The Iran Money Transfer: Unanswered Questions

The Wall Street Journal on Tuesday revealed details of a U.S. cash transfer to Iran on January 17 – the same day that five American hostages were released from Iranian prisons. The method and timing of the events – both occurring the day after last summer’s nuclear deal went into effect – has sparked questions from lawmakers and pundits over whether the payment amounted to ransom.

On January 17, U.S. officials announced they had transferred $1.7 billion to Tehran to settle a dispute over an abortive arms sale signed before the downfall of the Shah in 1979. Tuesday’s report, however, revealed the method by which the first, $400-million installment was delivered: deposited in two European central banks, converted into local currency, then flown to Iran on wooden pallets in an unmarked cargo plane. Senior U.S. officials this week insisted there was no quid pro quo, that the two diplomatic tracks were separate, and that the hostages were released solely in exchange for Iranians incarcerated or charged for sanctions busting.

A report published by an outlet tied to Iran’s Islamic Revolutionary Guard Corps (IRGC) had claimed in February that the payment and hostage releases were linked, disclosing that the $400 million had landed in Mehrabad airport on the same day that the hostages were released (the Journal report corroborates that assertion, and quoted officials in Washington saying the Iranian negotiators wanted cash to show they had gained something tangible). That report claimed that Guard intelligence officials had set a “steep price” for the five hostages: not just the $1.7 billion, but also dropping charges against and releasing over a dozen Iranian nationals, and delisting the IRGC-linked Sepah Bank from UN sanctions – all of which indeed took place as the nuclear deal went into effect. U.S. official have said the delisting was merely a confidence-building measure.

Senior U.S. officials, including President Obama, played down allegations of ransom, pointing out that the transfer’s timing had already been made public in January. Obama acknowledged, however, that the payment was made in hard cash in order to circumvent U.S. primary sanctions. Critics in Congress say the administration did not disclose how the $1.7 billion was transferred and withheld relevant information during Congressional inquiries over the past seven months.

Prior to the transfer, Department of Justice officials had objected to sending cash payments on the same day of the hostage release, citing the “message” it would send to the Islamic Republic. They were right: Once the exchange was made, the commander of the Guard’s Basij paramilitary touted the payment as ransom on state media.

The timing, manner, and the administration’s subsequent obfuscation of details suggest that the settlement and hostage transfer are linked. Unanswered questions about the transfer remain: Beyond the $400 million, how was the rest of the $1.7-billion payment delivered? Who gathered the money from the European banks, and whose plane flew it to Iran? Proving that the January prisoner release did not constitute ransom will require that the administration provide convincing answers to these questions.

Amir Toumaj is a research analyst at the Foundation for Defense of Democracies. Follow him on Twitter @AmirToumaj