‘Ball Is Still in Iran Court,’ U.S. Says of Hostages

WASHINGTON —  The White House on Tuesday flatly rejected Iranian suggestions that the “ball is now in the American court” in the hostage stalemate.

“The ball has always been in their court,” Bush Administration spokesman Marlin Fitzwater insisted. “It will be as long as there are hostages yet to be released.”

The Administration response reflects President Bush’s strategy of maintaining a relatively low profile on the issue and keeping attention focused on Iran and its Lebanese Shiite Muslim allies.

Bush and his aides are obviously familiar with how the administrations of former Presidents Ronald Reagan and Jimmy Carter were nearly wrecked by direct, highly visible involvement in risky efforts to release American captives in the Middle East.

They are determined to avoid those mistakes and to err, if at all, on the side of too little action, not too much.

Facing no political pressure for dramatic action, the Administration has confined itself to cautious steps aimed at resolving two of the biggest issues that have become entwined with the hostages’ fate--the captivity of about 400 Shiites held by Israel’s Christian allies in south Lebanon and financial claims that Iran has made against the United States.

Bush and his aides continue to issue thinly veiled hints that Israel should release at least some of the Shiites, although aides say that Israel’s chaotic political situation gives the United States little leverage.

On the financial front, State Department legal adviser Abraham Sofaer arrived Tuesday in The Hague for another in a series of meetings with Iranian officials. The two sides have made steady progress toward resolving relatively small claims but remain far apart on the largest issues they face.

Past debacles over the release of hostages form the background for the Administration’s policy. Bush, as Reagan’s running mate in 1980, watched as President Carter tied his future to the fate of Americans held hostage in Tehran. Six years later, he saw Reagan agree to sell arms to the Ayatollah Ruhollah Khomeini’s government in Iran in a trade for hostages, a trade that eventually plunged Reagan’s Administration into its deepest crisis.

Now, with officials in both Iran and Syria calling for a U.S. gesture of “goodwill” in the wake of the release of a second American hostage, Frank H. Reed, Bush is mindful of the mistakes of the past and has shied far away from anything that might appear to be a deal.

“The President and the Administration are always conscious of the experience of Iran-Contra,” Fitzwater said Tuesday. In particular, he noted, Bush and his aides recall “the impact of the hostage families . . . on that situation,” a reference to the widespread feeling that Reagan’s emotional involvement with hostage families clouded his judgment. “We try to keep that in mind in all of our dealings with the hostages,” Fitzwater said.

There are, however, some small gestures that the Administration may be prepared to make.

One possibility involves money. The financial issue between the United States and Iran is often incorrectly described as being about Iranian assets frozen here when Iranian militants took over the U.S. Embassy in Tehran in 1979. In fact, however, all frozen assets were unfrozen in 1981, when the embassy hostages were let go.

What remains are a series of lawsuits between the two governments and cases brought by American companies against Iran.

The Administration is believed to be close to settling one large group of those lawsuits--more than 2,000 “small claims,” suits for less than $250,000, that have been brought against Iran, involving everything from money owed to American schoolteachers to purchases of machinery by the Iranian government. Sofaer is believed to have discussed a lump-sum settlement of those claims during meetings Tuesday in The Hague with his Iranian counterpart, Goudarz Eftekhar.

Sofaer’s meeting was scheduled weeks ago and was not directly tied to the release of either Reed or, eight days earlier, of Robert Polhill, but a settlement of thousands of cases pending before the U.S.-Iran Claims Tribunal might fit the Iranian desire for a “goodwill” gesture.

A far more complicated issue involves thousands of contracts that the United States signed while the late Shah Mohammed Reza Pahlavi still ruled Iran. The contracts promised delivery of military supplies that Iran never received. The United States admits that it owes Iran some money paid for much of the materiel, but the two sides are billions of dollars apart over how much the United States should pay. Iran has claimed $12 billion.

Another area in which a gesture might be forthcoming during the next few weeks involves the roughly 400 prisoners held by the South Lebanon Army, a Lebanese force allied to Israel, and a Lebanese Shiite cleric, Sheik Abdul Karim Obeid, seized by Israel last July.

Asked about the prisoners Tuesday, Fitzwater repeated his by-now-standard line: “Our policy is that all hostages should be released,” but he refused to say whether the Administration considers the Israeli prisoners to be hostages.

The deliberate ambiguity is designed to allow the Administration to put pressure on Israel without seeming to be promoting a deal. There is “no need to discuss the hostage issue” with Israel, which “knows exactly what to do,” said one Administration official who has been closely involved with hostage negotiations. “We don’t need to bang them over the head.”

For the time being, the official noted, there is no one to bang over the head in any case. Despite weeks of negotiations, Israel has only a temporary, caretaker government which may not be strong enough to cooperate.

On Tuesday, Israeli officials said that Israel would be willing to trade its captives for prisoners held in Lebanon, but only if Israel’s own hostages are released. Israel frequently has traded for hostages in the past, in one case releasing 1,100 Arab prisoners to gain the return of three Israeli airmen.

Israel believes that radical Shiite factions are holding an airman and two soldiers captured in 1986.

Times staff writer Robin Wright contributed to this report.