The always tense mood between the US and Iran has appeared to lift, at least slightly, since the two nations announced the details of a painstakingly negotiated deal. Iran and the US will both release prisoners, and the US will unfreeze some Iranian oil profits.
Washington reportly agreed on a partial transfer of the Iranian funds locked in South Korean banks under US sanctions via Switzerland. According to a senior official that South Korea's foreign ministry, the US has in effect accepted the plan, though discussions still remain on the exact method of transfer.
The question is why is this happening and why now. Bloomberg's Courtney McBride has been reporting on this story, and whether it's a one off arrangement or if it hints at a broader diplomatic effort behind the scenes.
The administration emphasizes that this is a separate issue from any kind of nuclear negotiations, but they are somewhat linked.
And later I speak with a run expert, Ali Vayez of the International Crisis Group.
In general, this is a very fragile process, but if it is completed and concluded successfully, I think it is likely to become a gateway for more dialogue.
I'm wes Ksova today on the big take what Tehran and Washington hope to get from this agreement. Courtney, nice to have you back.
Thanks for having me.
I'm glad you were willing to do this because I have a million questions about this story. Even by State Department standards, they don't really like to divulge a lot. They seem to be really cagy about describing what is going on with this deal. So what do we know?
Absolutely, I think both the State Department and the White House are being very cautious. Have been situations previously where they thought they had gotten to the finish line and everything collapsed. And so particularly because you have several American citizens who've been detained for a very long time in Iran, they just don't want to say the wrong thing and upset the Apple card, if you will. Last week, four
American citizens were moved from prison to house arrest. A fifth was already on house arrest, and the plan is for those five ultimately to come home Tea the United States. In concert with these releases, South Korea is going to release six billion dollars of Iranian oil profits that have been frozen since twenty nineteen. That money will be transferred to an account that the Iranians can access to buy humanitarian and other goods that are not subject to US sanctions.
Once that money is in hand, Iran will allow the Americans to return home. That is expected to happen in September, in a move that the US government is claiming is not linked is not part of a swap. Iranians held in the United States are going to be released from prison.
Courtney. Who are the Americans who've been held in prison?
Three of them have been publicly identified and are pretty well known, but two others have requested that their names remain private at the moment, so the administration is not releasing their names, even though there has been some reporting about them. The Iranian government has a fairly long history of seizing dual nationals Iranian Americans and charging them with
spurious espionage crimes. So some of the Americans who are in custody now and have been moved to house arrest have been held by Iran for as long as eight years.
So those are the Americans who are the Iranians the US is holding.
This is another complication or mystery as part of this arrangement is that the Americans haven't indicated which Iranians the Iranian government is interested in getting back.
And why is this happening now?
The big impetus appears to be the movement of the money. The US has tried, through successive administrations to get these people home. The administration emphasizes that this is a separate issue from any kind of nuclear negotiations, but they are somewhat linked there. You know, those talks are happening in parallel indirectly, as the US and Iran do not have
diplomatic relations. The movement of the money which South Korea is transferring to accounts and cutter that the Iranians can access, is really the piece that allows the Americans to move out of prison and eventually home.
And why is South Korea involved?
South Korea purchased oil from Iran using waivers from US sanctions, and under the US law, that money had to be held in accounts that Iran could use only to purchase certain types of goods. And now that money is finally moving now the US.
As you said, is saying that this money can only be used for certain purposes. But Iran came out publicly and said Nope, They're free to use the money for anything they want.
Iran may try to spend the funds in other ways. Not only Iran, but any companies or banking institutions that would do business with them are subject to sanctions, and so I think any of their counterparts might be reticent to do any of those transactions.
For fear of running a file of US sanctions. Absolutely, what is the US said about the reasons they're doing this.
The Biden administration and the Trump administration before it have really emphasized the need to bring home Americans who are wrongly detained abroad. That is the primary, in some ways, the only reason that they have stated for trying to bring these folks home.
So Iran obviously wanted to get this money unlocked. The US wanted to get these prisoners released. But is there something more going on here? Is this a thaw in US Iranian relations for a particular purpose.
I wouldn't go so far as to call it a thaw, but there is a sense that the nuclear issue, which has loomed over the relationship for some time, is a component of this deal. You know, while the US in particular is careful to say that the issues are separate. The Iranians have said that this opens the door for
wider negotiations. You know, the US had tried for some time throughout the Biden administration to get Iran to return to compliance with the twenty fifteen International Nuclear Agreement, from which the Trump administration withdrew in twenty eighteen. Those talks ultimately went nowhere, despite a lot of intervention by even
the European Union Foreign policy chief. But there is some hope, it seems, on both sides, and the Iranians have said this publicly that should this prisoner agreement and the release of the Iranian funds from South Korea proceed as planned, that this could open the door to some sort of negotiation on the nuclear issue.
And what is the status of Iran's nuclear program.
It is somewhat opaque, in part because Iran has not complied with the International Atomic Energy Agency's monitoring efforts, and so one of the criticisms of the Trump administration's decision to withdraw from the deal is that it somewhat blinded the international community to the status of the Iranian program.
Because when the deal was underway, Iran had to let inspectors in and they were able to see what they were doing or not doing correct.
Not only were their inspection requirements, but then Iran was somewhat constrained in what it could do in terms of enriching the uranium that it would use for what it called peaceful nuclear purposes and what the international community regarded as a weapons program.
Because Iran still insists that they have no intention of building a nuclear weapon, that's correct, but the evidence would strongly suggest otherwise it would.
There have been reports that Iran has continued to enrich uranium to a level that would bring it closer to achieving a nuclear weapon, though more recently there's speculation that Iran has actually pulled back, perhaps an anticipation of making a deal with the United States or other Western countries.
You said earlier that Iran indicated that it would want to return to the nuclear deal. Do you think they're open to that?
Yes. The Iranian Foreign Ministry spokesman said that this could pave the way for a nuclear agreement. There are no specifics on what that could entail, and I think that any sort of agreement which would involve concessions on either side is politically unpalatable or at least challenging in both countries, and.
Why would Iran be so eager to return to that deal.
The twenty fifteen deal at least opened the possibility of greater integration into the Internet sational economy and removing some US and international sanctions that had been crippling to the Iranian economy. The Trump administration's withdrawal and the maximum pressure
campaign that followed really harmed the Iranian economy. That six billion dollars in funds that stand to be released from South Korea are really critical right now after months of economic challenge and internal turmoil in Iran.
Much as Iran might like to return to this deal that the US pulled out of under prison and Trump, there's a lot of resistance to that in Washington. Do you think it's at all plausible that the US and Iran could return to the table.
That would be a hugely challenging for the administration. There's opposition on both sides of the isle. In Congress. The conventional wisdom seems to be that right now, a status quo with reduced or low level Iranian enrichment and minimal malign activity within the region by Iran and its proxies in other countries is the best that the administration can
hope for until after the twenty twenty four elections. The phrase we hear a lot in our reporting is kick the can down the road, that the administration is really just hoping to buy time, and then perhaps in twenty twenty five, should President Biden be reelected, it could attempt a more robust, long term deal with Iran.
What's been the response in Washington to the announcement of the release of these US prisoners and the money transfer.
There's been a lot of criticism of the administration for making what some would term end run around Congress, the idea that any sort of negotiation really needs congressional approval, even though this is not a treaty or anything that would require the advice and consent of the Senate, for instance. That being said, I think even those who would criticize the administration for the way it has proceeded here are of course publicly glad to see that American citizens are
being released from a notorious prison in Iran. Because the administration hasn't explained exactly what's happened or what the planned sequence of events is, and the fact that the money is actually Iran's in the first place. His critics are able to say that the US is paying off Iran, that Iran is getting six billion dollars in ransom payments.
Where do you think this goes from here? Courtney?
The administration is not going to speak publicly about this. The word from them has been that after the Americans are safely on US soil, or at least out of Iran, we should not expect much information. The focus really seems to be getting to that step where the American citizens are safely out of Iran, and at that point they will explain a little bit more of how things fell into place.
And maybe how this could be part of something larger potentially.
Yes, all of those conversations seem to be happening quietly, but one of the real challenges in the nuclear negotiations has been that Iran and the United States do not speak directly. There are always intermediaries, you know, as anyone who's played a game of telephone knows that can complicate messaging and communication.
Courtney, thanks so much for coming back on the show.
Thanks for having me, always a pleasure.
After the break, how Iran's leaders view this agreement. Obviously a lot going on here, and as Courtney says, the US has been pretty tight lift about the details. The Iranians, though, have been a bit more talkative. So let's take a closer look at why Iran's leaders were eager for this deal to come together and what else they may hope will come a bit to do that. I asked Ali Vayez to come back on the show. Is the director of the Iran Project at the International Crisis Group I
think tank here in Washington. Ali, thanks for coming back. It's good to see you again.
Great pleasure.
So last time we spoke, it was about the internal turmoil within Iran with the protests, and now we have something entirely different, this agreement between the US and Iran. You don't see that very often. Can you help explain just exactly what's happening here.
I think the two are connected in the sense that as of last October, about a month after the protests started, I think the US intelligence community came to the conclusion that the protests do not pose an existential threat to the regime. Bill Burns, the head of CIA, Avriel Haines, the Director of National Intelligence. They both came out and
publicly shared this assessment with members of Congress. So, if you're divide and administration and you come to the conclusion that the regime is here to stay, you have to deal with some matters of priority, and the fate of American hostages in Iran, of course, is one of the key issues, as is some of Iran's most problematic activities,
including its nuclear program. And according to reports, that's when direct contacts were established between US envoy for Iran and Run's ambassadre at the United Nations, and apparently that led as of this spring, to proximity talks in Oman about how to de escalate tensions between the two countries. And take into account that if the two sides were hesitating about whether this is necessary or not. In March they
came very close to finalizing a detained deal. Then there was a military confrontation between Iran and the US and Syria that resulted in the first American fatality under prison Biden's tenure, and that resulted in the talks being derailed,
the detaining negotiations being derayed for several weeks. That shows to you how the two key priorities for the US administration, the American hostages and regional developments or around nunclear program are interlinked, even though the administration would like to tackle them separately, but the linkage is undeniable.
What specifically does the US hope to come out of this and what does Iran want to come out of this?
Look I think both sides do not want a conflict for different reasons. I think the US primarily for political reasons because Biden administration's number one priority is the president's re election in the coming year and a half. And second, they're dealing with a major crisis in Ukraine that absorbs almost all the oxygen in the room. But they also
have other concerns, including tensions with China over Taiwan. The last thing they want is a nuclear crisis in the Middle East that could result in a military confrontation in an election year. And I think the Iranians too do not want a conflict, but mostly for economic and security reasons. Iran is now coming out of months of turmoil and Iran has parliamentary elections in March of twenty twenty four, and it's really struggling economically, although they have survived under sanctions,
but that doesn't mean they're thriving. In fact, they're experiencing
the highest inflation rate historically in Iran. The currency has been devalued, and so they need a degree of common stability, and I think that's why interests of both sides have aligned to move towards not a deal necessarily that would be a would amount to a major diplomatic breakthrough restored the twenty fifteen nuclear deal, but an understanding that would at least keep the status go between now and November twenty twenty fourth until they both know who the next
US president is going to be.
There are always so many layers to this. In this case, we have the unusual appearance of South Korea as being central to this deal. You don't often think of South Korea as being a big part of US around relations. Yeah.
Absolutely, there are a lot of countries caught in between. But the South Koreans I think shouldered this burden in a very unfair way. It's very rare for the Supreme Leader of Iran in a public speech to single out an international firm. He did so by singling out Samsong and basically saying that because South Korean companies had withdrawn from Iran, not because of international sanctions, but because of unilateral US sanctions that they should never be allowed back
into the country. South Korea had a significant exports of electronics to Iran, and all of that market has been lost to China. But South Korea also could not repatriate about six seven billion dollars Iranian oil receipts that it accrued when it was allowed to import Iranian oil until President Trump withdrew from the twenty fifteen nuclear deal and
reimposed sanctions. Basically, under US law, it was allowed for Iran to use this money for humanitarian trade all along because US sanctions exempt food and medicine and medical equipment. But South Korean banks were so spooked by US sanctions that they were over complying with these regulations, and as a result, South Korea had become on a tremendous amount of political pressure from the Iranians.
Do you think that South Korea was bringing any sort of pressure to bear on the US to free them from what you call this burden?
Yeah, I think South Koreans had engaged both sides and explaining to them that this is definitely that they don't want to be between a rock and a hard place, that this is not the kind of assets that they would like to be in position of. But at the end of the day, it had limited leverage here because South Korean banks absolutely refused to move this money without explicit green light from the Treasury Department that they are able to do so.
After the break. Could this deal be the start of a new phase in the US Iran relationship. You had said that, especially in an election year, any deal with Iran becomes a political football. What is the reaction bin so far that you can see in the US and also overseas to this agreement.
Well, in the US, as anticipated, it has become a political football. The administration has not come out in full s strength to defend this agreement because let's remember that the hostages are still in Iran, they have not left the country, and any kind of detail that could potentially backfire on them would be disastrous for the administration. But the critics are in full swing in basically calling this a ransom deal and criticizing the Biden administration for funding
basically all the destabilizing activities that Iran is involved in. Again, take into account that it took about six months for the Treasury Department to negotiate a tightly controlled oversight mechanism of a banking channel that would not give Iran access to the funds, but it would allow Iran to submit orders through a bank in Doha and Qatar for food
and medicine. The Trump administration itself established a very similar mechanism in Switzerland because they too had realized that as a result of the chilling effect of sanctions, Iran was unable to buy food and medicine, and especially during COVID,
this was a major problem. And so I really think the criticism is much more of a partisan exercise in as we get closer to the elections than a real one, because I don't think the Biern administration has done anything that is that different than what the Trump administration put in place in Iran.
Two.
There is a degree of debates, but it's not at the same level because the hardliners are now in complete control. But nevertheless, there has been criticism against the government of Brahim Raisi, who's negotiated this deal, that they have basically accepted the deal that amounts to oil for food. But again, that too, I think is not a fair assessment because of the fact that Iran should have been able to do this all along getting way.
Ali, do you see this deal as perhaps being the beginning of a softening of tensions between the US and Iran that possibly lead somewhere, possibly even toward coming back to the table to talk about a return to the Iron nuclear Deal.
If it's fully implemented, it could turn into a confidence building exercise. But as I said, between now and the time that the hostages are back home, we're talking about a few weeks that the families are extremely anxious about.
Between now and then, still things could go wrong.
Oh absolutely, because there is just so much friction between Iran and the United States, and there's so many actors involved, respective allies in the region, whether it's non state actors, Shia militia's backed by Iran or Israel. That although we've seen a degree of the escalation between golf Arap States and Iran as well well, but there is still plenty of space for miscalculation, for freelancing, for mistakes and misunderstandings.
In general, this is a very fragile process. But if it is completed and concluded successfully, I think it is likely to become a gateway for more dialogue, not about a deal. But about what a future deal could look like once there's political certainty about who the next US
president is, because that's the most determining factor here. So in the short run, I think it is possible that we could see the resumption of negotiations at the nuclear level between Iran and the world powers that includes the United States, which would be quite significant because during the first two and a half years of the Biden administration negotiating to revive the twenty fifteen nuclear Deal, Iran refused to talk to.
The US directly. Ali, Thank you always great to talk to you.
What was a pleasure, Thanks for having me.
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