A delegation of Israel’s senior-most national security officials visited Washington in late April. Word was that they had been dispatched by Prime Minister Benjamin Netanyahu to glean more detail about U.S. negotiations with Iran to reenter the Joint Comprehensive Plan of Action (JCPOA, commonly known as the Iran nuclear deal) going on in Vienna. They may also have been trying to slow down the Biden administration’s race to embrace the Islamic Republic. Long story short, their visit was a bust. The deal, they told friends in D.C., is all but done. Officials from Saudi Arabia and the United Arab Emirates agree. The only chance of the impending deal collapsing, they say, is if Iran decides it won’t play ball.
Less than 100 days ago, then-Secretary of State nominee Antony Blinken told Congress, “It’s vitally important that we engage on the takeoff, not the landing, with our allies and partners in the region,” adding that “I think we’re a long way from [a deal].” Wendy Sherman, Blinken’s deputy, doubled down in her own nomination hearing: “Iran is a long way from compliance, as we well know.” In a meeting on April 30 (the details of which were disputed between Israeli and American officials), President Biden reportedly told Yossi Cohen, the head of Israel’s Mossad, that the U.S. isn’t close to returning to the Iran deal. In February, State Department spokesman Ned Price stated that the U.S. and Iran are “a long way” from a return to the JCPOA. President Biden later confirmed in a CBS interview that the U.S. would not lift sanctions before Iran returned to the deal.
So it’s slow going, right? Pretty complex? Iran is ratcheting back its violations of the original deal? Not quite. On April 16, Iran started enriching uranium to its highest level yet, 60 percent purity (compared to the 3.67 percent agreed upon in the deal). Also in April, Iranian fast attack boats twice swarmed American vessels (the first such attacks in four years); in the second incident, the boats departed only after the U.S. crew fired warning shots. Nonetheless, a May 1 headline from Voice of America enthused “Progress Reported at Iran Nuclear Talks in Vienna.” The Russian rep attending noted “cautious and growing optimism.” At another meeting two weeks earlier, Iran’s nuclear negotiator Abbas Araqchi said, “It seems that a new understanding is emerging and there is now common ground among all on the final goal.” Echoing Araqchi, Biden National Security Adviser Jake Sullivan told Fox News Sunday that “a new understanding” was emerging from the talks, focusing on “compliance for compliance.” The Washington Post headline said it all: “Biden national security adviser suggests fast timeline to rejoin Iran deal.”
But the key is the commitments by multiple administration officials, including the president, that sanctions are going to stay in place, right? Not so much. While Sullivan’s promise of “compliance for compliance” suggests some form of barter in which Iran steps back into partial compliance and the United States lifts some sanctions, the truth is that sanctions relief is already being served up. How? Depends whom you ask. And what you ask. The straightforward bans on business with Iran and sanctions against senior officials in government and the Revolutionary Guards remain in place. But the Biden administration has apparently found another way to grease the flow of cash to its economically strapped negotiating partners in Tehran.
Iran has long engaged in what is called “hostage diplomacy.” The regime arrests Americans, Britons, Canadians, Frenchmen (and women), Australians, and others on bogus charges, sometimes conducts sham trials, and then convicts the victim in question for spying. Some targeted have been dual nationals with Iran; others are innocent academics and businesspeople. Among such hostages are American Wang Xiyue (see his Dispatch interview here); American-Iranian dual nationals Siamak and Baquer Namazi (still in prison); Australian Kylie Moore-Gilbert (released); dual British-Iranian national Nazanin Zaghari Ratcliffe (in prison). And then there are the ships taken hostage, sometimes in retaliation for seizures of Iranian smuggling vessels, sometimes for the cash to be extorted.
One such hostage ship released last month—the South Korean vessel Hankuk Chemi—was seized by Iranian forces while transiting through the Strait of Hormuz in January. According to Iranian press reports, Seoul agreed to release $1 billion of Iranian assets frozen in two South Korean banks. Others reported that as much as $7 billion could have been released. But releasing frozen Iranian funds is subject to U.S. sanctions (U.S. law forces foreign banks to choose between access to the American banking system or Iran), and to avoid punitive retaliatory measures, Seoul would have required the permission of the U.S. Treasury. I am told that the Biden administration denied to members of Congress that it provided any waivers to South Korea. But one possible workaround could have been a South Korean agreement to permit the funds to be used to buy “medicine, medical equipment, and COVID-19 vaccines” much needed in Iran. U.S. sanctions permit frozen Iranian funds to be used to purchase humanitarian items, including medicine and medical equipment, but using frozen funds releases foreign exchange that otherwise would have had to be spent from inside Iran.
Additional cash infusions may yet come from the release of four American hostages and Briton Zaghari Ratcliffe. Iranian press reported an imminent exchange of Iranians imprisoned in the United States and a cash ransom of $7 billion from the United States and some $500 million from the United Kingdom—though the United States denied the imminence of any such payoff. Nonetheless, rumors abound that the American and British hostages are being prepared for release. Again, how would such payoffs happen? Both the United States and U.K, have strictures in place about the transfer of cash to the Islamic Republic.
There are two more sources of cash that the United States is reportedly facilitating for Iran. The first is from the People’s Republic of China: From almost the moment of Joe Biden’s inauguration, illegal Chinese purchases of Iranian oil have skyrocketed. March purchases were up 129 percent, with no hint of repercussions from Washington despite the sanctions violations. Then there is the bizarre deal in which China promised to invest $400 billion in Iran over the next 25 years in return for oil. First discussed before the JCPOA was signed, Beijing did little to pursue it during the heyday of Obama’s bromance with Tehran, making it official only when Biden came to office. Why? Some suspect Beijing was warmly encouraged by Biden’s Iran negotiating team to help Iran out of its financial squeeze.
A final cash infusion is likely coming from Iraq. Iran’s influence in Baghdad is a byword, and Iran claims to have $5 billion held in the Bank of Iraq, funds frozen because of U.S. sanctions. Iranian officials claim that the United States has given the go-ahead for release of some of those funds, and bank officials confirm that at least some Iranian funds have been transferred. Again, this is a violation of U.S. law, but there has been no hint that sanctions are in the offing.
The Biden administration promised a go-slow approach to re-entering the JCPOA; insisted that no sanctions would be lifted before Iran returns to full compliance with the deal; told Congress that the original deal was not good enough, and that there would need to be an “Iran deal plus.” The exact opposite appears to be the case. And the administration appears to be skirting U.S. law to relax sanctions pressure on Tehran to further encourage a quick return to the deal. In September of 2020, Joe Biden labeled Donald Trump a liar. What’s now clear is that he is also being economical with the truth.
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