“Our incompetent secretary of state, Hillary Clinton, was the one who started talks to give 400 million dollars, in cash, to Iran. Scandal!”
— tweet by Donald Trump, Aug. 3
The GOP presidential nominee jumped on an interesting report in the Wall Street Journal that the Obama administration shipped $400 million in cash to Iran at about the same time that four Americans being held in Iran were released after negotiations.
Our incompetent Secretary of State, Hillary Clinton, was the one who started talks to give 400 million dollars, in cash, to Iran. Scandal!
— Donald J. Trump (@realDonaldTrump) August 3, 2016
We will leave it up to readers to decide whether the facts warrant calling this some sort of ransom payment. But Trump is completely off-base about Clinton’s involvement.
Clinton stepped down as secretary of state in early 2013. The deal involving the American detainees — including The Washington Post’s Jason Rezaian — was announced in January this year, three years after the end of her tenure. Clinton did initiate negotiations with Iran over its nuclear program — though substantial talks with Iran did not take place until after she left.
But Clinton had nothing to do with talks on the detainees. Those occurred on a separate track, which U.S. officials said was necessary to not raise the price to reach an agreement on Iran’s nuclear ambitions.
The $400 million payment — part of an overall $1.7 billion settlement of claims — was also announced by the State Department on Jan. 17, the same day that President Obama announced the release of the detainees. (He also made reference to a settlement of claims without mentioning a dollar figure.)
The main thing that was new in the Wall Street Journal article was that the $400 million was paid in cash, loaded on a cargo plane, and the timing of the transfer was close to the release of the detainees. The timing — which U.S. officials insisted was a coincidence — suggested the cash could be viewed as a ransom payment. In a follow-up article, the Wall Street Journal reported the Justice Department initially objected to the cash transfer for that reason.
But the $400 million was always Iran’s money. In the 1970s, the then-pro-Western Iranian government under the shah paid $400 million for U.S. military equipment. But the equipment was never delivered because the two countries broke off relations after the seizure of American hostages at the U.S. Embassy in Iran.
It’s worth noting that a key element in the release of the hostages in 1981 was the United States agreed to release several billion dollars in Iranian gold and bank assets that had been frozen in U.S. banks.
After the 1981 hostage deal, the two countries set up a tribunal in The Hague to litigate outstanding claims against each other. The $400 million remained unresolved, but U.S. officials say a ruling was expected that would have resulted in the return of the $400 million plus billions of dollars in outstanding interest. Instead, concurrent with the detainee negotiations, the two countries negotiated a deal that resulted in a return of the $400 million plus $1.3 billion in interest.
At the time, U.S. officials touted the agreement as a savings for American taxpayers. “Iran is unable to pursue a bigger tribunal award against us, preventing U.S. taxpayers from being obligated to a larger amount of money,” Secretary of State John Kerry said at the time. Obama said: “For the United States, this settlement could save us billions of dollars that could have been pursued by Iran.”
Clinton at the time released a statement hailing the release of the detainees but made no mention of the side agreement on The Hague tribunal claims.
[Update: In an interview on Aug. 3 with a Colorado television station, Clinton said: “So far as I know, it had nothing to do with any kind of hostage swap or any other tit for tat. It was something that was intended to, as I am told, pay back Iran for contracts that were canceled when the Shah fell."]
The Treasury Department says the $1.3 billion in interest was paid out of a fund associated with the Tribunal known as the Judgment Fund, which it says is “a source of funding to pay judgments and settlements of claims against the United States when there is no other source of funding.”
Ironically, when the deal was announced, the families of more than a dozen Americans attacked or held hostage by Iranian proxies were outraged. They had been told that the $400 million already had been paid to them, as part of a settlement reached by the Clinton administration (and urged on by then-first lady Hillary Clinton), according to a fascinating article in Newsweek. But it turned out the money could not be paid, as Iran filed a claim for the $400 million in The Hague, and so the families instead received $400 million in U.S. taxpayer funds in 2001. But no one admitted that to the families until Obama announced the new deal in January, 15 years later.
As the Wall Street Journal noted, a Revolutionary Guard commander openly declared that the money was returned in exchange for the “release of the American spies.” An Iranian news report said the cash arrived on the same day the Americans left Tehran.
The Pinocchio Test
Trump is simply wrong that Clinton started the talks that led to the release of $400 million to Iran. She initiated the talks on Iran’s nuclear program, but that’s as far as her involvement goes. Perhaps resolution of claims could not have been achieved without a deal on the nuclear issue, but that’s going too far. Iran’s claim for the $400 million was made long before Clinton took office — and was resolved after she left.
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