Obama not only did not pay Iran Ransom, he denied Iran Billions it had Coming to It

By Juan Cole | (Informed Comment) | – –

Zack Beauchamp at Vox has a very clear explanation of why the $400 million the US paid to Iran in January was not a ransom for hostages.

The fact is that the Obama administration dodged a likely ruling by an arbitration court against the United States that could have awarded Iran as much as $10 billion.

The Iranian government of the Shah had paid the US $400 million for fighter jets before the 1979 Islamic Revolution. After the revolution, the US froze Iranian assets, and after the hostage crisis had no representation in Iran. But by international law the US still owed Iran $400 mn because it never delivered the promised planes. Ultimately a special court was set up to arbitrate the dispute. Iran was asking for $10 billion because of inflation and because of aggravation. It began to look as though Iran might win the $10 bn.

Obama avoided that ruling by negotiating directly with Iran and getting the settlement down to $1.7 billion, which is what a 1978 $400 mn. would be in today’s currency because of inflation.

Obama likely saved the country $8.3 billion. The team that negotiated the repayment of Iran’s own money to Iran for non-delivery of the jets was completely different from the team negotiating on the nuclear deal.

It was just a coincidence that one of the tranches of the repayment to Iran of Iran’s own money coincided with the release of hostages.

Remember, Iran was not getting anything extra from this deal, and was just recovering funds that all along belonged to Iran.

Logically, that can’t possibly be a ransom, as Beauchamp correctly notes. Giving back someone their own money after you reneged on the deal is not a form of ransom!

But if it was, then Obama is the cleverest president ever. If he turned a payment he had to make into a way of getting hostages out, then more power to him.

But no, it was just unrelated.

Related video:

CNN: “State Department: Iran money was not ransom payment”

13 Responses

  1. Billy Glad

    So the payment wasn’t made in cash? And @realDonaldTrump says Morning Joe made up the nuclear weapons question. Disinfo everywhere

  2. well at least nobel peace prize obama wasn’t busy blowing shit up in this instance.

    irony is he is really good at cia shit and fooling the hippies. but the rednecks can’t stand him because he is a negro.

  3. Actually, in the O’Henry story, “The Ransom of Red Chief” the kid proves to be so awful, the kidnappers pay the parents to take him back. So, if it was a ransom Obama Red Chief-ed the Iranians. I suspect the Iranians also wanted interest on their money, which in the 1979 — 1985 era, was close to 20 percent.

  4. All true. Moreover, the Obama Administration announced the claims settlement back in January. Since then, it has been trying to figure out the mechanism for making the payment. Since banking channels are still closed due to U.S. sanctions, the U.S. Treasury cannot just do a wire transfer or write a check that Iran could cash at a bank elsewhere, a planeload of cash was the chosen option. Was the timing completely coincidental? No, but it was Iranian money, not a ransom payment.

  5. Apparently it was delivered in cash on crates to be sure to arrive before an imminent judgement from the arbitration court.

    …we felt it was … in the interest of the American taxpayers, to save them what could have been billions of dollars had this gone to settlement or adjudication. We felt it was prudent to act and to seize the moment.

    link to state.gov

    Clever? Yes. But is it enough to be clever. Better perhaps long-term to have wooed Tehran with generosity than to have enhanced their distrust and driven them further eastwards.

  6. What matters in this instance is how it looks. The timing of the cash transfer was very bad, making it appear to be a ransom payment.

  7. Something similar occurred, but under different circumstances, with regard to the sale of F-16 fighter jets to Pakistan in 1989. Pakistan had bought and paid for 28 F-16s to the tune of $464 million. The funds had been transferred but the planes had not yet been delivered when The shipment was blocked — and the planes placed in escrow in the Arizona desert — after President George H.W. Bush declined to certify that Pakistan was free of atomic weapons and Congress, concluding Pakistan had lied about its nuclear program, imposed restrictions on arms exports as required by the Pressler Amendment.

    This issue festered for ten years–the U.S. kept Pakistan’s money but blocked delivery of the F-16s. The Pentagon had used the money to pay Lockheed and the planes were in the Arizona desert. Pakistan, logically enough, wanted either the F-16s or the money returned, noting that it was an issue of fairness. There were attempts by the U.S. to sell the planes to both the Philippines and Indonesia, but both deals fell through for various reasons. Finally, in 1999, President Bill Clinton reimbursed Pakistan the amount due, thus removing a major irritant in U.S. Pakistani relations.

  8. While everyone is lauding Obama’s genius payout, one overlooks the fact as a super power, who would have forced the U.S. to make any payment a court ordered. It is a sign of how weak America has become on the world stage. Obama should not have paid anything. The previous president’s didn’t.

    • Refusing international court orders is not a good idea.

      It would be enforced by attaching US assets abroad and transferring them to Iran. The US government has a dangerous number of assets abroad. What are we gonna do when the title to the land is transferred to Iran? We aren’t going to declare war on France or Germany or India or anyone else, because that would be stupid.

      The US went out of its way in the 1950s to make enemies with the people of Iran, which is crazy, because Iran was culturally a natural US ally in the region (unlike the psychos running Saudi Arabia). Obama is finally correcting this.

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