US sent cash to Iran as Americans were freed - WSJ

The Obama administration secretly organized an airlift of $400 million worth of cash to Iran that coincided with the January release of four Americans detained in Tehran, according to US and European officials and congressional staff briefed on the operation afterward.

Wooden pallets stacked with euros, Swiss francs and other currencies were flown into Iran on an unmarked cargo plane, according to these officials. The U.S. procured the money from the central banks of the Netherlands and Switzerland, they said.

The money represented the first installment of a $1.7 billion settlement the Obama administration reached with Iran to resolve a decades-old dispute over a failed arms deal signed just before the 1979 fall of Iran’s last monarch, Shah Mohammad Reza Pahlavi.

The settlement, which resolved claims before an international tribunal in The Hague, also coincided with the formal implementation that same weekend of the landmark nuclear agreement reached between Tehran, the U.S. and other global powers the summer before.

“With the nuclear deal done, prisoners released, the time was right to resolve this dispute as well,” President Barack Obama said at the White House on Jan. 17—without disclosing the $400 million cash payment.

Senior US officials denied any link between the payment and the prisoner exchange. They say the way the various strands came together simultaneously was coincidental, not the result of any quid pro quo.

“As we’ve made clear, the negotiations over the settlement of an outstanding claim…were completely separate from the discussions about returning our American citizens home,” State Department spokesman John Kirby said. “Not only were the two negotiations separate, they were conducted by different teams on each side, including, in the case of The Hague claims, by technical experts involved in these negotiations for many years.”

But US officials also acknowledge that Iranian negotiators on the prisoner exchange said they wanted the cash to show they had gained something tangible.

Senator Tom Cotton, a Republican from Arkansas and a fierce foe of the Iran nuclear deal, accused President Barack Obama of paying “a $1.7 billion ransom to the ayatollahs for U.S. hostages.”

“This break with longstanding U.S. policy put a price on the head of Americans, and has led Iran to continue its illegal seizures” of Americans, he said.

Since the cash shipment, the intelligence arm of the Revolutionary Guard has arrested two more Iranian-Americans. Tehran has also detained dual-nationals from France, Canada and the U.K. in recent months.

At the time of the prisoner release, Secretary of State John Kerry and the White House portrayed it as a diplomatic breakthrough. Mr. Kerry cited the importance of “the relationships forged and the diplomatic channels unlocked over the course of the nuclear talks.”

Meanwhile, U.S. officials have said they were certain Washington was going to lose the arbitration in The Hague, where Iran was seeking more than $10 billion, and described the settlement as a bargain for taxpayers.

Iranian press reports have quoted senior Iranian defense officials describing the cash as a ransom payment. The Iranian foreign ministry didn’t respond to a request for comment.

The $400 million was paid in foreign currency because any transaction with Iran in U.S. dollars is illegal under US law. Sanctions also complicate Tehran’s access to global banks.

“Sometimes the Iranians want cash because it’s so hard for them to access things in the international financial system,” said a senior U.S. official briefed on the January cash delivery. “They know it can take months just to figure out how to wire money from one place to another.”

The Obama administration has refused to disclose how it paid any of the $1.7 billion, despite congressional queries, outside of saying that it wasn’t paid in dollars. Lawmakers have expressed concern that the cash would be used by Iran to fund regional allies, including the Assad regime in Syria and the Lebanese militia Hezbollah, which the U.S. designates as a terrorist organization.