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No, Biden’s new deal with Iran won’t involve ‘U.S. taxpayer dollars’

An anti-America mural on a wall of the former U.S. Embassy in the capital, Tehran. (Atta Kenare/AFP/Getty Images)
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“The reports of ongoing negotiations with Iran raise serious concerns about why the Administration is willing to engage and provide U.S. taxpayer dollars to a country adverse to America’s interest.”

Letter to Secretary of State Antony Blinken, signed by 18 House Republicans, March 30

“Joe Biden will be the biggest funder of terrorism in the world, and American taxpayers are going to be the ones paying for it.”

— Rep. Jim Banks (R-Ind.), interview on Fox News, March 19

The Biden administration appears to be nearing an agreement to restore the nuclear deal with Iran that was abandoned by the Trump administration. Given the controversy surrounding the deal negotiated by the Obama administration, Republicans are sharpening their criticism of the emerging pact. Banks, in a March 9 tweet, even asserted Biden would give nearly $100 billion in “taxpayer dollars” to Iran.

But this claim — that U.S. taxpayers will end up footing the bill — is really off base. Perhaps these lawmakers are confused after listening to President Donald Trump frequently make similar misleading claims about the Obama-era agreement, officially known as the Joint Comprehensive Plan of Action (JCPOA).

The Facts

Trump had two favorite lines about President Barack Obama and the Iran deal, both of which he said more than 130 times during his presidency. First, he would claim that Obama gave Iran $150 billion as part of the deal, often suggesting that these were taxpayer dollars. Then, he would add with astonishment, $1.8 billion was in cash.

But as we wrote a gazillion times, the first was completely wrong and the second was misplaced. Iran had billions of dollars that were frozen in foreign banks around the globe because of international sanctions over its nuclear program. So none of this was U.S. taxpayer funds; this was Iran’s money. The amount, according to the U.S. Treasury Department, was about $55 billion, though Iran’s Central Bank said it was even lower.

As for the $1.7 billion in cash — Trump always used the wrong figure — that was related to the settlement in 2016 of a decades-old claim between the two countries, not the nuclear deal. The initial payment was handed over the day after Iran released four American detainees, including The Washington Post’s Jason Rezaian. Officially, it was a coincidence, but many suspected the cash was in effect a ransom payment.

Thus, we were puzzled when we saw Republican lawmakers assert that U.S. taxpayer funds were going to be spent on behalf of Iran in any new deal. Since that had not been a feature of the old deal, we wondered if they had been misled by years of Trump’s rhetoric.

Buckley Carlson, a spokesman for Banks, did not respond to repeated queries. Jessica Collins, the communications director for the Republican staff of the House Committee on Oversight and Reform, directed our attention to an article — titled “This isn’t Obama’s Iran deal. It’s much, much worse.” — in the Tablet magazine by Gabriel Noronha, who had been special adviser for Iran at the State Department from 2019 to 2020.

“It’s been reported that the Biden administration will provide a $7 billion ransom payment to Iran,” Collins said, citing the article.

The article actually says: “Personally, the most troubling transfer of funds will be the $7 billion ransom payment the United States is preparing to pay for the release of four Americans from an Iranian jail.”

In other words, it relates to detainees being held in Iran, not the nuclear deal. In his article, Noronha blames Obama’s 2016 settlement of claims at the same time as the release of the detainees as leading to an increase in the cost of detained Americans.

But Noronha told the Fact Checker that he was referring to the unfreezing of $7 billion worth of Iranian oil sales held (in dollars) in South Korean banks that were originally frozen from Iranian access by U.S. sanctions in 2018 and 2019. “It would not be accurate to say these are U.S. taxpayer dollars,” he said.

South Korea and Iran have been holding talks on resolving the release of about $7 billion of frozen funds, held at two banks. Supposedly, if the funds are unfrozen, Iran has agreed to use the money only for humanitarian items. (Of course, once the money ends up in the Iranian budget, it would be hard to trace how it’s used.)

Incremental steps have been taken in recent months to build confidence. In January, South Korea released $18 million to pay Iran’s outstanding bill at the United Nations, allowing for a restoration of Iran’s voting rights. Separately, the Treasury Department issued a special license to allow South Korea to pay $63 million that was owed to an Iranian consumer electronics company.

There is a side issue of whether U.S. victims of Iranian terrorism — who have about $60 billion in outstanding unpaid lawsuit judgments and associated liens awarded by U.S. courts — should get a first crack at these assets. But in any case, those funds would not be coming from the Treasury Department.

As for the detainees, four U.S. citizens are in prison in Iran or barred from leaving the country: businessman Siamak Namazi, who was arrested in October 2015; his father and former U.N. official Baquer Namazi, who was arrested in early 2016 when he went to visit his son, then given a medical furlough from prison but is barred from leaving Iran; Morad Tahbaz, a conservationist and entrepreneur who was arrested in January 2018; and businessman Emad Shargi, who was first detained in early 2018.

The Biden administration’s chief negotiator, Robert Malley, was quoted in January as saying that “it is very hard for us to imagine getting back into the nuclear deal while four innocent Americans are being held hostage by Iran.”

But officials also have insisted that the negotiations regarding the detainees is not connected to the nuclear talks. “We have never tied the fate of these American detainees to the JCPOA or any other diplomatic effort, because any diplomatic effort is at best an uncertain proposition,” State Department spokesman Ned Price said on March 14. “We want to see their safe release, their return to their families, a certain proposition. So, we have been discussing this on a separate track.”

Nevertheless, Iran has indicated that it was not interested in any sort of prisoner exchange to resolve the fate of the detainees, but instead wants its money back.

“I do insist that this would be a form of ransom payment regardless of U.S. government descriptions, in part because it’s expressly how the Iranians have viewed it and discussed it internally when they took the hostages in the first place,” Noronha said. “The Iranians don’t particularly care where the funds come from, they just want to be able to show internally that the practice of hostage-taking pays off because it causes considerable damage to their tourist industry.”

Barry Rosen, a former State Department official who survived the 1979-1981 Iran hostage crisis, has argued that to wean Iran off such tactics, any deal to revive the nuclear agreement should snap back sanctions if more hostages are taken.

The Pinocchio Test

Whatever one may say about an emerging agreement with Iran on its nuclear ambitions, one cannot say U.S. taxpayer funds will be involved. The money that would be released was always Iran’s money — primarily what it should have received in exchange for selling goods such as oil.

Dealing with Iran often involves difficult choices for U.S. officials. The regime is holding U.S. citizens as hostages and, no matter what the diplomatic artifice constructed, Iran may conclude such seizures are a profitable way to get its money back. Despite official denials, it may also be the case that the detainees and the nuclear deal are linked, at least from Iran’s perspective.

Lawmakers are certainly free to criticize U.S. officials for the diplomatic choices that are made, such as unfreezing billions of dollars blocked by sanctions. But they shouldn’t mislead Americans into thinking U.S. taxpayers are footing the bill.

The lawmakers earn Four Pinocchios, just as Trump did when he made a similar false claim.

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