the hostages.¹ The most effective of these was the freezing of Iranian assets. The freeze had the following implications. To begin with, it deprived Iran of access to over $14 billion of assets and properties. Secondly, it restricted Iranian international transactions by closing down the US financial markets to Iran, and by making it impossible for Iran to deal in US dollars in the first few months of the freeze. Thirdly, it created a situation whereby Iran was required by many of her trading counterparts to pay in cash for her international transactions despite her high credit rating. Fourthly, it started a flood of litigation in the United States and Europe engaging Iran in an unprecedented legal battle. The Iranian government was faced with hundreds of court cases. Over 450 US banks and giant corporations were alleging that the Iranian government was responsible for the liabilities of all the Iranian public entities. Finally, the freeze provided effective leverage in the negotiations for the release of the hostages which resulted in an agreement that was to the advantage of the United States.