U.S. Releases Funds to Pay Iran’s Debts

Latest Developments

Iran’s deputy oil minister, Majid Chegeni, said on June 25 that Iraq repaid its $2.76 billion debt to Iran on purchases of natural gas using funds previously frozen by U.S. sanctions due to Tehran’s nuclear development and other malign activities. The transfer coincides with reports that the Biden administration is negotiating an agreement it says will limit Iran’s nuclear enrichment and release three Americans wrongfully detained by the Islamic Republic.

Chegeni, who is also head of the National Iranian Gas Company, told the Iranian state-affiliated Shana News Agency that Tehran does not have direct access to the funds, which is consistent with reports the Biden administration is allowing Iran to use the funds for paying off debts rather than to repatriate the money.

Expert Analysis

“It’s troubling to see the administration helping to fill Iran’s coffers while the Islamic Republic continues to increase its malign activities on all fronts: terrorism and terror finance, nuclear mendacity, hostage-taking, and assassination attempts, in addition to human rights abuses against its own people. This deserves immediate scrutiny by Congress. And imagine the message this sends to Democrats and Republicans alike who lost loved ones at the hands of Iran’s Islamic Revolutionary Guard Corps: paying the regime for nominal, reversible nuclear commitments is prioritized over satisfying Iranian judgments owed to victims’ families.” — Toby Dershowitz, FDD Senior Vice President for Government Relations and Strategy

“The evidence continues to mount that the administration is providing Iran sanctions relief prior to congressional review. That should prompt immediate hearings, requests for documents, and action to prevent another dime from going to the world’s leading state sponsor of terrorism.” — Richard Goldberg, FDD Senior Advisor

More Funds Could Be Unfrozen

The debt payment constitutes merely part of Iranian funds frozen in escrow accounts worldwide. Iraq is believed to have $7 billion more in frozen funds, and another $7 billion are frozen in South Korean banks. All of these funds are reportedly on the table in the ongoing nuclear discussions. Iran has also benefitted from the Biden administration’s inconsistent enforcement of sanctions against Iran’s illicit oil trade, leading to the highest Iranian oil export levels since the United States withdrew from the Joint Comprehensive Plan of Action in 2018.

Funds Are Fungible

While Iran is unable to access the funds directly, their use for humanitarian essentials frees Iran’s budget to continue funding its military, including the Islamic Revolutionary Guard Corps — which the United States has designated as a foreign terrorist organization — and its terrorist proxies throughout the region, including Hamas, Islamic Jihad, Hezbollah, and the Houthi rebels. Tehran also continues to violently suppress dissent and provide lethal aid to Russia in its invasion of Ukraine.

“How Congress Should Respond to an Interim Iran Deal,” by Richard Goldberg and Behnam Ben Taleblu

“U.S. Permits Iraq to Release Billions to Iran,” FDD Flash Brief

“Hamas and Islamic Jihad Meet Iranian Leaders in Tehran,” FDD Flash Brief

“U.S. Denies Reports of Cash Offers to Iran for Limited Enrichment Concessions,” FDD Flash Brief