The Obama administration acknowledges that its $1.7 billion transfer to Iran earlier this year was made entirely in cash, using non-U.S. currency, as Republican critics of the deal have continued to denounce payments.
Treasury Department spokeswoman Dawn Selak said in a statement Tuesday that the cash payments were necessary because of “the effectiveness of U.S. and international sanctions,” which have isolated Iran from the international financial system.
The $1.7 billion was the settlement of a decades-old arbitration claim between the United States and Iran. An initial $400 million worth of euros, Swiss francs and other foreign currencies were delivered on pallets on January 17, the same day Tehran agreed to release four American prisoners.
The Obama administration had claimed the events were separate, but recently acknowledged the money was being used as leverage until Americans were allowed to leave Iran. The remaining $1.3 billion represented estimated interest on Iranian cash the United States had held since the 1970s. The administration had previously declined to say whether the interest was returned to Iran in physical cash, as for the principal, or through a more regular banking mechanism.
Earlier Tuesday, officials from the Departments of State, Justice and Treasury held a closed briefing for congressional staff on the payments, according to a Capitol Hill aide familiar with the session. Officials said the $1.3 billion was paid in cash on January 22 and February 5. The aide was not authorized to speak publicly and requested anonymity.
The money came from a little-known fund administered by the Treasury Department to settle disputes. The so-called Judgment Fund is taxpayers’ money that Congress has permanently approved when needed, allowing the President to circumvent direct Congressional approval to reach a settlement. The United States had already paid out $278 million of Iran-related claims using the fund in 1991.
“President Obama’s disastrous nuclear deal with Iran has been sweetened by the payment of an illicit ransom and billions of dollars to the world’s leading state sponsor of terrorism,” said Sen. Marco Rubio (R-Fla .), the main sponsor of the bill.
Rep. Ed Royce (R-Fullerton), chairman of the House Foreign Affairs Committee, also introduced a bill banning cash payments to Iran and requiring transparency on future settlements.
“Sending pallets of untraceable money to the world’s number one state sponsor of terrorism is not just terrible policy,” Royce said. “This is incredibly reckless, and it only puts bigger targets on the backs of Americans. … This financial windfall has emboldened Iran’s radical regime and undermined US national security.”
The House and Senate plan to hold hearings on the payments.
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