U.S. tells how $1.3B in interest paid to Iran
WASHINGTON — President Barack Obama’s administration on Wednesday revealed the details of how it paid in January the $1.3 billion in interest owed to Iran to resolve a decades-old dispute over an undelivered military sale, two days after allowing $400 million in cash to fly to Tehran.
State Department spokesman Elizabeth Trudeau said the U.S. couldn’t say more about the Jan. 19 payments because of diplomatic sensitivities. They involved 13 payments of $99,999,999.99 and final payment of about $10 million. There was no explanation for the Treasury Department keeping the individual transactions under $100 million.
Briefing reporters last week, a senior U.S. official involved in the negotiations said the interest payments were made to Iran in a “fairly above-board way,” using a foreign central bank. But the official, who wasn’t authorized to be quoted by name and demanded anonymity, wouldn’t say whether the interest was delivered to Iran in physical cash, as with the $400 million principal, or through a more regular banking mechanism.
The money came from a little-known fund administered by the Treasury Department for settling litigation claims. The so-called Judgment Fund is taxpayer money Congress has permanently approved in the event it’s needed, allowing the president to bypass direct congressional approval to make a settlement. The U.S. previously paid out $278 million in Iran-related claims by using the fund in 1991.
The money settles a dispute over a $400 million payment made in the 1970s by the U.S.backed shah’s government for military equipment. The equipment was never delivered because of the 1979 Islamic Revolution that overthrew the shah and ended diplomatic relations between the U.S. and Iran.
On Jan. 17, the administration paid Iran the account’s $400 million principal in pallets of euros, Swiss francs and other foreign currencies. The $1.3 billion covers what Iran and the U.S. agreed would be the interest on the $400 million over the decades.
The deal has faced increased scrutiny since the administration’s acknowledgment this month that it used the money as leverage to ensure the release of four U.S. prisoners.
Republican critics accuse the administration of paying a “ransom.”
Obama and other officials deny such claims, though they’ve struggled to explain why the U.S. paid in cash. Obama said it was because the United States and Iran didn’t have a banking relationship after years of nuclear-related sanctions, but that wouldn’t rule out using intermediary banks that maintain relationship with both.
White House spokesman Josh Earnest on Monday refused to agree with a State Department spokesman who called the money “leverage” in the talks.
“I have never made the case that this was somehow a coincidence,” Earnest told reporters Monday, defending the Obama administration’s negotiations with the Islamic Republic.
Pressed by reporters, the spokesman offered an alternative characterization of the deal.
“The notion of a ransom, I think, is often perceived as paying money in exchange for the release of unjustly detained individuals,” Earnest said. “That’s not what occurred here. What occurred here was a mutual prisoner release.”
A State Department spokesman, John Kirby, said last week that the money was used as “leverage” to ensure the Americans’ release. Earnest refused to back Kirby’s description of the payment as leverage.
“That’s a word that I have not used,” Earnest said.
Republicans pounced after Kirby’s statement that the payment and the release of the prisoners eventually became linked, with the former being used as “leverage” to ensure the latter. Kirby rejected accusations that the money was a ransom. Monday’s briefing at the White House was the first time Earnest has taken questions from the media since Kirby’s statement.