One month ago, a scandal erupted when it emerged that the US had made a $400 million cash delivery to Iraq (in foreign currencies) to facilitate the release of 4 US hostages held by the regime; many promptly called it a ransom payment. At the time we noted that this was just a portion of the full amount that the US had paid Tehran, and overnight the WSJ confirmed as much when it reported that the Obama administration followed up a planeload of $400 million in cash sent to Iran in January with two more such shipments in the next 19 days, totaling another $1.3 billion.
The cash payments were once again made in foreign currencies, mostly Swiss francs, euros, and settled a decades-old dispute over a failed arms deal dating back to 1979. U.S. officials have acknowledged the payment of the first $400 million coincided with Iran’s release of American prisoners and was used as leverage to ensure they were flown out of Tehran’s Mehrabad on the morning of Jan. 17. The White Hous has yet to comment if the incremental $1.3 billion was also part of a ransom payment prearranged with Iran.
According to the WSJ, the Obama administration briefed lawmakers on Tuesday when it told them that two further portions of the $1.3 billion were transferred though Europe on Jan. 22 and Feb. 5. The payment “flowed in the same manner” as the original $400 million that an Iranian cargo plane picked up in Geneva, Switzerland, according to a congressional aide who took part in the briefing. The paper also notes that the original $400 million was converted into non-U.S. currencies by the Swiss and Dutch central banks. The Treasury Department confirmed late Tuesday that the subsequent payments were also made in cash.
“The form of those principal and interest payments—made in non-U.S. currency, in cash—was necessitated by the effectiveness of U.S. and international sanctions regimes over the last several years in isolating Iran from the international financial system,” Treasury spokeswoman Dawn Selak said.
The Obama administration had previously refused to disclose the mechanics of the $1.7 billion settlement, despite repeated calls from U.S. lawmakers. The State Department announced the settlement on Jan. 17 but didn’t brief Congress that the entire amount had been paid in cash. Lawmakers have voiced concern that Iran’s military units, particularly the elite Islamic Revolutionary Guard Corps, would use the cash to finance military allies in the Middle East, including the Assad regime in Syria, Houthi militias in Yemen, and the Lebanese militia, Hezbollah.
The cash payments also effectively circumvented the US' own financial sanctions imposed on Iran previously, which have yet to be fully unwound. Obama has justified his payment by claiming it was owed to Iran from a previous dispute, and engaging in litigation would result in costly interest payments:
The settlement resulted from a legal arbitration under way in the Netherlands since the early 1980s between the U.S. and Iran. At issue was a $400 million payment Tehran’s last monarch, Shah Mohammad Reza Pahlavi, made to a Pentagon trust fund just months before his government was toppled. The money was earmarked for airplane parts that were never delivered.
Obama administration officials have said they believed the U.S. was set to lose the court proceedings in The Hague and would end up being liable for as much as $10 billion because of accrued interest. Republican lawmakers have argued the initial $400 million shouldn’t be repaid to Iran and instead should have been used to compensate the victims of Iranian-backed terrorism.
The latest revelations come as Congress returns from a summer recess with Republicans vowing to pursue charges that the White House paid ransom to Tehran, a charge President Barack Obama has repeatedly rejected. Sen. Marco Rubio (R., Fla.) introduced legislation on Tuesday that would bar such payments to Iran in the future and seeks to reclaim the $1.7 billion for victims of Iranian-backed terrorism. The bill introduced by congressional Republicans on Tuesday would block the Treasury Department from making any payments to Iran until Tehran returns the $1.7 billion to the U.S. and pays the American terrorism victims. Three dual U.S.-Iranian citizens are still being held in Iran.
“The U.S. government should not be in the business of negotiating with terrorists and paying ransom money in exchange for the release of American hostages,” Mr. Rubio said.
Meanwhile, Iran military vessels, empowered by Obama's appeasement of the Iranian regime, have now engaged in numerous "harassing" close-encounters involving US ships in the Persian Gulf, the latest of which took place yesterday.