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Iran Reports Progress in Financial Talks with U.S.

December 30, 1986

THE HAGUE, Netherlands (AP) _ Progress has been made in the U.S.-Iranian talks aimed at returning $507.7 million in blocked assets to Iran, both sides reported Tuesday.

Return of all Iran’s U.S.-held assets has been linked to possible Iranian intercession to help free American hostages in Lebanon.

Officials from the New York Federal Reserve Bank, the U.S. Treasury Department, the Iranian Central Bank and the Iranian government scheduled a second meeting in The Hague Wednesday at the Iran-U.S. Claims Tribunal, according to U.S. Embassy spokesman Sam Wunder.

No reason was given for cancellation of a meeting planned for Tuesday. The talks opened with a 3 1/2 -hour session on Monday.

In Washington, State Department deputy spokeswoman Phyllis Oakley said that the meeting at The Hague was ″constructive, that progress was made, but we do not expect that we will be able to reach final agreement on all issues at this session.″

Mrs. Oakley said the U.S. team was expected to return to the United States soon to prepare for the next round of talks, but she would not give any dates.

She also repeated the U.S. position that the talks are technical dealing with financial issues and have nothing to do with efforts to secure the release of Americans held hostage in Lebanon.

An Iranian government source in The Hague, when asked about the talks, said: ″They have progressed.″

He told The Associated Press the issue should be settled through continuing face-to-face negotiations rather than through recourse to the tribunal.

At issue is $507.7 million left over in Account Number One at the New York Federal Reserve Bank. The account was established by the 1981 Algiers Accords with $3.66 billion in Iranian funds to repay syndicated bank loans. Those same accords resulted in freedom for 52 American hostages held 444 days at the U.S. Embassy in Tehran by Islamic militants in 1979-81.

The new figure of $507.7 million, up from the $506 million used earlier, came from the New York Federal Reserve and reflected accruing interest.

Iranian Parliament Speaker Hashemi Rafsanjani in at least five recent speeches has made return of all U.S.-held Iranian assets a precondition for possible Iranian intervention on behalf of American hostages in Lebanon. Pro- Iranian Shiite Moslem extremists are believed to hold most of the six missing Americans.

The Iran-U.S. Claims Tribunal was set up to adjudicate billions of dollars in financial claims between the two nations resulting from the 1979 Iranian revolution.

It ruled last August that the Account Number One money should be returned to Iran, adding that either side could ask it to decide the terms of repayment if negotiations failed.

The United States agreed to return of the money, but details remain to be worked out.

The tribunal is the only forum where Iran and America have had direct official contacts since diplomatic contacts ended after the U.S. Embassy seizure.

Both the Iranian and U.S. sides stress that the present talks deal only with financial issues and not with political or diplomatic ones.

The Iranian source, who spoke on condition of anonymity, noted that Rafsanjani’s ″statement includes all Iranian assets and all Iranian property in the United States.″ The source added that Account Number One ″is that for sure. That is not arguable. When you talk about this amount, it is Iranian property, no doubt about it.″

The U.S. side is comprised of James Oltman, general counsel of the New York Federal Reserve Bank and the delegation chief; Donald Bittker, the bank’s deputy general counsel, and Richard Newcomb, director of trade and tariff affairs for the U.S. Treasury.

Legal adviser Assadolah Nouri heads the Iranian side, helped by Mohsen Kakavand, head of the Iranian National Bank’s foreign branch.

This is the third series of meetings in recent months on Account Number One.

Issues being discussed include: specifics of a quitclaim absolving the New York Federal Reserve of any responsibility for its management of the account; which of the Iranian bank accounts set up by the Algiers Accords should be used to repay $10 million to $15 million in interest still owed banking syndicates; the final draft of an agreement, and the mechanism for transferring the funds back to Iran.

The United States also holds hundreds of millions of dollars in military equipment bought by the late Shah Mohammad Reza Pahlavi but never delivered to the successor revolutionary government of Ayatollah Ruhollah Khomeini because of U.S. export controls.

Iran demands return of all its assets to help the country in its 6-year- long war with neighboring Iraq.

Update hourly