US made entire $1.7 bn payment to Iran in foreign cash – Treasury

September 7, 2016 at 09:47

Not only the $400 million debt, but also the $1.3 billion interest on it was paid by the US to Iran in foreign currency and in cash this year, the US Treasury acknowledged.

Two planeloads full of Swiss francs, euros, and other currencies followed the initial cash payment to Iran to settle the debt dating back to 1979, the Obama administration confirmed. The planes flew on January 22 and February 5 from Europe, the White House reportedly said in a briefing it gave lawmakers after they returned from their summer recess.

Earlier the US Department of State said the money was transferred through a third party in 13 separate payments of $99,999,999.99, with the final payment amounting to about $10 million. The administration however did not reveal that the interest settlement was in cash like that of the original debt.

The US payment “flowed in the same manner” as the original $400 million that an Iranian cargo plane picked up in Geneva, Switzerland, the Wall Street Journal reported, citing anonymous congressional officials. The original sum was converted into non-US currencies by the Swiss and Dutch central banks, the report said.

The Treasury Department said the cash transaction was necessary because of the US-championed sanctions against Tehran.

“The form of those principal and interest payments – made in non-U.S. currency, in cash – was necessitated by the effectiveness of US and international sanctions regimes over the last several years in isolating Iran from the international financial system,” Treasury spokeswoman Dawn Selak said.

Washington’s debt stems from a 1970s purchase by the Shah government of military aircraft parts that were never delivered. It was paid in January this year, shortly before Iran released some American prisoners. The White House said the payment was used to put leverage on Tehran while its critics described it as paying ransom for US citizens.

The Obama administration said it decided to cover the debt because it expected to lose arbitration in The Hague and be ordered to pay as much as $10 billion due to accumulated interest. Washington and Tehran agreed on a $1.7 billion settlement, which includes $400 million of original debt and $1.3 billion of interest.

The release of US prisoners coincided with the signing of a breakthrough deal between Iran and six leading world powers, which addressed concerns over Iran’s controversial nuclear program. Many Republicans, and some officials from Israel, criticized the Obama administration for signing the deal, saying it was bad.

A bill introduced in Congress by Republican lawmakers on Tuesday would block the US Treasury Department from making any payments to Iran until it returns the $1.7 billion it received to the US and to citizens who the US considers victims of Iran-sponsored terrorism.

“President Obama's disastrous nuclear deal with Iran was sweetened with an illicit ransom payment and billions of dollars for the world's foremost state sponsor of terrorism,” Senator Marko Rubio, who sponsored the bill, said.

“The US government should not be in the business of negotiating with terrorists and paying ransom money in exchange for the release of American hostages,” he added.

Both the House and Senate are planning to hold hearings on the controversial payments.