President Barack Obama approved the $400 million transfer, which was the first payment of a $1.7 billion settlement resolving claims at an international tribunal at The Hague over a failed arms deal under the time of the Shah. The Iranians were seeking more than $10 billion at arbitration.
Because existing US sanctions ban American dollars from being used in a transaction with Iran, officials said the money was procured from central banks in Switzerland and the Netherlands, and an unmarked cargo plane loaded with wooden pallets of Swiss francs, euros and other currencies were flown to Iran.
The payment required hard currency, they said, because Iran could not access the global financial system due to international sanctions it was under at the time. The details of the transaction were first reported by The Wall Street Journal.
“They were totally cut off from global banks and there was no other way to get them the money,” one senior official with knowledge of the transaction said.
While the transaction took place the same day as the release of Jason Rezaian and three other Americans, officials insist the payment did not constitute ransom for the Americans and that there were was no quid pro quo for the payment. They say agreement on the release of the prisoners dovetailed with the resolution of parallel negotiations over the dispute of the failed arms deal.
But US officials conceded that the Iranian negotiators involved in the prisoner exchange said they wanted the cash to coincide with the release of the Americans to prove a deliverable for the exchange.
“As we’ve made clear, the negotiations over the settlement of an outstanding claim at The Hague Tribunal were completely separate from the discussions about returning our American citizens home,” State Department Spokesman John Kirby said, referring to the $1.7 billion payout that the $400 million cash installment was part of.
“Not only were (the) two negotiations separate, they were conducted by different teams on each side, including, in the case of the Hague claims, by technical experts involved in these negotiations for many years,” he said. “The funds that were transferred to Iran were related solely to the settlement of a long-standing claim at the US-Iran Claims Tribunal at The Hague.”
“It’s not surprising that Iran would want to call this a ransom for domestic political reasons,” another senior US official said. “But that is not the case. The confidence built during the Iran nuclear negotiations helped the negotiations in other areas, so it is true all these things came together at the same time as implementation day of the Iran deal. But this was not a ransom.”
By Elise Labott, CNN