The Long, Confusing History of Iran’s Frozen Assets
Policy + Politics

The Long, Confusing History of Iran’s Frozen Assets

The list of criticisms of the deal between a coalition of world powers and Iran to scale back the Islamic Republic’s nuclear program is long and varied, but one of the biggest is the near immediate provision of what one unnamed U.S. official told Reuters said was more than $100 billion in frozen Iranian assets. 

Sen. Tom Cotton (R-AK), one of the most rabid opponents of the deal, characterized it as a “signing bonus” that Iran’s leaders could use to fund overseas terrorism and other attacks on U.S. interests. Proponents of the deal say that it will allow Iran to begin repairing an economy hobbled by decades of punishing sanctions that began in 1979, when revolutionaries overthrew the U.S.-friendly government of Mohammad Reza Shah Pahlavi and took American hostages. 

Related: Tom Cotton Sharpens His Knives for Obama’s Iran Deal 

After the eventual release of the hostages in 1981, tentative talks began over the disposition of assets in the U.S. that had been frozen by President Carter in 1979. The discussions quickly became complicated, in part because of the difficulty of identifying personal and governmental assets, and tracking down assets of the deposed Shah, which the Iranian government insisted rightly belonged to the Iraqi people. 

Many of the assets blocked by Carter in 1979 were unfrozen in 1981 after the signing of the Algiers Accords and the end of the hostage crisis. 

Ten years after the revolution, though, former undersecretary of state David Newsom wrote, “Any resumption of formal relations between the US and Iran will require a further sorting out of the web of financial claims and counter claims. To suggest that this process can take place quickly neglects history, underestimates the complexity of the present situation, and obstructs an examination of other possible solutions to the hostage issue.” 

More than 25 years after Newsom’s observation, the issue is still a complicated one. The U.S. has actually released billions of dollars to Iran already, such as the nearly $3 billion released last summer as a show of good faith during the negotiations over Iran’s nuclear program. 

Related: How the Iran Nuclear Deal Will Affect Oil Prices 

However, according to the Congressional Research Service, there is still a substantial amount of money, real estate and other property being held. 

For instance, the former Iranian embassy in Washington was impounded by the United States and rented out, as were 10 other properties in various locations. The real estate and accumulated rent is estimated to be worth $50 million. 

At the time of the 1979 revolution, Iran’s deposed government had been waiting on the delivery of some $400 million in military equipment, for which it had already paid. The Pentagon later re-sold that equipment and the money was placed in an escrow account. 

Later executive actions blocked financial assets owned directly or indirectly by Iran’s central bank, major companies, and various government and military entities. 

Related: Iran Agrees to Limit Nuclear Weapons in Historic Deal 

The agreement announced this morning runs to 159 pages, and 60 of them are dedicated simply to listing the individuals and entities that will have some or all of the financial sanctions against them lifted and their assets unfrozen. 

The $100 billion figure, however, does not apply only to assets frozen in the U.S. Actions by the United Nations related to Iran’s nuclear program and its treatment of protesters after a 2009 uprising resulted in Iranian assets being frozen around the world. (Not all of the sanctions imposed on Iran over human rights abuses will be lifted under the deal.) 

Where Iran will spend its windfall is unclear, but the likelihood of it immediately stocking up on sophisticated weapons and shipping them off to terrorist proxies across the Middle East is limited. An embargo on selling weapons to the Islamic Republic will not be eased for at least five more years. 

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