President Carter announced yesterday that the United States is breaking diplomatic relations with Iran and that all Iranian diplomats and officials will be ordered to leave the country by midnight tonight.
Carter acted hours after Ayatollah Ruhollah Khomeini ruled that the 50 American hostages must remain in the hands of the militants occupying the U.S. Embassy in Tehran until the new Iranian Parliament decides their fate.
The hostages have been held 157 days.
Carter also cut off virtually all remaining trade between the two countries, prohibiting further exports to Iran, with the exception of food and drugs.
The U.S. will also invalidate all visas issued for future arrival to Iranians, issuing new ones or renewing old ones only in unusual circumstances.
Carter has instructed Treasury Secretary G. William Miller to prepare an inventory of outstanding claims of American citizens and corporations against the government of Iran, with the aim of seizing assets of the Iranian government in the United States to finance settlements of claims by the hostages and their families.
"The steps I have ordered today are those that are necessary now," Carter announced in yesterday's nationwide television broadcast, adding, "Other actions may become necessary if these steps do not produce the prompt release of the hostages."
Carter declined to define "prompt" but said a continuing refusal to free the hostages "will involve increasingly heavy costs to the government of Iran."
He did not say what other steps might be taken but has reportedly considered a naval blockade and the enlisting of help from European allies in further economic retaliation.
Carter's decision came after a two-and-a-half-hour meeting with top foreign policy advisers, including Secretary of State Cyrus R. Vance.
There was no immediate comment on the president's actions from militants, who have held the embassy and hostages since November 4.
Earlier in the day, Khomeini announced his rejection of Iranian President Abolhassan Bani-Sadr's proposal to transfer custody of the Americans to the ruling Revolutionary Council.
After Khomeini's announcement, as the expulsion of the Iranian diplomats became increasingly likely, stock prices in New York dropped sharply, while gold futures soared.
Campaigning in Pennsylvania, Sen. Edward M. Kennedy '54 criticized Carter yesterday for not having taken diplomatic initiatives earlier in the crisis.
"There's a legitimate question whether we could have made other diplomatic progress before we found ourselves where we are at the present time," Kennedy said.
Officials at the U.S. Immigration Service regional office said yesterday they do not know yet how the order invalidating future visas will affect the Iranian students attending Harvard and other area colleges.
"The complications are too many to even begin to understand the issues at this point," a spokesman for the office said.
Daniel Steiner '54, general counsel to the University, said yesterday that "confusion reigns." He added, "We really don't know where this will affect students' visas or when the effect will be.