Reports of $400 million paid in cash to Iran soon after four Americans were released from prison in January has breathed new life into charges that Washington paid a ransom for their freedom.
House Speaker Paul D. Ryan (R-Wis.) was among those who seized on the timing and cloak-and-dagger delivery method, which was first reported by the Wall Street Journal, saying it proved suspicions that the Obama administration had tried to hide a payment for the four Americans, including Washington Post reporter Jason Rezaian. GOP candidate Donald Trump called it an example of the administration’s foreign policy failures.
“Obama administration sent plane load of cash to #Iran as ransom as part of deal on hostages. Just unreal,” tweeted Sen. Marco Rubio (R-Fla.), a long-standing critic of the Iran talks.
In fact, the money was earmarked to settle a decades-old Iranian claim on the money, plus $1.3 billion in interest.
The funds were deposited by Iran before the 1979 revolution to buy U.S. military equipment, and they were frozen under President Jimmy Carter after Americans were taken hostage at the U.S. Embassy in Tehran. Iran has been trying to recover the money ever since, at one point contending that it was owed $10 billion or more with accrued interest.
The White House and the State Department both denied on Wednesday that the money was part of a quid pro quo arrangement to win the prisoners’ freedom.
Former diplomats and scholars of Iran say that the transaction is as much about perception as provable reality.
“The timing may look awkward, but on the other hand, this dispute had been festering for more than three decades, and it was good to get it resolved — and to get Jason and the others out,” said Barbara Slavin, acting director of the Future of Iran Initiative at the Atlantic Council. “Those who opposed the nuclear deal will call it ‘ransom’ and those who supported it will call it ‘compensation.’ ”
The broad contours of the transaction have been known since Jan. 17, the day the White House announced the prisoner release and a settlement in a case at the Iran-U.S. Claims Tribunal in The Hague.
State Department spokesman Mark Toner said Wednesday that three separate teams of negotiators were assembled to conduct talks with Iran on the nuclear deal, the prisoner swap and the financial settlement. That move to silo the teams allowed the administration to argue that the deals were not linked and that the $1.7 billion saved taxpayers’ money because the United States most likely would have paid more if the matter had gone to arbitration.
“Let me be clear: The United States does not pay ransom,” said White House press secretary Josh Earnest, rejecting the assertions of those who are “falsely accusing us of paying a ransom.”
There is a long history of Iran getting back part of its frozen assets after Americans are released. As part of an agreement that led to the 52 remaining embassy hostages being freed in 1981, Iran received $3 billion of its $12 billion in frozen assets. The rest was used to repay American creditors or put into escrow to cover judgments against Iran.
The $400 million settlement in January was one of those cases.
“I thought settling this issue at the same time as all these other things were being settled was as good as you could hope for,” said Gary Sick, the chief Carter aide on Iran during the embassy hostage crisis and now a scholar at Columbia University.
“I thought it was a brilliant stroke to get things taken care of, leaving us a tabula rasa to begin afresh if we do decide to resume diplomatic relations. All the old lingering, festering doubts and cases will have been removed.”
The case was important to the Iranians. They raised it in one of the very first meetings in 2001 attended by Hillary Mann Leverett, then a diplomat who led a U.S. dialogue with Iran on Afghanistan.
“It was always at the top of the agenda, with everybody I encountered,” she said.
But Leverett said that in her experience, the Iranians do not usually demand large payouts for individual detainees. She cited the case of the American hikers who strayed into Iran and were accused of espionage. The remaining two were released in 2011 and left the country, forfeiting $500,000 in bail each.
“We may think the bail paid was too high,” Leverett said. “But it was $1 million, not $400 million or $1.7 billion. That sum of money is linked to cooperation with the United States, not to specific detainees.”
Congress is not the only place where the payment was characterized as ransom. Commanders of the Islamic Revolutionary Guard Corps were quoted in state media saying bluntly that the money was paid in exchange for the American prisoners.
Omri Ceren, a senior adviser at the Israel Project and critic of the nuclear deal with Iran, said the administration’s lack of openness raised suspicions.
“It seemed like there was smoke because of the timing and the Iranian claims,” he said. “The administration was repeatedly asked, ‘Show us there’s no fire here.’ And they refused. Which is why I and many other people went ahead with the presumption which is now confirmed.”
Bob Baer, a former CIA case worker in the Middle East who is now an author, said the settlement was bound to look bad, simply because it involves Iran.
“Technically, the State Department may be right,” he said. “But given the archaeology of our relations with Iran, it looks very bad. They take people. They get money back they think is theirs.”
Greg Jaffe contributed to this report.