Ransom payment?  Try obligation fulfilled
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In January 1981, Ronald Reagan became the 40th President of the United States.  He did a great many things during his term of office, some good and some bad.  But, one of the least noticed – at least in the general public – was to continue with the implementation of the Algiers Accord reached with Iran just hours before Reagan’s inauguration.

The Algiers Accord released the hostages from the U.S. embassy in Tehran, terminated U.S. sanctions imposed in response to the hostage crisis, and established the Iran-U.S. Claims Tribunal, which was intended to resolve all outstanding legal claims between Iran and the United States after the Iranian revolution.  These claims include payment for lost equipment, expropriated by the revolution, and damages from contracts severed when the U.S. imposed sanctions against Iran in response to the Embassy hostage taking.

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It also directly led to the so-called “ransom payment” made to Iran by the United States in January 2016 of $400 million, and now the subject of such controversy.

Thirty-five years is a long time.  And, throughout that time, the United States and Iran have patiently worked through hundreds of claims against each other, with cases going for and against the United States.  John Bellinger, the former Legal Advisor to the U.S. State Department under George W. Bush, put the total awards granted to the United States and Iran at $2.5 billion and $1.5 billion respectively.  These cases have been settled without public fanfare or attention, with hundreds of claims decided and thousands of cases finalized since 1981. 

It is doubtful that anyone in the greater American public ever knew about the process; it is the sort of work that U.S. civil servants just get on with doing, year after year.  The highest public attention the Tribunal has received in at least a decade was when President Obama mentioned the claim, explicitly, in his statement acknowledging the start of the Iran nuclear deal on Jan. 17, 2016.

At least, until this week, when the Wall Street Journal reported that $400 million of the total $1.7 billion to paid to Iran was transferred in cash on unmarked planes.  This was payment to settle a claim from Iran regarding an arms contract made when the Shah of Iran was still in power, but terminated by U.S. sanctions after the revolution. 

What is unfortunate is that though many, many people are talking about the claim and the cash paid out, very few have gotten even the most simple detail right: that this was not a ransom paid, but rather a debt settled (and, according to the State Department, at a fraction of what Iran probably would have won had we not settled this claim).

The coincidence of timing is, in retrospect, unfortunate.  The fact that this claim was paid at the same time as Americans – held illegitimately in Iran – were released and the nuclear deal became operative has helped contribute to the confusion surrounding this process and where the claim fits. 

But, importantly, so has the deliberate, misleading commentary of people who frankly know better.  This commentary has drawn a straight-line between hostage taking and this payment.  If the Iranians learned this lesson, surely it was first drawn in 1981, as Eli Lake has noted, when President Reagan began the implementation of the Algiers Accord (and contrary to campaign pledges to renounce it).  This agreement explicitly linked return of hostages for sanctions relief and satisfaction of mutual claims.  Though perhaps distasteful, this is what was necessary to get our people home from Tehran and – in my view – a price worth paying.

It is also worth noting that the coincidence of timing is, at best, a weak brush with which to tar the Obama Administration.  Given the vitriol surrounding the Iran Deal, I challenge those criticizing the Administration now: tell me what day you would not have complained about this claim having been paid and this obligation of 35 years having been settled. 

Had the Administration settled this claim and told no one, then the charges of illicit payment would only have been louder if it became public.  If it had been concluded six months before the Iran deal was implemented,  the response would have been much the same, this time tinged with suspicion that Iran was getting a down payment on implementation of the deal it had yet to complete.  And, six months after the Iran deal?  Critics would have argued that, regardless of the reason, this money would be given to Iranian-sponsored terrorists.

The debate over how to handle issues of ransom and hostages is a sensitive one.  President Obama faced bipartisan support, and bipartisan criticism, when he announced a new policy in 2015 to handle issues of ransoms paid by families, in part because there appears to be no right answer.  The U.S. bipartisan approach to this issue over the past 35 year years has tried to thread the needle, but will never be satisfying either to separated families or policymakers.

Will Iran’s security services take more Americans hostage, putting them in prison on trumped up charges?  Probably yes and we need to consider ways of responding to hostage taking that disincentivizes the practice without turning imprisoned Americans into pawns.  There are at least two American citizens in Iranian prisons now, facing this same fate and we cannot rest until they are home.  But, did this claim settlement create this problem?  Hardly.

Richard Nephew is a senior research scholar at the Columbia/SIPA Center on Global Energy Policy. He was the lead sanctions negotiator for the United States with Iran from 2013-2014.


The views expressed by authors are their own and not the views of The Hill.