Tentative Agreement Reached between the United States and Iran

Introduction

This week, the United States and Iran have reached a tentative agreement that aims to secure the release of five detained Americans in Iran and an unknown number of Iranians imprisoned in the U.S. The agreement involves the transfer of billions of dollars in frozen Iranian assets from banks in South Korea to Qatar. It is expected that the transfer of assets and the subsequent release of prisoners will be completed by mid- to late-September.

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Details of the Agreement

Under the tentative agreement, the U.S. has given its approval for South Korea to convert frozen Iranian assets held in the South Korean currency, the won, to euros. The converted money will then be sent to Qatar, which has been acting as a mediator in the negotiations. The transferred amount could range from $6 billion to $7 billion, depending on exchange rates. The funds represent the money owed by South Korea to Iran for oil purchased before the imposition of sanctions by the Trump administration.

The U.S. ensures that the money transferred to Qatar will be held in restricted accounts and can only be used for humanitarian purposes, such as medicine and food, which are exempted from American sanctions. Some in Iran have expressed doubts about the U.S. claim, suggesting that Tehran will have complete control over the funds. The monitoring and disbursement of the money by Qatar have not been publicly addressed.

In return for the transfer of assets, Iran has agreed to release the five Iranian-Americans who have been held as prisoners in the country. Currently, these individuals are under guard at a hotel in Tehran. The identities of three of the five prisoners have been made public, while the remaining two remain undisclosed. The released prisoners have been described as wrongfully detained and innocent by advocates seeking their freedom. Iran has a history of using prisoners with Western ties as bargaining chips in negotiations.

Challenges and Timeframe

One of the challenges in the execution of this agreement is Iran’s preference not to receive the frozen assets in South Korean won, which is less convertible than euros or U.S. dollars. The South Korean government is concerned that converting the entire amount of won into other currencies at once could adversely affect its exchange rate and economy. Therefore, the conversion process is being carried out gradually, with smaller amounts being transferred to the central bank in Qatar. Additionally, to avoid triggering American sanctions, the transfers must be conducted through third-country banks, making the process complicated and time-consuming.

The successful movement of the account from South Korea to Qatar has been assured by extensive cooperation between the U.S. and South Korean authorities. However, the monitoring and policing of the money in Qatar have not been addressed publicly.

Impact and Perspectives

The release of the frozen assets, even under strict circumstances, could provide an economic boost for Iran, whose economy has been severely impacted by years of American sanctions following the withdrawal of the U.S. from the 2015 nuclear deal. On the other hand, the Biden administration sees this agreement as a step towards getting Iran back into the nuclear deal. However, critics, including former Vice President Mike Pence and Senator Jim Risch, have likened the money transfer to paying a ransom and argue that it encourages Iran to continue taking prisoners.

Future Release of Iranian Prisoners in the U.S.

Iran’s Foreign Ministry has raised the issue of prisoners held in the U.S., but American officials have not commented on the details or number of potential releases. Iranian media has previously identified several prisoners with cases tied to violations of U.S. export laws and restrictions on doing business with Iran. These violations include money transfers through Venezuela and sales of dual-use equipment that the U.S. alleges could be used in Iran’s military and nuclear programs.

Ongoing Tensions and Geopolitical Context

It is essential to note that despite this agreement, tensions between Iran and the U.S. persist. Apart from the nuclear deal and Iran’s atomic ambitions, there have been a series of attacks and ship seizures in the Middle East attributed to Tehran since 2019. The deployment of U.S. troops, along with advanced military assets, in the region indicates an ongoing military presence and an active response to security concerns.