World Worried US Mulling To Free $10bn More Of Iran's Funds

Iran International Newsroom
US President Joe Biden in the Oval Office at the White House in Washington, November 13, 2023
US President Joe Biden in the Oval Office at the White House in Washington, November 13, 2023

Speculations about US planning to release another multibillion-dollar chunk of Iran’s funds frozen in Iraq has worried American lawmakers and the international community. 

The Washington Free Beacon reported Monday that the Biden administration is set to approve a sanctions waiver that will allow Iran to access at least $10 billion in previously frozen funds held in Iraq. The acutely contested decision comes just a month after the Tehran-backed Islamist group Hamas launched an attack on Israel that left 1,400 mostly civilians dead. 

The waiver -- which would extend the sanctions relief first issued in July and set to expire Tuesday, November 14 -- allows Iraq to transfer frozen electricity payments into Iranian-owned bank accounts in Europe and Oman. 

In July, the Biden Administration announced that some of Iran’s frozen funds in Iraq will go to Oman, acting as a conduit to release the money for purchasing non-sanctionable goods under US supervision. Iraq owes Iran around $11 billion for imports of gas and electricity, but US banking sanctions prohibit dollar transactions with Iran. In June, the US agreed to make $2.7 billion available for Iran’s humanitarian needs.

The Trump administration first allowed Iraq to import electricity and gas from Iran, but only on the condition that the payments were kept in an escrow account in Baghdad. The Biden administration continued to issue that waiver, and then broadened it in July so that Iraq could move more than $10 billion outside the country, enabling Tehran to draw on the funds for its budget and humanitarian needs. In late October, the governor of the Central Bank of Iran reportedly discussed expediting Iran's access to the funds with his Omani counterpart.

In September, Washington released about $6 billion of Tehran’s frozen funds in South Korea as well as five Iranians from US prisons in exchange for five Iranian-Americans held hostage in Iran. The US-Iran agreement led to criticism of the Biden administration, as many called the scheme the largest ransom payment in history.

In October, Hamas waged its bloody war against Israel. The Iraqi waiver renewal has sparked concerns that such financial support could indirectly aid Iran's proxies. The Biden administration insists that, like the $6 billion held in Qatar, Iran can only use the $10 billion for non-sanctioned purposes. However, critics argue that since money is fungible, the access allows Iran to free up cash in other places for illicit activities.

In a US State Department briefing on Monday, spokesman Matt Miller declined to comment on the reports, saying he would not talk about “social media speculations.”

The news has prompted reactions by US lawmakers who were already pushing for tighter enforcement of sanctions on Tehran. Republican lawmakers in Congress argue that even though the money was allocated for humanitarian purposes, it helps the Islamic Republic regime divert funds into US-designated terror groups like Hamas and Hezbollah. They made this argument when they pressured the Biden administration to halt its $6 billion ransom payment to Iran.

Worried over the decision, Senator Bill Hagerty (R-TN) renewed his call on Congress Tuesday to pass his proposed Iran Sanctions Relief Review Act (S.2210), supported by 41 senators. The bill can mandate a congressional review of actions to terminate or waive sanctions imposed with respect to Iran. Representative Jim Banks (R-IN) also urged a similar motion at the House, where over 100 Republican lawmakers cosponsored the Maximum Pressure Act to codify the Trump administration’s maximum pressure campaign on Iran into law. 

"The world is living in a post-October 7 world, but the White House is still running an October 6 policy toward Iran," Richard Goldberg, a senior adviser at the Foundation for Defense of Democracies and sanctions expert who previously served on the White House National Security Council, told the Washington Free Beacon.

"Why should Iran have any access to more than $10 billion after sponsoring one of the worst terrorist attacks against American citizens and the worst massacre of Jews since the Holocaust? It would make more sense to freeze all of these accounts and keep every penny out of Tehran's hands."

In testimony before Congress late last month, Goldberg advised Congress to lock down the $10 billion as punishment for Tehran’s role in supporting Hamas’s war on Israel. He said Tuesday that the decision to release Iran’s money in Iraq is a “massive sanctions relief for Iran. It is NOT like previous waivers. It is NOT what the Trump administration did.”