The Changing U.S. Story on Sending $400 Million to Iran

After suggesting the timing of a cash delivery was unrelated to the freeing of hostages, the State Department admits the two were contingent.

Jason Rezaian, center, a Washington Post reporter and former hostage, waves after being freed from an Iranian prisoner and arriving in Germany. (Kai Pfaffenbach / Reuters)

NEWS BRIEF In early August, The Wall Street Journal delivered a fascinating scoop: At the same time that Iran released four American hostages in January, the U.S. arranged to deliver $400 million in cash to Iran.

Almost immediately, the agreement was described as a ransom payment. Donald Trump insisted he had watched footage of the cash being unloaded in Iran, which could not have been true because no such footage was available. The Obama administration, through the State Department, offered two defenses.

The first was that the money belonged to Iran in the first place. Prior to the overthrow of the shah, Iran’s government had sent money to purchase fighter jets, but before the sale could be completed, he was overthrown. Even after American hostages had been released, there was no chance the U.S. would send the planes, but it also never returned the money. In that sense, the money was really a hostage exchange: human hostages for monetary hostages. In addition, the State Department said that because Iran was cut off from the international banking system (thanks in large part to American sanctions), it wasn’t like the U.S. could just wire the money.

Second, the U.S. suggested that despite appearances, including the suspiciously simultaneous transfer and the secrecy with which it had been conducted, there was really nothing more than weird coincidence at play. State Department spokesman John Kirby said in a statement:

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. 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 also tweeted:

It’s now clear those statements were not wholly accurate. Even if the negotiations were conducted separately, the timing was not a coincidence. Thursday morning, Jay Solomon and Carol Lee, the Journal writers behind the original scoop, reported:

New details of the $400 million U.S. payment to Iran earlier this year depict a tightly scripted exchange specifically timed to the release of several American prisoners held in Iran.

They didn’t have any official confirmation, but later Thursday afternoon, the State Department admitted to the Associated Press that the payment was contingent on Iran freeing the prisoners. While Kirby again argued that the negotiations had been separate, even if the handoff was not, it’s very hard to read his statement that “reports of a link … are completely false” as honest.

Why is the Obama administration changing its story? The obvious culprit is politics. Obama and aides seemed frustrated by the argument, common among opponents of the nuclear deal with Iran, that the agreement entailed the United States “giving” $150 billion to Iran. That, too, was money that Iran already possessed, but which had been frozen thanks to sanctions restrictions. Faced with the danger that the further $400 million would be demagogued, the State Department instead chose to offer an explanation that didn’t pass a straight-face test. The cash delivery may not have been ransom in the strict sense—it isn’t that the U.S. was giving Iran money, but that it was returning money that was rightfully owed to it—but the claim that it was coincidental with the hostage release never seemed especially plausible. The surprise is that the administration thought it could get away with it.