Allen S. Weiner, director of the international and comparative law program, at Stanford Law School, served as the U.S. agent to the Iran-United States Claims Tribunal from 1998 to 2001. Duncan Pickard is a student at Stanford Law School.
The latest victim in the presidential race’s assault on truth — to say nothing of nuance — came last week in the flurry of accusations surrounding the United States’ payment of $400 million to Iran. Donald Trump called it ransom, and Sen. Tom Cotton (R-Ark.) accused the United States of acting like a “drug cartel.”
In reality, the payment represented continued adherence to a masterful feat of American diplomacy and to the peaceful resolution of disputes under international law. Ronald Reagan understood how important it is for us to keep our promises — which is why, as president, he upheld the agreement negotiated by the Carter administration that led to the recent payment.
The payment was not a ransom but rather part of a settlement agreement that the United States reached with Iran for claims arising out of the 1979 Iranian revolution, which toppled the pro-American shah and brought the current Islamist government to power. Before the revolution, the United States had signed hundreds of contracts with Iran, then an ally, to sell it military equipment. When the hostile Islamist regime took power, the military sales relationship collapsed. That left hundreds of millions of dollars of outstanding claims between the two countries and their citizens: claims both by U.S. companies for breached contracts and expropriated properties, and Iranian demands for the delivery or return of equipment that Iran had already paid for but not received — not to mention the issue of the 52 Americans that Iran then held hostage.
The United States and Iran had severed diplomatic relations, leaving no forum in which to settle these disputes. The countries worked through Algerian intermediaries to negotiate the Algiers Accords, in which Iran agreed to release the hostages in exchange for the United States’ unfreezing Iranian assets. The agreement also established a tribunal in The Hague to settle the outstanding disputes, including many claims for which American companies had already filed lawsuits in U.S. courts. Iran conditioned the release of the hostages on the transfer of the pending claims to the Iran-U.S. Claims Tribunal in The Hague.
Soon after taking office as president, Reagan issued an executive order to suspend those claims in U.S. courts, which the Supreme Court upheld in Dames & Moore v. Regan. In a testament to the urgency of the case, the court issued its decision a mere eight days after it heard oral arguments. Justice William Rehnquist described the need for the president to respond with flexibility to “international crises” — as commander in chief and diplomat in chief.
Reagan’s executive order implementing the Algiers Accords was a remarkable endorsement of the power of international law to peacefully resolve a violent crisis abroad. He transferred claims under U.S. jurisdiction to an international court — a striking departure from those today who question our fundamental commitment to international alliances such as NATO and who flatly reject widely adopted treaties such as the U.N. Convention on the Law of the Sea. Reagan saw international law as an important mechanism by which the United States could secure peace and security for its citizens.
The Iran-U.S. Claims Tribunal, which has equal numbers of American, Iranian and neutral judges, has settled more than $2.5 billion in claims, including many in favor of U.S. nationals. Nearly 35 years on, it continues to be a hallmark of peaceful dispute resolution and has contributed greatly to the development of international law.
The $400 million itself was the balance in a “trust fund” account into which Iran, under the shah, had made advance payments on military contracts with the United States. In a claim before the tribunal, Iran had demanded return of these funds plus 35 years of accumulated interest. U.S. diplomats negotiated the interest amount down to $1.3 billion (much less than they feared the tribunal would award if the case proceeded to a final judgment) to generate a $1.7 billion total. The two sides announced the settlement on Jan. 17 — one day after their groundbreaking nuclear agreement, and the same day that each released a few of the other’s prisoners. The Obama administration has repeatedly made clear that the negotiations regarding the prisoners and the trust fund settlement were “completely separate.”
All of this information has been publicly available since January. All that is new is last week’s disclosure that part of the payment was transferred in cash — due to U.S. government restrictions on making wire transfers to Iran — and renewed expressions of Trump’s dangerous ignorance.
The payment, then, reflects the United States’ commitment to respect the rule of law, keep our promises, and pursue peace and accountability under international law. These are characteristics of our strength in the international community that we must steadfastly promise to uphold.