Las Vegas Review-Journal (Sunday)
U.S. planeload of cash unusual in recent times
Manner of payment still subject of suspicions
WASHINGTON — A $400 million cash delivery to Iran to repay a decades-old arbitration claim may be unprecedented in recent U.S. history, according to legal experts and diplomatic historians, raising further questions about a payment timed to help free four American prisoners in Iran.
The money was sent to Iran on Jan. 17, the same day Iran agreed to release the prisoners. The Obama administration claimed for months the events were separate, but recently acknowledged the cash was used as leverage until the Americans were allowed to leave Iran. Only then did the U.S. allow a plane with euros, Swiss francs and other foreign currency loaded on pallets to take off in the other direction for Tehran.
“There’s actually not anything particularly unusual about the mechanism for this transaction,” White House press secretary Josh Earnest said this week of the initial cash payment.
But diplomatic historians and lawyers with expertise in international arbitration struggled to find any similar examples.
Asked to recall a similar payment of the U.S. using cash or hard money to settle an international dispute, the office of the State Department historian couldn’t provide an example.
The acknowledgement that the prisoners and the payment were linked, and the unusual cash delivery, have fueled Republican claims that a “ransom” was paid. At a news conference this month, President Barack Obama said cash was used because the U.S. and Iran don’t have a banking relationship after years of U.S. sanctions on Iran, making a check or wire transfer impossible.
The $400 million was the principal owed by the U.S. on a 1970s Iranian account for buying U.S. military equipment. After Iran’s 1979 overthrow of the U.S.-backed shah and the U.S. Embassy hostage crisis in Tehran, the weapons were never delivered. Iran has wanted the money back plus interest ever since. Seven months ago, the two sides put the matter to rest with a $1.7 billion settlement.
Alan Henrikson, diplomatic history professor at the Fletcher School of Law and Diplomacy, Tufts University, found a precedent by reaching back to the 1848 Treaty of Guadelupe Hidalgo that ended the Mexican-American War.
The accord called for the United States to pay Mexico $15 million, an amount worth about $482 million in today’s money, he said. The payment was determined “in consideration of the extension acquired by the boundaries of the United States,” vague diplomatic wording designed to compensate Mexico for a massive loss of territory that included all of California and parts of seven other states.
The treaty stipulated that the United States immediately pay $3 million — or nearly $100 million in 2016 dollars — in Mexico City in the form of Mexico’s gold or silver coin. The remainder had to be paid the same way in $3 million installments each year, with the debt subject to a fixed rate of 6 percent annual interest.
“Ambiguity is often needed in diplomacy in order to achieve agreement,” Henrikson said.
“What is important, in my view, is that both sides to a negotiation clearly understand, even if only tacitly, what is being agreed upon when ambiguity is used. This is not all that subtle, actually. It is life.”