September 19, 2023

IntelBrief: U.S. and Iran Finalize Prisoner Swap

AP Photo/Lujain Jo

Bottom Line Up Front

  • Yesterday’s prisoner swap between the United States and Iran will include the release of $6 billion in Iranian assets, to be used to purchase food and medical equipment for the Iranian people.
  • The deal has reignited a debate over U.S. concessions to Iran’s long-used tactic of incarcerating American citizens.
  • Iran reportedly sought to complete the swap as the UN General Assembly meetings convene in New York City this week.
  • U.S. officials see the exchange as not only bringing home American citizens detained abroad, but also paving the way for broader de-escalation with Iran.

On September 18, five detained U.S. citizens and residents flew out of Iran as part of a prisoner swap deal that will also see approximately $6 billion in frozen Iranian oil revenues released to Qatar’s central bank, where they can be accessed by Iran for humanitarian purposes. The five arbitrarily detained Americans are to be exchanged for five Iranians convicted of violating U.S. sanctions on Iran. The liberated Americans include Siamak Namazi, Emad Sharghi, Morad Tahbaz, and two others whom U.S. officials say asked not to be identified. Both Sharghi and Tahbaz have been held since 2018, while Namazi has been held since 2015. In August, as the agreement was close to being finalized, four of the five Americans were released from Iran’s notorious Evin Prison to join the fifth U.S. citizen under house arrest in an Iranian hotel to await release. Namazi’s father, Baqer, had also been held with him in Iran since 2016, but was released on humanitarian grounds in 2022 due to his failing health. The five Iranians to be freed by U.S. authorities include a U.S. permanent resident and a U.S.-Iranian dual national. A spokesperson for Iran’s foreign ministry said only two of the five Iranian prisoners being freed by the United States would return to Iran; two had chosen to remain in the United States as legal residents, and one would return to a third country.

Although many U.S. Republican political leaders criticize making any concessions to Iran, including prisoner exchanges, the release of $6 billion in Iranian assets has been the most controversial component of the swap. The release of the assets, to be used by Iran under strict conditions and monitored by Qatar and the U.S. Department of Treasury, was agreed upon by U.S. officials “to facilitate [the Americans’] release,” according to a sanctions waiver signed off on by U.S. Secretary of State Antony Blinken. U.S. sanctions restrict the National Iranian Oil Company (NIOC) and Central Bank of Iran, which are designated by the United States as entities that support international terrorism, from accessing or transferring assets held in third-country banks. U.S. officials can waive the threat of penalty on banks that hold the Iranian accounts or allow their transfer if doing so is reported to the U.S. Congress as necessary to protect national interests. According to Blinken’s September 11 announcement, the waivers enable banks and other financial institutions in South Korea, Germany, Ireland, Qatar, and Switzerland to transfer the funds or convert their currency without fear of U.S. penalty.

Critics of the deal asserted that releasing the funds for use by Iran, even under controlled conditions, amounts to paying a ransom to secure the release of U.S. hostages. They assert that the exchange follows a longstanding pattern in which Tehran seizes or incarcerates foreign citizens to wrest concessions – including sanctions relief – from the United States and other governments. In January 2016, coinciding with the implementation of the multilateral Iran nuclear agreement (JCPOA), the United States and Iran agreed to a prisoner swap under which Washington Post journalist Jason Rezaian and others were released. Simultaneously, U.S. officials agreed to settle a longstanding dispute with Iran by providing $1.7 billion in cash directly to Iran. This amount represented principal and interest payments for military equipment paid for by Iran under its former regime but withheld after the Iranian revolution brought the Islamic Republic into power. The Iran hostage crisis of 1979-1981 was settled only after U.S. officials agreed to release some of the Iranian assets frozen in the United States in response to the seizure of the U.S. Embassy in Tehran. Some fear providing concessions may present a moral hazard and encourage Iran to continue taking Americans prisoner in the future to obtain more concessions. Yet, partisan criticism aside, the U.S. and Iran have made deals on and off for the past four decades.

U.S. officials counter that the $6 billion represents money Iran earned from oil sales to South Korea, purchased when U.S. sanctions were suspended by the JCPOA or were otherwise permitted under U.S. sanctions law. Officials add that the funds can only be used for humanitarian purchases such as food and medical equipment “in accordance with written guidance from the U.S. Government,” as outlined by Secretary Blinken. To that extent, Iran will not be able to repatriate the funds or use them to purchase weaponry or to fund armed factions in the region that Tehran supports. Critics assert that the $6 billion asset release will free up an equivalent amount of Iran’s funds for purposes that empower Iran militarily and strategically, while proponents of the swap argue that sanctions were used effectively to help bring about the release of U.S. hostages.

Reports indicate that Iranian officials sought to complete the prisoner swap before or during the UN General Assembly (UNGA) meetings, which began yesterday, with hopes that the deal might overshadow expected anti-Iran demonstrations in New York and perhaps empower experts and officials who argue that diplomacy between the United States and Iran is preferable to unending confrontation with Iran’s current regime. However, with Iranian President Ibrahim Raisi slated to deliver a speech to the gathering today, exiled Iranian oppositionists and U.S. critics will certainly take advantage of Raisi’s presence in the United States to highlight and denounce Iran’s policies, including its repression of women. The UNGA meetings come just one year after the death of Mahsa Amini, who died in Iranian custody on September 16, 2022, setting off months of anti-regime unrest. Other critics focus on Iran’s supplies of missiles and armed drones for regional armed factions that commit acts of violence against U.S. forces in the region, its nuclear program, and Tehran’s supply of Iranian-designed armed drones to Russia for use against Ukraine.

The UNGA meetings also provide opportunities for U.S., European, and Iranian diplomats to build on the prisoner swap to achieve broader de-escalation in the region. International diplomats speculate that U.S. and Iranian officials might hold talks on the sidelines of the meetings – either directly or, more likely, through state mediators from the Persian Gulf, Europe, or elsewhere– to discuss voluntary Iranian restraints on its nuclear program, further assets releases by the United States, and de-confliction between U.S. and Iran-backed forces in Syria. In particular, U.S. officials and Gulf mediators have been pressing Iran to commit to restrain its uranium enrichment to sixty percent purity, which is the highest level to which Iran is currently enriching. Experts and officials assess that calls within the United States and Israel for military action against Iran will grow louder if the uranium reaches purity levels closer to ninety percent, at which point it would be considered weapons grade. However, the UN nuclear agency reported earlier this month that Iran had reduced its enrichment to its slowest pace since 2021. U.S. officials acknowledge that the obstacles to a more formal restoration of the JCPOA – which held Iran to much lower levels of uranium enrichment – are formidable in light of Iranian concerns that the United States might again withdraw from the deal, as the Trump administration did in 2018. For their part, U.S. officials are wary of providing Iran the sweeping sanctions relief outlined in the JCPOA, amid widespread criticism that U.S. leaders have been too quick to offer Iran sanctions relief in exchange for relatively modest Iranian concessions.