The day before, the Iran nuclear deal had been implemented, and in return, the president was making a “reciprocal humanitarian gesture”, clemency for seven Iranians imprisoned or awaiting trial for criminal violations of American sanctions. It was later announced that the U.S. had also dropped outstanding warrants against fourteen other Iranians.
The president added that, with the nuclear deal implemented, and the hostages released, “the time was right” for “resolving a financial dispute that dated back more than three decades.”
The government of the Shah of Iran advanced money for military equipment, but after the 1979 revolution Washington did not deliver it. Therefore, the president asserted, we were returning the disputed money, Iran’s “own funds,” including “appropriate interest,” but “much less than the amount Iran sought.” Now that the larger issues had been resolved, the U.S. was simply issuing a long-delayed refund to Iran, and in the process saving Americans a significant amount of money.
The president was returning $400 million in Iran’s “Foreign Military Sales” (FMS) account with the Pentagon, plus $1.3 billion in interest. However, the Victims of Trafficking and Violence Protection Act, stipulated that Iran’s FMS account could not be refunded until court judgments held by the U.S. government against Iran for damages from terrorist acts against American citizens were resolved to America’s satisfaction. Those judgments, including interest accumulated between 2001 and 2016, totaled about $1 billion.
Many of Obama’s opponents called the $1.7 billion payment ransom, and to understand this, in his article for Mosaic Magazine, Rick Richman, author of “Racing Against History: The 1940 Campaign for a Jewish Army to Fight Hitler” explains some of the background.
Alisa Flatow, a twenty-year-old Brandeis University honors student was spending her junior year abroad in Israel. In April 1995, she boarded a bus in Jerusalem bound for Gaza. She was killed when a van filled with explosives slammed into it. The attack was carried out by a faction of Islamic Jihad that was reportedly controlled, financed, and directed by the highest levels of Iran’s government. Her father filed suit in U.S. federal court against Iran. Flatow v. Islamic Republic of Iran (1998), and was awarded a total of $20 million in compensatory damages as well as punitive damages. The court noted that expert testimony had “detailed an annual expenditure [by Iran] of approximately $75 million for terrorist activities” and that Iran “is so brazen in its sponsorship of terrorist activities that it carries a line item in its national budget for this purpose.” The court also awarded punitive damages of $225 million, which was the minimum amount the expert had testified was necessary to have a significant deterrent effect.
As well, Cicippio v. Islamic Republic of Iran (1998) involved Joseph Cicippio (comptroller of the American University of Beirut), David Jacobsen (CEO of the medical center there), and Frank Reed (who operated two private schools in Beirut), who were all abducted by Hizballah, an entity the court found was “sponsored, financed, and controlled by Iran.” The three were held under horrific conditions, and the court awarded them a total of $65 million in compensatory damages.
Terry Anderson, chief Middle East correspondent for the Associated Press, was kidnapped in Beirut by Hizballah and held for nearly seven years. In the case of Anderson v. Islamic Republic of Iran (2000), the court again found Iran responsible, and awarded $41.2 million in compensatory damages and $300 million in punitive damages.
Leonard Eisenfeld brought the case of Eisenfeld v. Islamic Republic of Iran (2000) before the court for the death of his son Matthew, a twenty-five-year-old Yale graduate studying at the Jewish Theological Seminary in Israel, and by Arline Duker for the death of her twenty-year-old daughter, Sara, a Barnard College graduate enrolled in a program at the Hebrew University. The two had been on an Israeli bus, when a passenger—acting under directions from a Hamas official funded and trained by Iran—detonated a bomb that destroyed the bus and killed them. The court awarded $22.5 million in compensatory damages and $300 million in punitive damages.
Iran was held legally responsible in many other cases. A total of sixteen cases were decided against Iran by courts in the United States between 1998 and 2004, and awards of compensatory damages totaling some $400 million and punitive damages totaling $3.5 billion were stipulated.
The problem was collecting the judgments. Sixteen years later, no payments were made by Iran for any of the sixteen court judgments against it.
Richman writes, “The president’s actions with respect to the lawsuits won by American victims of Iranian terror, after years of litigation, stand in stark contrast to the resolution of the court cases concerning Libya’s terrorism, including the 1988 Pan Am 103 bombing over Lockerbie, Scotland. When Libya sought to re-establish relations with the United States, Congress and the State Department blocked action until Libya satisfied the terror claims of American citizens against it. Libya paid the U.S. $1.5 billion to resolve those claims. Nothing of the sort accompanied the negotiations with Iran over the nuclear deal, as the administration made concession after concession to obtain it.”
Richman calls the policy of appeasing Iran worse than paying ransom.