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A Hesitant Ally: Australia–Iran Trade Relations and US Sanctions, 1979–1981

Miguel Paolo Galsim,[1] Centre for Arab and Islamic Studies, College of Arts and Social Sciences, Australian National University


Questions of alliance politics, and the complex balancing between domestic needs and partnership commitments, are crucial in foreign policy analysis. However, as illustrated by the dilemmas facing the Australian Fraser government during the 1979–81 Iran hostage crisis and concurrent American overtures for anti-Iran sanctions, alliance relationships can be turbulent, and allies often act in their own self-interest at the expense of co-operation. While traditional theoretical approaches might ascribe Australia’s reluctance to accept American sanctions to powerful domestic interest groups, this article uses unresearched archival material to contend that the individual reservations of government department officials were more potent in shaping the outcome. Fraser’s Cabinet, persuaded by bureaucratic advice, hesitated to accede to US-led sanctions as they perceived the venture as ethically and strategically dangerous, and were disgruntled when their American counterparts failed to consult their perspectives. Hostile domestic associations were only of partial influence. Accordingly, socially constructed interests, relationship norms and private perceptions should be elevated when making sense of alliances. Thus, the determinants of non-co-operation must not only account for strategic and normative differences within the policymaking elite, but also the way these differences are appreciated or ignored by the other party.

Keywords: Alliance relations, Australian foreign policy, Iran sanctions, US–Iran relations, government officials.


Strategic alliances have long been the centrepiece of Australian foreign policymaking. Australia matured under an imperial Britain, and since concluding the ANZUS[2] defence pact of 1951 during the Cold War it has remained firmly within the US strategic order. Such alliances, however, are not easily maintained. It is within this context that this article examines Australia’s early relations with the Islamic Republic of Iran and the policy dilemmas posed to Australia’s Fraser government when the US embargoed Iranian trade. Incensed by Tehran’s arbitrary imprisonment of US embassy staff in late 1979, the US pursued economic sanctions against Iran and pressured its allies to follow suit. Australia, engaged in significant trade with Iran, particularly in foodstuffs, was reluctant to join an embargo. Even though Australia was inclined to support US endeavours as part of its alliance commitments, having to service the Carter administration’s demands at the cost of domestic trade interests resulted in an unenthusiastic, delayed accession to a non-food embargo by the Fraser government in May 1980.

The few existing histories of Australia–US relations surrounding the Iran hostage crisis tend to privilege the overbearing influence of business and consumer interests in determining Australia’s hesitance in acceding to the embargo, and its persistent opposition to the idea of halting food exports to Iran. This concurs with the corpus of traditional international relations theory based on Robert Putnam’s (1988) ‘two-level game’, wherein a state’s foreign policy is constrained by the preferences of domestic constituencies.

Surely, Putnam’s approach is not an infallible mode of analysis for the case. To begin with, Putnam was an American political scientist who developed his theory with heavy recourse to instances of policymaking within the US presidential system. Furthermore, it did not claim to be a comprehensive explanation for the interlinkages between domestic conditions and foreign policy – it was merely a precursor for further theoretical synthesis of abundant case studies on the matter (Putnam, 1988: 459). As a result, questions may be raised about the applicability of the two-level game to a Westminster system where Cabinet is entrusted with acting in the national interest, and not completely bound by electoral imperatives.

Yet Putnam’s theory has been widely applied to cases outside of America with some modification, assisting the explanation of parliamentary oversight in the EU (Pahre, 1997) and the Anglo-Irish peace process (Trumbore, 1998), to name two instances. Additionally, to ascribe the role of Australian Cabinet ministers as the promoters of public interest is to ignore the ways in which public interest is defined. As Rhodes and Wanna (2009: 162) underline in their study of Westminster bureaucracies, there is a fundamental dilemma in characterising elected ministers as guardians of a purportedly neutral national interest, when by the nature of their position and membership in the ruling coalition they are still beholden to domestic constituencies. In using Putnam as a reference, this thesis is highlighting the traditional conception of policy elites – in Westminster or in presidential systems – as influenced by domestic interests. Most importantly, current analyses of Australia’s actions during the Iran hostage crisis tend to follow these theoretical contours, privileging the role of domestic agricultural interest in driving policy.

It is this analytical bias that this article seeks to problematise, with the intention of providing a fuller historical picture of the event. Collating hitherto unresearched archival materials from the Fraser Cabinet and Australian government departments, this article contends that bureaucratic advice rendered to Cabinet did not frame their opposition to US sanctions solely in terms of appeasing business interests. Indeed, maintaining Iranian trade connections was a core interest of the Fraser government from the beginning of Iran’s revolutionary rule. However, department officials, including the ministers themselves, were also eager to caution against the potential for the embargo to force Iran into the Soviet fold, and emphasised their moral objection to using food as a political weapon. Moreover, both Cabinet and the bureaucracy exhibited disgruntlement with American failures to consider Australian concerns. They diverged from the US in both strategic outlook and normative understandings of proper conduct in the alliance relationship.

Examining the policymaking process in this light, the final, hesitant accession to the sanctions regime illustrates the potency of policymaker perceptions in shaping alliance relationships. It becomes important to consider alliances not exclusively as a by-product of power interactions between intra- and international groups, as Putnam’s model would predict, but also as a socially constructed process of negotiation impacted by the ideas of the negotiators. Additional explanations for this political-economic outcome may be found in turning back to Rhodes and Wanna’s (2009) problematisation of public value theory as an unstable, re-definable concept. Cabinet ministers in the Westminster system may indeed act according to the public interest, but whether this public interest is constructed as an aggregation of electoral demands or as a detached tempering against short-term partisan objectives (Rhodes and Wanna, 2009: 171) may be contingent on the predilections of the ministers. Concerns of divergent strategic perceptions and conflicting understandings of alliance norms, particularly when mutual understanding is impeded, should not be ignored.

Australia–Iran trade, US sanctions and domestic interest groups

Australian foreign policymaking surrounding the sanctions dilemma was framed by Australia’s rising trade with the Islamic Republic in 1979. As Scrivener (2010: 95–100) outlines, Australian trade with Iran skyrocketed in early 1979 as a direct result of the Iranian regime’s decision to slash American food imports – Australia jumped from 14.52 per cent of Iranian imports to 51.10 per cent in the space of a year, and the Australian Wheat Board had exported 800,000 tons of wheat between 1979 and 1980. In June 1979, Australia secured a contract to export AU$20 million of lamb, further insulating Iran from food scarcity in the wake of its disruptive revolution and subsequent diversification away from US products earlier in the year (Bookmiller, 2009: 40). This occurred even as Australian diplomats condemned secret trials and executions under the Ayatollah’s regime (Bookmiller, 2009: 40). With Iranian trade constituting a major share of Australian trade in the Middle East, the Fraser government was committed to its growth.

This politically cool but economically beneficial relationship was thrown into uncertainty on 4 November 1979, when supporters of the Islamic Revolution stormed the US Tehran embassy and took the staff as hostages, provoking the US Carter administration to freeze Iranian assets and oil trade days later.[3] The Australian government, not yet certain if the US would pursue military action or an embargo, was still quick to recognise the potential conflict between its strategic commitments to the US order and its trade interests with Iran (NAA/A12930: 564). However, as the crisis continued into 1980, Carter called on US allies to consider embargoing non-food and non-medical trade with Iran, eventually proposing a draft UN Security Council resolution (which was vetoed by the USSR) on 13 January 1980, increasing anxieties in Canberra (Bookmiller, 2009: 41–42). The US then intensified its pressure on Iran after breaking diplomatic relations on 17 April, lobbying its allies to pursue further sanctions along the lines of its failed UNSC resolution and embarking on an ill-fated military rescue attempt the following week. Australia responded by withdrawing its trade commissioner from its Tehran embassy. Yet, over the months, as both Bookmiller (2009: 42–43) and Scrivener (2010: 110–14) indicate, the Australian government continued to signal its reluctance to join the sanctions regime, particularly if it were to include foodstuffs. It was only after the US stressed a 17 May deadline for its allies to enact sanctions that the Fraser government followed suit. As foreign minister Andrew Peacock outlined in a submission for a 21 April Cabinet meeting, American pressure had increased to the point that failure to sanction non-food trade would ‘damage [Australia’s] standing with the Administration’ (NAA/A12909: 3959). The Fraser ministry halted non-food trade on 20 May 1980.

February 1979 Nearly a year of protests in Iran against the Western-backed ruler Mohammad Reza Shah Pahlavi culminate in the rise to power of Ayatollah Khomeini as Supreme Leader. Iran begins its transformation into a state hostile to the US and led by a revolutionary interpretation of Islam (Saikal, 2016: 38-44).
October 1979 The exiled Shah is permitted to enter the US for medical treatment.
4 November 1979 Fuelled by anti-American sentiment and suspicious of a US-backed plot to derail the revolution, pro-revolution protesters storm the US Embassy in Tehran and take 53 American hostages.
14 November 1979 US freezes Iranian state assets in American banks.
11–13 January 1980 Draft UNSC resolution forwarded by the US, proposing non-food, non-medical sanctions on Iran, is vetoed.
7 April 1980 US cuts diplomatic ties with Iran and begins economic embargo.
14 April 1980 Australia decides to not replace outgoing ambassador to Iran and withdraws trade commissioner from Tehran (NAA/A12909: 3948).
25 April 1980 Iranian–US negotiations break down; subsequent US military rescue attempt ends unsuccessfully with the deaths of eight US servicepersons.
12 May 1980 In line with the European Council, Australia announces that it will enact non-food and non-medical sanctions against Iran along the contours of the vetoed US resolution by 17 May (NAA/A12930: 764).
20 May 1980 Australia enacts embargoes on all existing non-food, non-medical contracts with Iran (NAA/A12930: 782).
20 January 1981 Iran releases all American hostages in exchange for the release of US$8 billion of Iranian state funds from US banks.
27 April 1981 Australia approves re-appointment of ambassador to Iran and trade commissioner in Tehran, pursuant to the re-establishment of normal relations (NAA/A12909: 4718).

Table 1: Timeline of events in the Iran hostage crisis, 1979–81

Australian policy outcomes during the crisis thus raise the conundrum: why did Australia hesitate in following the strategic directions of its most powerful ally? The existing analyses from Bookmiller and Scrivener suggest a resolution of the dilemma by highlighting the influence of domestic interest groups, concordant with Putnam’s concept of ‘two-level games’. According to this model, domestic interests pressure state elites to adopt favourable policies in the international realm. Seeking to enhance their own political standing, these state elites then seek to satisfy their domestic constituents in foreign policy negotiations (Putnam, 1988: 434). Additionally, state executives find themselves constrained by domestic constituents not only when these domestic groups are threatened by government preferences, but especially when they are empowered to shape the opinion of the executive (Trumbore, 1998: 548–50) – this is particularly seen in the agricultural sector’s traditional electoral influence on conservative Liberal-National politicians in Australia (Krever, 2006: 56). By this argument, therefore, international negotiation outcomes are mostly shaped by domestic interest state elite dynamics.

Bookmiller’s analysis of the episode accords to this framework. It contends that Australia’s reluctance derived mainly from the feared impacts to the agricultural sector – deputy prime minister Doug Anthony’s main constituency was rooted in agricultural trade, and the government believed Iran would boycott Australian meat if it joined the US initiative (Bookmiller, 2009: 42–43). Passing mention was also made of Anthony’s caution against the potential blowback by the Soviet bloc, and Australian efforts to convince the Carter administration of its own ‘tunnel vision’, but trade principles remained the core of the argument (Bookmiller, 2009: 43).

Similarly, Scrivener (2010: 117) contends that Australia’s reluctance to enact sanctions was driven by business-sector interests lobbying government, particularly through the National Country Party’s ministers for trade and primary industry. He notes that when prime minister Fraser and foreign minister Peacock proposed sanctions against the USSR for invading Afghanistan in early 1980, agricultural lobbyists pressed Canberra to reconsider (Scrivener, 2010: 112). Observing that Australian politicians began publicly opposing food sanctions on Iran a mere week later, Scrivener (2010: 117) argues that ministerial eagerness to protest food sanctions was ‘a direct result’ of interest group lobbyists and their sponsors in Cabinet. Australia’s eventual accession to non-food sanctions in May was illustrative of the final compromise between those in Cabinet who were bent on supporting the US, and their agriculturally based peers who supported trade interests.

These early assessments reveal a theoretical shortcoming, however. While both Bookmiller and Scrivener were able to explore the impact of the Australian agricultural lobby on foreign policy, they overlook a proviso within Putnam’s (1988: 457) theory that underlines the capacity for state elites to engage in independent behaviour. Neither scholar elaborates on the personal predilections of key ministers in the crisis, nor do they consider how sectional and individual perceptions of the alliance relationship might have impacted the Australian response to US requests. This connects to more methodological drawbacks; while Bookmiller also drew on an interview from an Australian diplomat stationed in Tehran during the period, both authors could only rely on public parliamentary records and press coverage available at the time to investigate the issue. Consequently, their analyses face the enduring problem that what politicians say for public record does not necessarily reveal the real reasons for pursuing a policy. The advice conveyed to Cabinet by bureaucrats and specialists in foreign affairs and trade, and the private reservations of some of these ministers, are not accorded a place in the process. Moreover, a strong empirical link between business lobbying and policy outcomes cannot be built until it is confirmed that the policymakers were persuaded by the agricultural sector to begin with. By turning to declassified Cabinet and departmental records, this article will attempt to fill this gap of understanding in Australia’s policymaking process during the Iran crisis.

Ministerial and departmental opposition to the US embargo

The same way foreign policy is not exclusively determined by domestic constituencies, policy decisions are not imagined by the executive alone. Cabinet ministers, while debating the final policies in their meetings, were supplied with submissions and memoranda from department officials that acted as condensed accounts of bureaucratic wisdom on the policy issues. During Cabinet’s sanctions discussions from late 1979 to mid-1980, the advice rendered in departmental submissions and memoranda opposed the US embargo on more bases than domestic business opposition alone. Furthermore, records of the final Cabinet decisions often concurred with the multifaceted recommendations made by department officials. As a result, there is historical utility in turning to these archival documents to delineate the full range of arguments shaping Australia’s hesitant entrance into the American sanctions regime.

Such departmental opinion presented more complex lines of argument. The Fraser ministry’s response to US pressure for sanctions was conditioned by a divergent understanding of the Soviet threat in the strategic environment and by normative expectations surrounding sanctions and proper alliance relations that were not necessarily shared by the US. Accordingly, attention must be diverted to differences in the Australian outlook and the purported unwillingness of the US to take these qualms into account.

Protecting trade interests

To be certain, departmental cautions did focus on adverse impacts to trade interests, although potential pressure from business interests were only part of the general thrust of the argument. In meetings of the Foreign Affairs and Defence Committee of Cabinet between December 1979 and May 1980, bureaucratic assessments circulated to the ministers frequently reference the damage a sanctions regime might impose upon Australian trade interests. In an 18 December memorandum provided by the Iran Task Force – composed of foreign affairs and trade officials – Australia’s priorities were framed under the consideration that:

Australia is less likely to attract an unwelcome United States approach to us on our commercial relations with Iran if we continue to pursue a helpful and visible diplomacy on the question of release of the hostages, and keep as low a profile as possible in the commercial area, consistent with our need to protect and promote our trading interests.
(National Archives of Australia (NAA), Fraser Ministries – Cabinet Memoranda (with Decisions), A12930. 570, Memorandum No. 570: Australia and the Iran Crisis (2) – Minister responsible: Mr Fraser (Prime Minister & Cabinet) – circulated 18 December 1979 – Decision No. 10519(FAD), 18 December 1979)

Such considerations continued, with foreign minister Peacock stating in a 14 April submission than an embargo would have ‘an immediate and detrimental impact’ on trade, and noting that industry representatives had already begun pressuring the government to purse an alternate course (NAA/A12909: 3948). Moreover, he also warned that while non-food trade was expected to decline in relation to foodstuffs, any embargo on Australian non-food trade could drive Iran to prejudice Australian meat and grain businesses.

These departmental and ministerial representations, however, were also buttressed by concerns surrounding the government’s own financial position, beyond the purview of business interests impacted by the crisis. On 22 January Peacock, channelling the advice of the Iran Task Force, cautioned that through the government’s Export Finance and Insurance Corporation, the federal budget would be charged by potential insurance claims issued by affected businesses, amounting to a maximum of AU$13 million (NAA/A12909: 3774). Such advice continued into April, as did additional references to the stain sanctions might cast upon Australia’s trading reputation for Middle Eastern and Islamic customers. For example, an early 11 December memorandum suggested that while some Middle Eastern states would be reluctant to support the radicalism of revolutionary Iran, ‘they would note that the principle of unimpeded trade had been breached [by Australia] in order to serve political purposes’ (NAA/A12930: 564).

Furthermore, there were instances where Cabinet decisions did not appear to be swayed by indications of business interest pressure. In a submission written on 18 April Peacock notes in his first appendix that alumina, wool, sugar cane and military equipment exporters in Australia had contacted the government to lobby against adverse trade actions (NAA/A12909: 3959). Regardless, the Cabinet decision made three days later, wherein Peacock’s submission was read, ordered an immediate withdrawal of all official assistance to non-food trading with Iran (NAA/A12909: 3959). Similarly, the 20 May Cabinet meeting was presented with bureaucratic recommendations to limit any non-food embargo to trade contracts concluded after 4 November 1979 – the day that the US hostages were taken – to evade substantial industry protest (NAA/A12930: 788). Nevertheless, Cabinet decided to embargo all non-food contracts anyway, without limitation.

Sanctions as threat to Soviet containment

Although the non-food sanctions may have indicated Cabinet’s willingness to sacrifice trade revenues to accommodate US demands, it also underlined the Fraser government’s preferences for a US-led global order, wherein the confinement of Soviet influence was central. Fraser (1976a) was a staunch anti-communist who interpreted the USSR as the core threat to the strategic order, so much so that he viewed China as a potential ally. He was also eager to prevent the Carter administration’s attempted demilitarisation of the Indian Ocean and achieved a de facto reinterpretation of ANZUS to include the region in their defence considerations (Bell, 1988: 150).

Yet, it should also be noted that while he was an ally, he was hardly a submissive one. In a 1976 parliamentary address, Fraser (1976b) stated his willingness to privilege Australian interests in the alliance with the US. Alan Renouf (1980: 127), Australian ambassador in Washington between 1978 and 1979, described Fraser as so adamant in pressing his own conditions in diplomatic meetings with the US that he could have harmed Australia–US relations were requests left unsatisfied. In his own memoirs Fraser (2014: 4, 160), while acknowledging the necessity of the Australia–US alliance, labelled his pro-American alignment as a ‘policy for which Australia paid a high price’ and exhibited disdain at Carter’s perceived naivety in his dealings with the USSR. However, implicit in these observations is Fraser’s recognition of the usefulness of American power, particularly in harmonising with his own fears of growing Soviet influence in Australia’s neighbourhood.

For the most part, containing Soviet creep would have accorded with US strategic interests. However, it was the Fraser government’s disposition to interpret a sanctions regime as a potential opening for Soviet influence in the region, diverging from the American vision of the situation and causing hesitance in Australia’s accession to the embargo. For instance, Peacock’s 22 January submission placed greater importance on the Soviet invasion of Afghanistan as a longer-term detriment to Western influence in the Persian Gulf and Indian subcontinent, to which ‘by comparison, the hostage situation in Tehran is a far more particular and short-run problem’ (NAA/A12909: 3774). For Peacock, the Iran crisis distracted from graver concerns with Soviet expansion in the Indian Ocean, although he also recognised that Carter could not afford to drop the hostage issue in an election year. A prompt solution of the crisis, particularly one where Australia would not be required to enact sanctions, aggravating potential allies against Soviet expansion, was a priority (NAA/A12909: 3948).

Departmental officials were also convinced that US efforts to end the crisis – sanctions and potential military action – would only promote Soviet influence in the region. On 21 April, a memorandum prepared by foreign affairs, trade, and intelligence officials presented the opinion that economic sanctions would push Iran to seek supplies from the USSR (NAA/A12930: 675). It continued to claim that US interests were divergent from those of their allies:

[The allies] have economic interests at stake and are concerned to preserve stability in the Gulf area. Moreover, there is apprehension among the allies that single-minded American preoccupation with the hostage issue is inconsistent with wider interests in relations to the expansion of Soviet power and influence in the North-West Indian Ocean Area.
(National Archives of Australia (NAA), Fraser Ministries – Cabinet Memoranda (with Decisions), A12930. 675, Memorandum No. 675: Iran – United States policy and Australia’s options – Related to Decision No. 11226(FAD), 21 April 1980)

Furthermore, an Office of National Assessments report attached to the memorandum suggested that a military blockade would likely see Iranian moderates ‘rally to the Ayatollah, or else be replaced by a militant, intransigent group’, thus creating further room for Soviet manoeuvres in Iran (NAA/A12930: 675). On 29 April, Cabinet was also presented with another departmental memorandum emphasising the prediction that Iran would turn to Soviet bloc suppliers if Australia were to halt food exports, thereby granting them ‘increased opportunities to gain influence in Iran’ (NAA/A12930: 686). The dilemma facing the Australians was clear: their vision of the strategic environment where the USSR was the core threat also recognised the necessity of American security guarantees to counter Soviet expansion. How, then, would the Fraser government act on its disagreements with the US approach, given its simultaneous interest in closeness with the US and preventing Soviet expansion in the Indian Ocean?

The Cabinet decision to sanction non-food trade on 21 April, synchronising with the European position and appearing superficially as an Australian acceptance of the US position, instead served as the partial solution to this conundrum. An additional memorandum presented at the meeting indicated that accepting non-food measures would have ‘presentational usefulness’ in demonstrating allegiance to the US, while having minimal long-term impact (NAA/A12930: 691). It was, ultimately, a device to keep Australia within the American camp, despite their deeper strategic differences.

On a tangential note, Australian foreign policy officials also opposed the reduction of diplomatic contacts with Iran on similar grounds. Having already decided on the non-replacement of Tehran’s outgoing ambassador and the removal of the trade commissioner on 14 April (NAA/A12909: 3948), bureaucratic advice presented on 29 April insisted that the Australian embassy in Tehran was already staffed at an ‘operational minimum’, with a complete withdrawal of diplomatic staff only curtailing Western abilities to influence the situation, and ‘[enhancing] the opportunities and influence of the Soviet Union’ (NAA/A12930: 691). A complete withdrawal of Australia’s diplomatic presence in Iran, as the US had earlier suggested to its Western allies, would only occur if other Western countries followed suit; and it would in any case run counter to Australian intentions ‘to provide the United States with an alternative to forceful sanctions’ (NAA/A12930: 691). Regardless, these documents indicate that American pressure remained focused on sanctions, given the space dedicated to outlining Australian options in the embargo regime.

In any event, it was these more intractable differences that generated the hesitation in accepting non-food sanctions in the first place, and continued to bar any accession to a wider embargo including foodstuffs. In light of the persistent objections raised against the US strategy as examined in Cabinet documents thus far, the decision to sanction non-food trade may be considered only as a necessary evil to safeguard Australia–US relations. Concurrently, Australian officials remained firmly opposed to any US suggestion of harsher measures against Iran, driven by their elevated threat perception of Soviet expansion. In this instance, it was the strategic appreciations of policymakers, not domestic business lobbying, that determined the policy outcome. The non-food embargo allowed Cabinet to service its alliance commitments with the US despite its discord with US strategic perceptions of the crisis, and gave Fraser’s ministers breathing room to continue resisting American overtures for a stoppage of food trade.

The special nature of food

Concurrently, Cabinet was animated by more normative concerns with the ethics of sanctioning food trade. In publicly available statements, the Fraser government hinted towards its more principled opposition to cutting food trade to Iran, unwilling to punish Iranian civilians with reduced food security. For instance, deputy prime minister Anthony stated in the House of Representatives on 17 April 1980 that ‘Australia has never applied sanctions where food items are concerned. We believe that food is something that the people, rather than the governments, of countries require’ (Anthony, 1980). At a National Country Party meeting in 1980, he had also argued that food sanctions would be an attack on the Iranian people, rather than its leaders (Bookmiller 2009: 43). At least publicly, this indicated executive unwillingness to punish the Iranian public with reduced food supplies concurrent to their intentions to protect trade interests.

Behind closed doors, however, foreign affairs and trade officials also pressed the principle of unimpeded food trade in their advice to Cabinet. In an initial Iran Task Force memorandum presented on 18 December, departmental officials wrote that ‘A necessary element in our position […] must be that, on humanitarian grounds, food is in a different category from other imports’ (NAA/12930: 572). They compared their approach to sanctions taken against Rhodesia in 1965 – in protest at its unilateral declaration of independence from Britain – wherein food was excluded from the embargo terms. On 14 April the following year, Cabinet was again presented with a submission from Peacock that highlighted the ‘point of principle’ inherent to Australia’s consistent policy of keeping food trade unimpeded in any sanctions regime (NAA/12909: 3948). Foreign affairs, defence, and trade officials then argued in a memorandum presented on 29 April:

There is the point that successive Australian Governments have held to the principle that food should not be used as a political weapon. To breach that principle in so full-blooded a way at the request of the United States would be a major step. It is in fact a step that should not be readily contemplated in the absence of a relevant United Nations resolution.
(National Archives of Australia (NAA), Fraser Ministries – Cabinet Memoranda (with Decisions), A12930. 686, Memorandum No. 686: Iran – food trade – Related to Decision No. 11262(FAD), 29 April 1980)

Accordingly, governmental resistance to food sanctions on Iran, largely focused on its trade impacts throughout, was also imbued with the willingness to adhere to humanitarian norms. Given these bureaucratic cautions, it becomes clear that Australian policymakers vociferously opposed the punishment of innocent Iranians, intensifying their resistance to sweeping US demands. Drawing from policy history and behavioural standards enshrined in the UN, Fraser’s ministers were convinced that food sanctions were morally wrong, making personal principles and perceived norms inseparable from the deliberation process.

Frustration with American indifference

Layered upon these divergent interests was the Australian government’s frustration with American lack of consultation and general indifference to Australian concerns, precluding a more seamless alliance interaction during the Iran crisis. Strategic disagreements are hardly immobilising forces in alliance relationships, but the Australian bureaucracy’s perception that the US was ignoring Australian concerns altogether proved to be the greater impediment to smoother co-operation on the sanctions issue. Policymakers were thus unsurprisingly reluctant to accord with Washington.

Bureaucratic anxiety regarding US pressure to cut food trade, despite Australian misgivings about its strategic utility, began in January 1980. An Iran Task Force memorandum presented on 9 January indicated that the Australian government was being pressed by the US to cease official assistance to food trade with Iran. When Australian diplomats queried this approach, it resulted in a sharper US demand to delay any response to Iranian requests for further wheat sales until the following month. The Australian ambassador in Washington was then instructed to ‘indicate that we have reservations about the arguments presented by the United States which seem to place wheat sales in a unique position’, especially given previous US guarantees that food trade would not be sanctioned (NAA/A12909: 3749). Consequently, the Iran Task Force recommended in the following week that Australian diplomats continue to press the US for consultation, particularly on the negative effects of a food embargo, although Cabinet eventually agreed to delay the initiation of new wheat contracts with Iran (NAA/A12930: 575).

This was made more severe by departmental officials highlighting the non-accession by other US allies, creating an atmosphere that discouraged Australian agreement to American demands. A submission from Peacock on 22 January emphasised to Cabinet that it was still not clear ‘precisely what the United States [expected] of its allies’, citing British uncertainty about similar US pressures to accede to the sanctions (NAA/12909: 3774). Again, Cabinet decided to continue querying the US for further information while also stressing the pitfalls of the US strategy. By 14 April, however, departmental officials were already discerning an imbalance between Australian commitment to the US and a dearth of reciprocation from Carter, with Peacock writing that support for US objectives had been readily given throughout the crisis, ‘despite repeated problems of short notice and confusion on the American side’ (NAA/12909: 3948).

Bureaucratic discontent came to a head later in April, when the Iran Task Force presented a memorandum that outlined the accumulated grievances of Australian officials. Noting the importance of the Australia–US alliance, the memorandum stated:

The [US] President and the Administration would likely react with considerable impatience to an Australian unwillingness to respond quickly to a call to curb our food exports to Iran. Since the beginning of the crisis the United States Government has shown scant regard for consultation with us and has on occasion made ill-defined and indeed erratic approaches to us.
(National Archives of Australia (NAA), Fraser Ministries – Cabinet Memoranda (with Decisions), A12930. 686, Memorandum No. 686: Iran – food trade – Related to Decision No. 11262(FAD), 29 April 1980)

The memorandum then opined that acceding to US demands to limit food trade would place Australia in high standing with Carter, but that ‘past experience suggests that we should be prudent to assume that this United States reaction would not be long-lived’ (NAA/12930: 686). This sentiment continued to 12 May, where Cabinet maintained its staunch opposition to restrictions on food trade and directed the Australian ambassador in Washington to ensure that the need for consultation was ‘well appreciated’ by the US government (NAA/13075: 11567/FAD). The decision record notes Cabinet’s frustration with American tendencies to consult Australia only after the fact, stating:

On some occasions advice after the event is the only option open but Australia does not accept this approach in relation to proposals for food embargoes aimed at Iran which affect Australia’s vital interests and which also involve much wider issues.
(National Archives of Australia (NAA), Second, Third, and Fourth Fraser Ministries – Folders of Cabinet Decisions, A13075. 11567/FAD, Decision No. 11567(FAD) – Iran – possible food trade embargo – Without Submission, 12 May 1980)

The Australian Cabinet and departmental officials, having spent the past several months underscoring the strategic and financial disadvantages rendered by Australian accession to the sanctions regime, found themselves exasperated with the failure of the Carter administration to consider these concerns to begin with. Policymakers in Canberra interpreted US demands not only according to their strategic merits, but also in light of a history of American inconsideration for Australian perspectives. If Australian foreign affairs and trade officials were already hesitant to follow the US lead because of the strategic drawbacks, they were certainly not encouraged by the US’s refusal to listen to its allies and its violation of norms of good conduct governing the alliance relationship.

Restoring ties

Archival evidence of Cabinet deliberations on the Iran crisis after May 1980 proves difficult to trace, particularly when sanctions were lifted and the American hostages were released in January 1981. However, a Cabinet decision from 27 April 1981, charging the Ministry of Foreign Affairs with reinstating the ambassadorial and trade representative positions in Tehran, may reveal the tenor of foreign relationships in the draw-down of the crisis. In the attached submission from then-foreign minister Anthony Street, he wrote that while the government was officially looking forward to a restoration of normal political and trade relations with Iran, the risk of faltered agreement with the Iranian regime would necessitate a more flexible timeframe for diplomatic reinstatement, left up to the discretion of the minister (NAA/12909: 4718). Regarding the US alliance, he was also united with American aggrievement with Iran’s breach of international law. However, Street appeared comfortable that moves to thaw relations with Iran would not anger the Americans:

The United States Government is trying to maintain pressure on Iran […] It wishes to bring home to the Iranian leadership that the taking of the US hostages was a gross violation of international law. While the US has sought Western (including Australian) support for such action, it has not sought to restrain moves to return to previous levels of diplomatic representation.
(National Archives of Australia (NAA), Second, Third, and Fourth Fraser Ministries – Cabinet Submissions (with Decisions), A12909. 4718, Submission No. 4718: Iran – replacement of Ambassador and Trade Commissioner – Related to Decision No. 14930(FAD), 27 April 1981)

Street continued to highlight that the European Community (not including the UK, which had ‘particular problems with Iran’) and New Zealand had agreed to restore, or were seeking approval to restore, their corresponding representations in Tehran (NAA/12909: 4718). Drawing similarities with previous strategic thinking in Fraser’s ministry, Street then asserted:

The very nature and policies of the Iranian regime necessarily inhibit the extent of our bilateral relationship. We nevertheless wish to develop closer ties than at present, as part of a Western effort to assist the more moderate elements in Iran to gain more influence, and so increase the prospects for stability and for independence from Soviet influence.
(National Archives of Australia (NAA), Second, Third, and Fourth Fraser Ministries – Cabinet Submissions (with Decisions), A12909. 4718, Submission No. 4718: Iran – replacement of Ambassador and Trade Commissioner – Related to Decision No. 14930(FAD), 27 April 1981)

In light of the Reagan administration’s refusal to mend bilateral ties with Iran, it appears that the Australians had again diverged in strategic outlook, preferring to ease Iran away from Soviet influence by diplomatic engagement and not heavy-handed punishment. Nevertheless, this time around the US did not pressure its allies to follow its stance. The Fraser ministry, despite the precariousness of the sanctions regime in the previous year, had transitioned out of the crisis on terms more amenable to Australian normative and strategic perceptions, simultaneously inviting less acrimony from their American peers. Whether this can be owed to the decreased political sensitivity of the hostage issue in the US, however, is beyond the scope of this study.


Intra-alliance disagreements and hesitancy are complex dynamics that can only be partially explained by the traditional model of societal actor pressure, pioneered by Putnam. As the Iranian hostage episode of 1979–80 has illustrated for Australia, the predilections and normative ideas of the individuals within government can be potent in shaping foreign policy manoeuvres. Alongside the bureaucracy’s more salient opposition to enacting sanctions due to the deleterious effects it would have on Australian business, the Fraser government’s unwillingness to bend to American pressures was also shaped by elite-level differences in strategic perception and standards of good international conduct – Australian appreciations of the potential for Soviet intervention were consistently grave, and the use of food sanctions could barely be countenanced throughout. This was exacerbated further by the departmental view that the US was violating norms of proper consultation, with sustained American ignorance of Australian concerns gradually pushing Fraser’s ministry away from a fuller agreement with their ally. In the end, despite the decision to sanction non-food trade as a small show of loyalty, the US’s accumulating refusals to adhere to expectations of consultation may have solidified Australian resistance to a more sweeping and severe US-led embargo.

While Putnam’s approach has been applied widely to a range of political-economic conundrums, its use may be limited for explaining Australia–Iran trade relations between 1979 and 1981. One avenue, in considering the purported independence of political elites in Westminster systems, would be to begin with Rhodes and Wanna’s disaggregation of assumptions within the concept of public interest. For instance, public interest may be defined within a market paradigm as obtaining the lowest cost for the citizenry, whereas a bureaucratic paradigm might see public interest enshrined in a Cabinet minister as having the discretion to interpret the common will (being themselves an elected representative in parliament) and charge their subordinate public servants to enact this will in policy (Rhodes and Wanna, 2009: 171) – it is in this bureaucratic tradition that one may still detect strains of Putnam’s theory. However, Rhodes and Wanna (2009: 171) outline a third tradition of public interest as conditional on ‘dialogue between actors and groups’, whereby individual bureaucratic elites and ministers mediate between societal interests and their own assessments of policy, arriving at ideal, long-term, non-partisan solutions.

Australia–Iran trade relations during the hostage crisis might be explained by this third conceptualisation, with the Fraser Cabinet opting for a solution that appeared more sustainable for Australian strategic interests that just so happened to coincide with agricultural preferences for unimpeded trade. Further research along this contour may thus prove enlightening. Still central to this line of inquiry, however, is the impact of individual perceptive and normative influences in the policy process behind Australia’s hesitant accession to sanctions against Iran. As the departmental and ministerial representations have shown, societal forces were not the only driver of disagreement – what the ministers thought was right for Australia’s position in the world proved just as influential.


I would like to offer a quick thanks to Prof. Bob Bowker at the ANU’s Centre for Arab and Islamic Studies, whose patient guidance and positive criticism in the development of my research skills inspired me to purse inquiry into this particular episode of Australian diplomatic history.


[1] Miguel Galsim has just completed his Honours thesis in Middle Eastern and Central Asian Studies at the Australian National University, comparing Islamic-nationalist discourses between the Moro Islamic Liberation Front and the Palestinian Hamas.

[2] The Australia, New Zealand, and United States Security Treaty, or ANZUS, is a defence agreement binding Australia and New Zealand, and Australia and the United States, to military co-operation in the face of mutual threats. Initiated in 1951, it was initially limited to the Pacific Ocean, although over the subsequent decades it expanded to implicitly include other global crises. New Zealand was suspended from membership in 1986 due to its opposition to US nuclear policy.

[3] A useful summary of the crisis in the context of Iran’s revolutionary fervour can be found in Saikal (2016), chapter 4.


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To cite this paper please use the following details: Galsim, M. P. (2018), 'A Hesitant Ally: Australia–Iran Trade Relations and US Sanctions, 1979–1981', Reinvention: an International Journal of Undergraduate Research, Volume 11, Issue 2, Date accessed [insert date]. If you cite this article or use it in any teaching or other related activities please let us know by e-mailing us at Reinventionjournal at warwick dot ac dot uk.