U.S. Pays Iran $400 Million: Ransom or Routine?

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A new detail has been drudged up regarding the January prisoner swap between the United States and Iran: as the U.S. hostages boarded their planes, $400 million dollars–divvied into euros, Swiss francs and other foreign currencies–was passed to the Iranians. The cash drop, reported on Wednesday by The Wall Street Journal, drew ire from Republicans opposed to the Iran deal–in which the U.S. lifted sanctions on Iran in exchange for reduced nuclear capacity and increased tolerance for outside inspectors–and used it as evidence of why President Obama’s diplomatic handshake with Iran is ill-advised.

“This report makes plain what the administration can no longer deny: this was a ransom payment to Iran for U.S. hostages,” said Senator Tom Cotton (R-Ark.). House Speaker Paul Ryan (R-Wis.) cautioned those who were gnashing their teeth at the report–which he said was still unconfirmed–but said if true, amounted to “another chapter in the ongoing saga of misleading the American people to sell this dangerous nuclear deal.”

The $400 million cash delivery also reportedly included $1.3 billion in accrued interest. The money dates back to the 1970s, according to U.S. officials involved in the transfer. They said it was a belated return of funds Iran paid for U.S. weapons before the 1979 revolution. At some point during the seventies, Iran paid $400 million for a cache of weapons, but the Iranian government was overthrown by revolutionaries in 1979, and American hostages were taken at the U.S. Embassy in Tehran. The weapons deal never went through. But the U.S.–until January 2016–had yet to return the $400 million to Iran. Secretary of State John Kerry on Thursday defended the cash drop, saying it “saved the American taxpayers potentially billions of dollars.” He added: “There was no benefit to the United States of America to drag this out.”

January’s exchange was primarily a prisoner swap. Iran held five hostages–including a Washington Post journalist, a marine veteran and a Christian pastor–and the U.S. held seven Iranians, six of whom have dual U.S. citizenship. All of those men were held, some already convicted, others awaiting trial, on charges of exporting activities that violated sanctions in place on Iran. All were released in exchange for the U.S. prisoners.

But the timing of the cash drop, which happened at the same time as the prisoner exchange, and as the Iran nuclear deal was being finalized, was enough to prompt outrage from congressional Republicans and a fresh round of tweets from Donald Trump, the Republican presidential nominee, who implicated Hillary Clinton, his Democratic opponent:

The White House refuted the ransom claims, and portrayed the Republican backlash as no more than an attempt to justify their position against the Iran nuclear deal. John Earnest, White House press secretary, said the Republican response was “an indication of just how badly opponents of the Iran deal are struggling to justify their opposition to a successful deal.” He also reiterated the U.S. policy to not engage in ransom exchanges, adding: “Let me be clear, the United States does not pay ransom for hostages.”

But, what is the official policy regarding securing U.S. hostages?

In June 2015, President Obama announced an executive order that clarified the language on assisting families in negotiating with terrorists who might harbor their loved one. Obama’s order created a new team based at FBI headquarters called the Hostage Response Team, but said the U.S. “will not make concessions, such as paying ransom, to terrorist groups holding American hostages.” Instead, the new team would be “responsible for ensuring that our hostage policies are consistent and coordinated and implemented rapidly and effectively.”

The executive order was designed to shape the rules regarding negotiating with terrorist groups. And while Iran is known to fund terrorist groups, it is a functioning government state. It’s unclear whether the Obama administration’s stance extends to governments, but on Thursday Kerry seemed to insinuate the policy applies to every hostage-taking body: “The United States does not pay ransom and does not negotiate ransoms,” he said.

Alec Siegel
Alec Siegel is a staff writer at Law Street Media. When he’s not working at Law Street he’s either cooking a mediocre tofu dish or enjoying a run in the woods. His passions include: gooey chocolate chips, black coffee, mountains, the Animal Kingdom in general, and John Lennon. Baklava is his achilles heel. Contact Alec at



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