U.S. and Qatar Deny Iran’s Access to $6 Billion From Prisoner Deal

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The move comes after harsh criticism that the Biden administration had given Iran a vast sum that freed up other funds for Tehran to provide support to Hamas.

Wally Adeyemo, the United States deputy Treasury secretary, speaking during a news conference.
Wally Adeyemo, the deputy Treasury secretary, told House Democrats that Iran would no longer have access to $6 billion in funds that had been negotiated as part of a prisoner release deal last month.Credit…Stefani Reynolds/Agence France-Presse — Getty Images

Michael CrowleyAlan Rappeport

The United States and Qatar have agreed to deny Iran access to $6 billion recently transferred to the nation as part of a deal between Washington and Tehran that led to the release of five imprisoned Americans from Iran last month.

Wally Adeyemo, the deputy Treasury secretary, told House Democrats on Thursday that Iran would no longer have access to the funds, according to a person familiar with the matter. The money was under close supervision and strict conditions that it be used only for humanitarian purposes.

The Treasury Department, which oversees the funds, is not employing sanctions powers to formally freeze the money but has what was described as a quiet understanding with Qatar that Iran will be unable to retrieve it. U.S. officials did not describe the money as frozen permanently but said that case-by-case applications to spend it under the current arrangement will be denied for the foreseeable future.

The move comes after harsh criticism, mainly from Republicans, that the Biden administration had given Iran a vast sum that freed up other funds for Tehran to provide support to Hamas before it attacked Israel over the weekend.

U.S. officials said they had not seen intelligence that Iran had directly assisted with the assault and that some senior Iranian officials were taken by surprise. But Tehran has been a major backer of Hamas for decades, and critics said the fungibility of money meant the restrictions had little meaning.

It is unclear whether the Biden administration may yet declare the funds permanently off limits. It is also unclear whether the action reflects any new analysis by the administration about Iran’s role in the attack. Regardless, it is certain to infuriate Iran’s leadership after a painstaking prisoner swap that took many months to construct and weeks more to complete.

Speaking with reporters in Tel Aviv on Thursday, Secretary of State Antony J. Blinken would not confirm that Iran would be cut off from the account. But he noted that “none of the funds that have now gone to Qatar have actually been spent or accessed in any way by Iran.”

John F. Kirby, a White House spokesman, also declined to confirm the decision at a briefing but emphasized that Iran had not retrieved any of the $6 billion. “Every single dime of that money is still sitting in a Qatari bank,” he told reporters. “Not one dime of it has been spent.”

Under the terms of the prisoner deal last month, the money was transferred from South Korean banks, where it accumulated as Seoul purchased Iranian oil under an agreement with the Trump administration, which choked off most of Iran’s energy exports. But Iran complained that those banks, fearful of being ensnared in U.S. sanctions, made it impossible to get the money.

In return for Iran’s release of Americans who had been held for as many as eight years, the money was shifted to banks in Qatar to allow Iran to tap the funds.

Mr. Kirby said that even if Iran had gotten any of the money, it would have gone to vendors providing humanitarian goods, not to the Iranian government itself. It would also be subject to oversight by U.S. authorities, as envisioned under the Trump program.

“We’ve done nothing different,” Mr. Kirby said. “It’s the same process.”

In a statement, Iran’s mission to the United Nations in New York City denounced the move.

“The U.S. cannot renege on the agreement,” the statement said. “The money rightfully belongs to the people of Iran, earmarked for the government to facilitate the acquisition of all essential and sanctioned requisites for Iranians.”

The decision to cut off the funds appears to be a reversal by the Biden administration, which had insisted until recently that the money was not relevant to the Hamas attack on Israel.

On Sunday, Mr. Blinken rejected Republican charges that giving Iran access to the money might have allowed it to increase support for Hamas.

“When any money is spent from that account, it can only be used for medical supplies, for food, for medicine,” Mr. Blinken said on NBC’s “Meet the Press.” “And those who are saying otherwise are either misinformed or misinforming, and it’s wrong either way.”

The Hamas attack has made President Biden’s recent approach toward Iran a prime target for Republicans. In recent months Mr. Biden has tried to de-escalate tensions with Tehran after efforts to restore the 2015 Iran nuclear deal, from which President Donald J. Trump withdrew, came up short. Iran’s rapid acceleration of its nuclear program in the following years prompted fears of potential U.S. or Israeli military strikes in response.

The prisoner deal came as Biden officials sought to reach other understandings with Iran to avoid conflict, including an agreement not to impose new nuclear sanctions so long as Tehran limited its enrichment of uranium that could be used for a nuclear weapon, according to U.S. and Iranian officials.

Biden officials hoped the effect would be a less risky relationship with Tehran. But Republicans accused Mr. Biden of pulling punches and have cast the $6 billion transfer as a lifeline to Iran’s anti-American government, however the money was restricted.

“You can say certain funds can’t be used, but you can use other funds that may be freed up as a result,” Gov. Ron DeSantis of Florida, a Republican presidential candidate, told reporters on Saturday.

Farnaz Fassihi contributed reporting from New York, Edward Wong from Tel Aviv, and Peter Baker from Washington.

Michael Crowley covers the State Department and U.S. foreign policy for The Times. He has reported from nearly three dozen countries and often travels with the secretary of state. More about Michael Crowley

Alan Rappeport is an economic policy reporter, based in Washington. He covers the Treasury Department and writes about taxes, trade and fiscal matters. He previously worked for The Financial Times and The Economist. More about Alan Rappeport

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