The newly revealed information indicates that the monetary payment and the prisoner swap were not only negotiated simultaneously, but were carried out at the exact same time. President Obama authorized an initial payment of 400 million dollars, to be flown directly two Iran in the form of cash acquired from European banks. Some of Wednesday’s media coverage highlights the seemingly scandalous nature of this sort of payment method, but the Obama administration has defended itself by saying that there was no other way of making the payment, since the nuclear deal had not yet been implemented, meaning that Iran was still fully cut off from the global banking system.
Even today, most international banking institutions are wary of resuming business with Iran. This is in part because US law still prohibits any direct contact between the Iranian and American financial systems. Banks that willingly or unwillingly facilitate such transactions could still be subject to economic sanctions, even though sanctions on Iran’s nuclear program were suspended with the implementation of the JCPOA.
But Wednesday’s revelations suggest that the Obama administration has not allowed this separation between the two financial systems to be the absolute barrier that it might have been. This can be expected to give additional fuel to months-long criticisms by the Republican Congress and other opponents of the Obama administration’s Iran policy. Many of those critics have decried the administration’s apparent efforts to actively encourage European investment in the Islamic Republic. Furthermore, they have repeatedly suggested that the White House might be pursuing plans to allow Iran access to US dollars.
The January shipment of cash arguably resembles the controversial (and currently banned) “U-turn transactions” that would allow international banks to facilitate transactions between the US and Iran by utilizing intermediary currencies. Among those who suspect that the Obama administration will allow such transactions, either officially or unofficially, some have characterized them as potential pathways for US taxpayer dollars to directly financing international terrorism.
The danger of contributing to Iran’s support for terrorism has actually been acknowledged by the administration itself. The Washington Free Beacon reports that when White House Press Secretary Josh Earnest was asked about the 400 million dollar shipment of cash, he argued that the vast majority of it has been devoted to Iran’s economic recovery but still admitted that “it is certainly possible” that some of that money was devoted to Iran’s nefarious activities such as its financing of the Hezbollah paramilitary and Syrian dictator Bashar al-Assad.
But regardless of whether the debt-repayment actually does materially contribute to terrorism, it is still a source of ammunition for those who accuse the current US leadership of failing to hold Iran accountable for its role in previous terrorist acts. CNN explains that the 400 million dollar principal debt was originally slated to be withheld and used as payment to victims of Iran-backed terror, following a decision by the Clinton administration in 2000. Obama’s agreement to repay the debt, and to begin doing so on the date of the prisoner swap, contradicted this arrangement and demonstrated that previous financial compensation to those victims and their families had come from American taxpayers and not from the Iranian regime.
This is in spite of the fact that in April the Supreme Court famously upheld a lower court ruling which allowed for the seizure of frozen Iranian assets, to be paid out to such victims. US court cases have deemed that Iran was responsible for a number of terrorist acts that killed and wounded American citizens, but the regime has ignored the resulting judgments and has traditionally be protected against enforcement by the principle of “sovereign immunity.”
But the Iranian tendency to ignore such financial obligations only raises more questions about the Obama administration’s apparent urgency in paying a debt that was incurred before the current Iranian government came to power. Such urgency is perhaps best explained if it was necessary that the Obama administration settle the matter in order to get something important in exchange. Tom Cotton, a notably stringent opponent of the Iran nuclear deal, said of the new information regarding that payment: “This report makes plain what the administration can no longer deny: this was a ransom payment to Iran for U.S. hostages.”
The USA Today reported upon Cotton’s remarks and added that House Majority Leader Kevin McCarthy had emphasized the clearly suspicious nature of such close overlap between the hostage release and the 400 million dollar delivery. Nevertheless, the Obama administration has continued to maintain that the timing of the two agreements was merely “coincidence.”
Another Republic representative, New York’s Lee Zeldin, described the administration’s claim as “beyond unbelievable.” He went on to levy particularly harsh criticism against the White House, saying, “It is clear at this point that one of two possibilities apply to this administration: either the president has absolutely no idea what he is doing or the president knows exactly what he is doing and is playing for some other team.”
Zeldin’s remark seems to reflect the general nature of congressional criticism of the nuclear deal that was spearheaded by President Obama. Virtually the entirety of the Republican Party, along with some Democrats, have judged that agreement to be weak and to have formalized a series of concession in return for very little guarantee that Iran would halt its pursuit of a nuclear weapon. But there has apparently been no consensus regarding whether the president disagrees with that assessment or has simply ignored the weakness in favor of preserving a fundamental reorientation of American foreign policy.
Whatever the case, some of the president’s critics appear to have seized upon the latest revelations in hopes of using it to undermine the nuclear deal or set the groundwork for its cancelation under the next presidency. “The revelation that the Obama administration ransomed the three Americans being unjustly detained by Iran with $400 million in cash is only the most recent piece of evidence that the so-called nuclear deal with the mullahs is fundamentally illegitimate,” said Texas Republican Senator and erstwhile presidential candidate Ted Cruz.
“It is nothing but a series of bribes and secret agreements that will do nothing to prevent Iran from reaching nuclear capability, yet will provide funding for their sponsorship of terrorism and encourage them to detain more of our citizens. This ‘deal’ should be ripped to shreds immediately before more damage is done,” he added, according to the Daily Signal.
When the JCPOA was finalized in July 2015, President Obama characterized it not only as a safeguard against the threat of an Iranian nuclear weapon but also as a possible forerunner to moderating trends within the Iranian regime. The latter prediction has been cited frequently in critical commentary over the past year, suggesting that the deal is a failure because it has not led to the promised changes in Iran-US relations.
In fact, by most accounts Iran’s anti-Western rhetoric has only intensified since that time, as evidenced by the fact that the hostages released in January were essentially replaced by other dual nationals including the international businessman Siamak Namazi and, much more recently, the recent San Diego State University graduate Robin Shahini.
Both of these men were invoked in further criticism of the apparent US ransom payment. “Paying ransom to kidnappers puts Americans even more at risk,” said Illinois Senator Mark Kirk, as quoted by Business Insider. “While Americans were relieved by Iran’s overdue release of illegally imprisoned American hostages, the White House’s policy of appeasement has led Iran to illegally seize more American hostages.”
Recognizing the danger of legitimizing hostage-taking, the State Department maintains a policy against the payment of ransom. Josh Earnest reiterated this fact in his press briefing on Wednesday, citing that policy as support for the administration’s claim that the 400 million dollar payment and the agreement to pay an additional 1.3 billion dollars over time did not constitute ransom for the American citizens Jason Rezaian, Amir Hekmati, Saeed Abedini, and Nosratollah Khosravi.