On this day in 1981 agreements were signed between the United States and the nascent Islamic Republic of Iran in order to bring an end to the embassy hostage crisis in Tehran and the release of Iranian assets which had been seized by Washington. While the accords did lead to the release of the hostages, they had an enduring legacy on the relationship, or lack thereof, between Washington and Tehran which still persists in the form of US-imposed sanctions and a defiant posture by the Iranian government.
What: A series of agreements, primarily to resolve the Iran hostage crisis
When: 19 January 1981
Where: Algiers, Algeria
During the chaotic aftermath of the Islamic Revolution in 1979, the popular uprisings that led to the ousting of Shah Mohamed Reza Pahlavi, a large group of between 300-500 Islamist students stormed the US Embassy compound in Tehran on 4 November, and held 65 American citizens hostage. This was said to be in response to the Shah's arrival in the US for medical treatment in the preceding weeks. The students demanded his extradition.
In the first weeks of the crisis, thirteen of the hostages were released, including all of the women and African-Americans as they were considered to be "oppressed minorities". The rest were held for 444 days. US President Jimmy Carter responded to the crisis by imposing unprecedented sanctions on Iran, cutting off military and oil business ties and freezing its assets. This was followed by the severing of diplomatic relations on 7 April 1980.
After a botched rescue mission in the same month which resulted in the deaths of eight US servicemen due to a sandstorm in the Iranian desert, all of the hostages were freed on 20 January 1981 moments after Carter's successor Ronald Reagan had been sworn in after a landslide election victory. The handling of the hostage crisis was particularly damaging for Carter's election campaign.
However, prior to this there was a series of secret negotiations between the US and Iran, with Switzerland and Algeria agreeing to represent the interests of both countries respectively. Algeria became the main intermediary, overseeing what became the Algiers Accords.
The main outcome of the accords was the freeing of the hostages and the establishment of a special tribunal to settle hundreds of commercial and trade disputes and the unfreezing of Iranian assets. The tribunal still operates at The Hague. In one of its more controversial rulings, in 2016 it awarded a settlement to Iran for a pre-revolution contract for military equipment, with interest, amounting to $1.7 billion.
Other important provisions in the accords included the US agreeing not to interfere in Iran's military or political affairs; the commitment by the US to drop all legal claims against Iran in US courts, including prospective claims made by the hostages themselves; and that the US would return property and assets belonging to the Shah and his family to the Islamic Republic. The latter was only partially fulfilled because of legal complexities in the US.
What happened next?
On 20 January 1981, all of the US hostages landed in Algiers, returning to their country a week later. Contrary to the terms of the accords, the US didn't lift all of the sanctions nor did it adhere to the principle of non-interference; the Reagan administration, for example, funded Iranian exile opposition groups designated as terrorists by Tehran.
For its part, Iran continued to support and endorse hostage-taking and terrorist attacks against US interests. This led to the US designation of Iran as a State Sponsor of Terrorism in 1984.
The overall effect of the Algiers Accords favoured the US more than the Islamic Republic, which became further isolated as a pariah state. Iran's vulnerable economic and political position also made it ripe for invasion by Saddam Hussein with the devastating Iran-Iraq War (1980-1988).
In Iran, Ayatollah Ruhollah Khomeini's supporters used the incident to consolidate power against the more democratic-leaning politicians. However, despite the framing by the Islamic Republic of the crisis and the accords as a victory over the "Great Satan", others, including President Abdolhassan Bani Sadr and former Prime Minister Mehdi Bazargan, were critical of the accords and felt that Iran failed to secure the wealth of the Shah and recover all of its frozen assets.
The Algiers Accords and the events leading to them being signed, both the hostage crisis and the US-backed coup that brought the Shah to power for the second time, have kept the US and Iran on a collision course ever since and helped shape US policy on Iran for successive presidents, primarily in the form of economic sanctions. Iran has also used the experience to become more self-reliant and defiant on the international stage, with Tehran citing the Algiers Accords frequently as a reminder of the legally binding agreement with the US against interference in its affairs.
The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.