“The folks that are around President Biden today in his White House talking about foreign policy are the same leaders — a fellow named Brett McGurk sent $150 billion, pallets of cash, to the Iranians, who are hosting the senior al-Qaeda leadership in Tehran today.”
At the Fact Checker, we are always dismayed when we encounter what we call a “zombie" claim — a falsehood that persists no matter how often we debunk it.
But it’s especially dismaying when a former secretary of state repeats this claim. Pompeo obviously spent too much time listening to his former boss, President Donald Trump, who often said a version of this claim at his campaign rallies. But policy details were never Trump’s expertise. As a former chief U.S. diplomat, Pompeo should know better. Instead, he has uttered a mishmash that is especially misleading.
Toward the end of the Obama administration, there were two deals with Iran that riled critics of the regime.
One was an arrangement to settle an outstanding claim by Iran, valued at $1.7 billion, including interest. The money arrived on jumbo jets in cash — euros, Swiss francs and other currencies — just as six American detainees, including The Washington Post’s Jason Rezaian, were released.
Here’s what happened. In the 1970s, the then-pro-Western Iranian government under the shah, Mohammad Reza Pahlavi, had 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. An initial payment of $400 million was handed over on Jan. 17, 2016, the day after Iran released detainees. Two other payments totaling $1.3 billion — a negotiated agreement on the interest owed on the $400 million — came some weeks later.
That’s the “pallets of cash” Pompeo mentions, along with an official named Brett McGurk who now handles Middle East policy at the Biden White House. McGurk had negotiated the release of the detainees, but he’s an experienced foreign-policy maven who also worked for Presidents George W. Bush and Trump — until he quit over Trump’s announcement that he would withdraw troops from Syria.
But Pompeo makes it seem as if $150 billion in cash was delivered to Iran. That’s bonkers.
A representative for Pompeo, who declined to be publicly identified, reached out to the Fact Checker and said that Pompeo misspoke. Pompeo supposedly meant to refer to the $1.7 billion in cash that was transferred at the time of the detainee release, not $150 billion — even though that number was a common Trump talking point.
In fact, after we received this call, we checked to see if Pompeo had said something similar before. Bingo. Here’s Pompeo on Fox News Sunday in 2020: “In 2015, the Obama-Biden administration essentially handed power to the Iranian leadership and acted as a quasi-ally of theirs, by underwriting them — underwriting the very malicious — that killed Americans … We provided them $150 billion, pallets of cash.”
So what’s this $150 billion?
Pompeo is referring to an aspect of the Iranian nuclear deal that President Barack Obama negotiated (in which McGurk played little or no role). But the $150 billion figure was always an exaggerated number — and it referred to Iran’s foreign-currency reserves, heavily restricted by sanctions. It was never U.S. taxpayer money.
For instance, many of the funds were held in banks in Asia, including China and India, as well as Turkey. Many of the countries received waivers to buy Iranian oil and gas during the sanctions but placed the payments in escrow-style accounts that largely remained off-limits to Iran. The Islamic Republic also transferred assets to Asian banks from Europe in anticipation of financial sanctions.
Still, even before the nuclear deal was reached, under the sanctions in place, Iran was able to use some of this money in restricted ways. Iranian money held in Japanese banks, for instance, could be used to buy Japanese-made products, while funds could also be used for humanitarian reasons such as buying food and medicine.
Iran also had loans that needed to be repaid, principally by China, further reducing what was available. Once Iran fulfilled other obligations, it would have about $55 billion left, the Treasury said at the time.
“Estimates of total Central Bank of Iran (CBI) foreign exchange assets worldwide are in the range of $100 [billion] to $125 billion,” Adam J. Szubin, acting treasury undersecretary for terrorism and financial intelligence, told Congress in 2015. “Our assessment is that Iran’s usable liquid assets after sanctions relief will be much lower, at a little more than $50 billion. The other $50-70 billion of total CBI foreign exchange assets are either obligated in illiquid projects (such as over 50 projects with China) that cannot be monetized quickly, if at all, or are composed of outstanding loans to Iranian entities that cannot repay them. These assets would not become accessible following sanctions relief.”
For its part, the Central Bank of Iran said the number was actually $32 billion, not $55 billion. U.S. officials privately think this figure was close to the mark but choose to be conservative in public statements.
Nader Habibi, a professor of economics at Brandeis University’s Crown Center for Middle East Studies, did his own calculation of Iran’s frozen assets in 2015. He noted that $10 billion was in Iraqi banks and could not be recovered quickly and that nearly $25 billion was deposited in Chinese banks as collateral for several Chinese investments in Iran. He estimated that only about $29 billion would be available to Iran for immediate use. In context of Iran’s oil revenue, he wrote, “$29 billion of released funds doesn’t amount to that much and represents only half of Iran’s current oil export revenue.”
Of course, when Pompeo was the nation’s chief diplomat, Trump in 2018 withdrew from the nuclear agreement — and the previous sanctions snapped back into place, once again restricting how Iran could use its foreign-exchange funds.
European powers who were party to the nuclear agreement sought to keep it alive by creating a channel, known as INSTEX, to allow for barter transactions. But it appears to have been limited to trade in humanitarian products such as medical devices during the coronavirus pandemic. Iran has dismissed INSTEX as ineffective.
The Pinocchio Test
It’s time for Republicans to retire this $150 billion claim. It’s often framed as U.S. taxpayer money — it was not — and it was related to the relief of Treasury sanctions that are now back in place. It’s especially absurd to suggest that this was provided to Iran as an all-cash transaction, as Pompeo did to Fox viewers. Perhaps Pompeo got his misleading talking points mixed up, but he has suggested before that Obama gave $150 billion in cash. So we’re not feeling especially generous.
Pompeo earns Four Pinocchios.
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