Iran Linking of Funds, Captives Obstacle: Baker

The United States would consider returning impounded Iranian funds if officials in Iran were not connecting the money to cooperation on gaining the release of American hostages, Treasury Secretary James A. Baker III said today.

“The Iranians to some extent have changed the reference of the debate . . . by suggesting somehow that if these funds are returned, hostages will be released or something like that and relating it to the question of hostages,” Baker said on NBC’s “Today” show. “Hostages have absolutely nothing to do with this.”

“We’re taking a look at the question of whether they should be returned,” Baker said of the funds, held by a tribunal established to settle possible claims against Iran.

Intercession Offered

At least five times recently, the Speaker of the Iranian Parliament, Hashemi Rafsanjani, has said his nation would intercede on behalf of American hostages in Lebanon if Washington releases frozen Iranian assets.

On Nov. 28, Rafsanjani said in a sermon at Tehran University that “if America stops being a bully and returns our material held there, we will call on the Lebanese people to help you on the question of the hostages.”

The Iranian assets, believed to total in the billions of dollars, include more than $500 million in an escrow account, $300 million worth of weapons stored in a Virginia warehouse and hundreds of millions of dollars worth of military equipment paid for by the late Shah Mohammed Reza Pahlavi but never delivered to the fundamentalist Islamic government that succeeded him in 1979.

Iran, outgunned by Iraq in its 6-year-old war, badly needs weapons and spare parts for its largely American-supplied armed forces.

Representatives of Iran and the United States met last month to discuss return of the money held in escrow, but stopped short of a final accord. Further talks are likely.