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Published on August 19th, 2016 | by Derek Davison


Defining “Ransom” for the Anti-Iran Crowd

by Derek Davison

Earlier this month, the Wall Street Journal reported that the Obama administration had “secretly” sent $400 million to Iran in January, at the same time that the Iranian government agreed to release three American citizens whom it had detained (a fourth prisoner was also released in a separate deal). The Journal’s framing was a bit odd—it’s a stretch to call a payment “secret” when the president of the United States publicly acknowledged it when it was made. The Journal clearly knew this because one of the two reporters who “broke” the $400 million payment story earlier this month, Jay Solomon, also “broke” the same story in January.

Yesterday, the WSJ expanded on its earlier story with a report that the U.S. government refused to let Iran take possession of the money until after the prisoners had been released:

The picture emerged from accounts of U.S. officials and others briefed on the operation: U.S. officials wouldn’t let Iranians take control of the money until a Swiss Air Force plane carrying three freed Americans departed from Tehran on Jan. 17. Once that happened, an Iranian cargo plane was allowed to bring the cash home from a Geneva airport that day.

The State Department later confirmed this version of events, saying that the administration had used the timing of the payment as “leverage” to ensure that Iran went through with the separately negotiated prisoner release. However, the implication of these stories, that America had paid a ransom for prisoners held unjustly by Iran, has raised eyebrows throughout the Washington foreign policy establishment. After all, is it not long-standing American policy to make “no concessions” (including paying ransom) in exchange for U.S. citizens held as hostages? Does not the payment of ransom encourage hostile foreign actors to abduct more Americans abroad?

Because Iran was involved in this case, these concerns were blended with a heaping helping of Iran Derangement Syndrome and picked up by virtually every organization and/or individual opposed to the Iran nuclear deal. It was almost as if they were all operating within some sort of “echo chamber,” but of course that couldn’t possibly be true. Republican politicians like Paul Ryan and John McCain decried the payment as ransom. Jason Chaffetz, chairman of the House Committee on Oversight and Government Reform, announced plans to hold hearings on the payment. The neoconservative Foreign Policy Initiative breathlessly declared “U.S. Paid Iran $400 Million Ransom for Hostages.” Republican nominee and former reality TV star Donald Trump said that he’d seen Iranians unloading a plane filled with pallets of cash from the United States on television, a claim that, shockingly, turned out to be so false that Trump, in a rarity for him, actually walked it back.

The only problem with all this hand-wringing is that the $400 million payment wasn’t ransom. Why? Simple: it was Iran’s money to begin with. And so is the rest of the $1.7 billion settlement that the Washington and Tehran reached in January concerning a decades-long dispute over money that Iran had paid the U.S. prior to the 1979 Islamic Revolution. Before he was overthrown, the Shah of Iran, a close American ally, had deposited $400 million in the United States as an advance payment on some slick U.S. military hardware. When America and Iran cut diplomatic ties with each other in 1981, that money was still parked in the United States, but Washington opted neither to give Iran the hardware for which it had paid nor to return the money and call off the weapons deal. That $400 million is and always was Iran’s money. Factoring in a few decades’ worth of interest, the $1.7 billion figure represents a pretty reasonable settlement. Iran had previously been pursuing repayment of this money, with interest, in an arbitration case at The Hague. Had that case gone to completion, Iran might have collected a considerably larger sum—they were seeking $10 billion in arbitration.

It’s difficult to figure out how “giving Iran money we already owed and were going to give it anyway” can be considered “ransom,” and as you might expect nobody criticizing the payment has actually attempted to explain this problem with their interpretation of events. Vox.com’s Zack Beauchamp nicely sums up what actually appears to have happened here, for those of us not predisposed to imagine that everything is a nefarious plot by Barack Obama to enrich Tehran (emphasis mine):

What happened is that the US chose to postpone the payment it had already promised to make until it was sure Iran was upholding the prisoner release deal. Iran wasn’t getting any additional money in exchange for prisoners (it actually got prisoners in exchange for prisoners). The US government just decided it couldn’t trust Iran, necessarily, so it withheld following through on the arms deal settlement until it was sure Iran was cooperating on the prisoner deal.

In other words, for the $400 million to actually have counted as a “ransom,” the US would have needed to agree to pay Iran $400 million specifically in exchange for the release of its prisoners. But that’s not what happened here. Only the timing of the payment was linked to the release.

Yes, the $400 million payment was timed to coincide with the prisoner release, but the relationship between the two didn’t work the way anti-Iran voices want us to believe it did. “Let’s consider what the Obama administration accomplished here,” Matt Duss, president of the Foundation for Middle East Peace and a supporter of the nuclear deal, told me, “Knowing that Iran was both likely to win a large settlement soon but in dire need of cash now, the U.S. got Iran to settle for a fraction of the money it would’ve gotten, saving American taxpayers hundreds of millions of dollars, while also leveraging it to ensure the release of American prisoners. And people are outraged by this?”

About the Author


Derek Davison is a Washington-based researcher and writer on international affairs and American politics. He has Master's degrees in Middle East Studies from the University of Chicago, where he specialized in Iranian history and policy, and in Public Policy and Management from Carnegie Mellon University, where he studied American foreign policy and Russian/Cold War history. He previously worked in the Persian Gulf for The RAND Corporation.

One Response to Defining “Ransom” for the Anti-Iran Crowd

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  1. avatar Matthew says:

    $10 billion (~9%) would never have happened, so it’s biasing your story to even mention it. So, do we still owe ~$1.3 billion?

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