U.S. Advances Deal with Iran to Swap Prisoners, Free Frozen Oil Funds

Washington Post photo by Demetrius Freeman
President Biden at the White House in August.

The Biden administration has issued a waiver for banks to transfer $6 billion in frozen Iranian oil funds without fear of U.S. sanctions – a key step in securing the release of five American citizens detained in Iran, said people familiar with the matter. As a part of the arrangement, the administration will release five Iranian citizens detained in the United States.

The move was notified to Congress on Monday and is likely to come as a relief to U.S. prisoners’ families and supporters, many of whom have waited several years for the return of the detainees. It also is expected to come under harsh criticism from Republicans in Congress opposed to any agreement that allows for the release of frozen Iranian funds, money that is being transferred from South Korea to Qatar and limited for the purchase of humanitarian goods like food or medicine.

The deal marks a major breakthrough for the longtime adversaries who remain at loggerheads over a range of issues, including the rapid expansion of Tehran’s nuclear program, its ongoing military support for Russia and Iran’s harsh crackdown on dissent. Though it remains unclear when the two sides could complete the prisoner transfer, Monday’s announcement comes as President Biden and Iranian President Ebrahim Raisi each prepare to travel to New York for the annual U.N. General Assembly next week.

Amid the prisoner release talks, the United States and Iran have been discussing a possible informal arrangement that would seek to place some limitations on Iran’s nuclear program and avoid an international crisis. U.S. officials have insisted, however, that those talks are unrelated to the prisoner-exchange negotiations.

The U.S. prisoners held by Iran include Siamak Namazi, an Iranian American who had been behind bars in Tehran for nearly eight years, the longest duration the Islamic republic has jailed any American. Others include Morad Tahbaz, an Iranian American who also holds British citizenship, and Emad Shargi, an American Iranian dual citizen. Each was released from Iran’s notorious Evin Prison last month in an initial step of the deal.

Two other American detainees involved in the swap have not been named at the request of their families.

While the five American detainees remain in Iran, the waiver decision, first reported by the Associated Press, tees up the prisoners’ full release, which could happen as early as next week amid the high-profile U.N. gathering, according to people familiar with the matter. They spoke on the condition of anonymity to discuss sensitive details.

South Korea, one of Iran’s largest oil customers, has held $6 billion in Iranian funds as a result of a waiver issued by the Trump administration in 2018 that allowed Seoul to continue purchasing Iran’s oil. Those funds became stuck in 2019 when the Trump administration tightened sanctions on Iran.

The new waiver, signed by Secretary of State Antony Blinken, is aimed at providing assurances to foreign banks that they will not be subject to U.S. sanctions for converting and transferring to Qatar Iran’s funds in South Korea. Under the arrangement, Iranian funds in Qatar’s central bank can be used only to purchase items from vetted providers of humanitarian goods and services allowed under existing sanctions.

“These funds will be moved to restricted accounts in Qatar, and the United States will have oversight as to how and when these funds are used,” the State Department said in a statement Monday. “It is longstanding U.S. policy to ensure our sanctions do not prevent food, medicine, and other humanitarian goods and services from flowing to ordinary people, no matter how objectionable their governments.”

Despite those restriction, Republicans remain opposed to the deal, saying the unfreezing of funds “creates a direct incentive for America’s adversaries to conduct future hostage-taking,” Rep. Michael McCaul of Texas, the top Republican on the House Foreign Affairs Committee, said in a statement following the administration’s notification to Congress.

McCaul added that the timing of the deal, ahead of the Sept. 16 anniversary of the death of Mahsa Amini, a 22-year-old woman who died in the custody of Iran’s morality police and ignited nationwide demonstrations, was “particularly egregious.”

Besides its clampdown on internal criticism last year, Iran has come under criticism for providing Russia powerful self-detonating drones that the Kremlin has used in its invasion of Ukraine.

The State Department said the Biden administration would continue to “counter the Iranian regime’s human rights abuses, destabilizing actions abroad, its support for terrorism, and its support for Russia’s war against Ukraine.”

Before the prisoner deal, the Biden administration’s rapport with Tehran has been marked by deep distrust and the failure to revive a nuclear deal that Biden vowed to renew when he ran for president. Tehran has repeatedly refused to talk directly with Washington, requiring third parties to help broker discussions.

Qatar played a significant role in facilitating discussions between the two sides over the detainees’ release and hosting the talks, said officials familiar with the matter. Switzerland, Oman, the United Arab Emirates and Iraq also played a role.

European allies, who broadly support a revised deal to restrain Tehran’s nuclear program, hope that progress on detainees could help pave the way for more productive nuclear discussions.

Iran’s nuclear program has expanded significantly following the decision by Donald Trump to pull the United States out of the 2015 nuclear deal. The accord, forged by the Obama administration, imposed strict limitations on Iran’s program in exchange for sanctions relief.