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August 14 2023

Policy Briefs

U.S. Deal with Islamic Republic Will Encourage More Hostage Taking

Last week’s release of $6 billion to the Islamic Republic, while hailed as a deal to save American hostages, is actually a deal that will end up incentivizing the Islamic Republic to take more innocent Americans and Iranian-Americans hostage. The regime in Tehran has a long track record of taking hostages as a source of revenue to boost its failed economy and finance its crimes against humanity and terrorism. Despite that, last week’s deal has found many proponents denying this reality and using a variety of misleading and false arguments to promote the Biden administration’s deal. 

The Bottom Line

  • The United States agreed to release $6 billion in frozen Iranian funds held in South Korea in exchange for the Islamic Republic releasing five American citizens that had been held hostage in Iranian prisons. The Biden administration is also expected to release five Iranian nationals serving prison sentences in the U.S.
  • Though the administration and supporters of the deal claim that the unfrozen assets can only be used to “pay vendors for humanitarian purposes such as medicine and food”, Iranian officials are adamant that they will have “full and direct access to its released assets” and “can purchase goods and services without any limitation or restriction.” Effectively, it’s a blank check.
  • While the United States has an obligation to bring home Americans held hostage, any negotiation or deal must also consider the consequences of rewarding hostage-takers with billions of dollars, as doing so is likely to encourage more hostage taking. This deal functionally puts a price of $1.2 billion on every American national in a hostile country. 

How Did We Get Here?

  • The Islamic Republic had been holding at least five American citizens hostage in Iranian prisons, with some being imprisoned for several years. The three hostages known to be part of this exchange are Siamak Namazi, Emad Shargi, and Morad Tahbaz. The two others remain anonymous. 
  • Reports since 2022 have repeatedly suggested that a deal to free the American hostages was imminent. Still, as a deal to free Messrs. Namazi, Shargi and Tahbaz was being negotiated - in conjunction with a larger deal that would hand even more money over to the Islamic Republic in exchange for the regime freezing nuclear enrichment - the regime wrongfully detained two additional Americans in the Summer of 2023. This was an attempt to gain additional leverage in the ongoing negotiations, helping the regime secure this lucrative deal.
    • On August 7, a fifth Iranian-American, a woman whose identity has not yet been released, was wrongfully detained in Iran. This occurred just two weeks after Semafor revealed the detention of a fourth Iranian-American in Iran.
    • On June 25, $2.76 billion in funds that were previously frozen in Iraq were released to the Islamic Republic. This release on frozen assets coincided with reports that the Biden Administration was actively negotiating the release of three Iranian-Americans held in Iran and attempting to reach an understanding to limit Iran’s nuclear enrichment. 
  • Iranian officials have repeatedly acknowledged the regime’s use of hostages as a tool of diplomacy and economic leverage. For example, former Vice President of Iran for Economic Affairs Mohsen Rezaei, during his 2021 presidential campaign, said that he would fix Iran’s economic issues by “taking 1,000 Americans hostage so America will have to pay billions of dollars in exchange for their freedom.”

The Deceitful PR Effort to Sell This Deal

Supporters of this agreement have made several false, manipulative assertions to determine that this was the only or best method for the United States to bring the American hostages home. It’s imperative that these arguments are rejected for their false premises:

  • Fallacy #1: If you’re against this deal, you are against Americans coming back home and you are against Iranian people having access to food and medicine.
    • This is an attempt to falsely present the situation as having only two options: either hand over billions of dollars to the top state sponsor of terrorism as they violently crack down on their people protesting for regime change, or let American hostages rot in Iranian prisons as Iranians suffer due to sanctions. Other methods, which can be achieved without any military threat or presence, include prisoners swaps, public advocacy, leveraging international law and working multilaterally with Western allies who also have citizens being held hostage by the regime, and sanctions and economic pressure. 
    • Recent history has further proven that these are not the only two options. The Trump administration managed to secure the release of two American hostages held in Iran without providing the Islamic Republic with any financial assets. 
    • Supporters of the Joint Comprehensive Plan of Action (JCPOA) made similar comments in 2015, attempting to falsely frame the options as binary: option 1 was to hand over billions of dollars to the regime in exchange for temporary restrictions on their nuclear activity, and option 2 was imminent war with Iran.
  • Fallacy #2: The unfrozen assets can only be used by the Islamic Republic to pay vendors for humanitarian purposes such as medicine and food.
    • This assertion, made in some form by a wide range of individuals including Biden administration officials, U.S. media including the New York Times, and think-tank analysts, has been directly refuted by Iranian officials.
    • The Iranian foreign ministry on August 11 claimed that there will be no restrictions on the frozen assets released to Tehran, saying, “The decision on how to utilize these unfrozen resources and financial assets lies with the Islamic Republic of Iran.”
    • Seyed Mohamad Marandi, an advisor for the regime’s negotiating team, said, “This is a dishonest claim manufactured by bitter people. Iran will have full and direct access to its released assets, there will be no Qatari companies involved, Iranian banks will have full control, and they can purchase goods and services without any limitation or restriction.”  
    • The details unfortunately support the regime’s assessment that it will be able to spend the money as it desires. The inherent fungibility of money, in addition to the development of Iran’s sophisticated sanctions-evasion techniques, suggests that the United States will not be able to ensure how the regime spends this influx of financial assets.
  • Fallacy #3: This deal, similar to lifting sanctions on Iran, will actually help the Iranian people, therefore it will hurt the regime by depriving them of using sanctions as a scapegoat for their failures. 
    • This is one of the most common claims made by those who support broadly lifting sanctions on the Islamic Republic. The premise of this statement is two-fold: Iranians will benefit from this deal, and Iranians blame American sanctions for their suffering (as opposed to blaming the regime).
      • First, as noted above, there is nothing to suggest that Iranians will actually benefit from this deal, as the regime prioritizes its spending on oppressing Iranians rather than providing for and protecting them. Second, the Iranian people are in the midst of a revolutionary movement calling for the end of the Islamic Republic. They themselves have made it clear that they already do not accept the regime’s attempts to use American sanctions as a scapegoat, and they believe that the regime’s corruption and misgovernance is the cause of their suffering. 
  • Fallacy #4: The $6 billion is Iran’s money that was frozen. It’s not being given to the regime as ransom.
    • This is just gaslighting. Whether Senator Chris Murphy and others who have made this argument want to acknowledge it or not, the regime, its proxies, and America’s other enemies around the world will see this as ransom. Furthermore, while it’s true that it’s Iran’s money, the regime is rightfully sanctioned and was restricted from accessing it. The money belongs to the Iranian people, not the regime. The reality is that this is an additional $6 billion for a regime that spends its money on terrorism and its proxy network, drones for Russia to kill Ukranians with, and the oppression of the Iranian people. 

Many members of Congress appear to have seen right through these fallacies, releasing messages expressing opposition and concern over the deal. Rep. Steny Hoyer, the former Democratic House Majority Leader, said, “This is a substantial amount of money for Iran, which has used money historically for damaging purposes…It’s hard to think that it does not incentivize criminal activities to profit from them.” 


The United States Must Stop Incentivizing the Regime’s Malign Actions

  • The problems with this agreement are wide ranging. It will strengthen the regime financially at a time when it is facing immense pressure. It will fail to actually provide humanitarian aid to the Iranian people. But the most troubling aspect of this deal, from the U.S. perspective, is that it will serve to encourage the Islamic Republic and other hostile actors to take more hostages.
    • The regime, rather than having its demands satisfied, will likely only increase their demands upon confirmation that the Biden Administration is willing to give in to such incentives. 
  • This deal is one part of the broader U.S.-Iran “de-escalation efforts”. The second part of the effort consists of Iran slowing the pace at which it accumulates highly enriched uranium and diluting some of its stockpile, potentially in exchange for additional sanctions relief.
    • NUFDI outlined the concerns over the reported interim “not a deal” with Iran in April, and many think tank experts as well as former officials have warned that the alleged deal will do little to slow down or reverse Iran’s nuclear program while also encouraging the regime to continue its regional aggression and malign behavior, including taking more Americans hostage. 
    • According to Wall Street Journal sources, “Iran has diluted a small amount of 60% enriched uranium in recent weeks and slowed the rate at which it is accumulating new material.” Still, as Foundation for Defense of Democracies (FDD) nuclear nonproliferation expert Andrea Stricker noted, “If Iran’s stock of 20% enriched uranium is still growing despite a reported reduction in 60% accumulation, this move is mostly symbolic. 20% production is most of the effort to make 90%.” 
  • These “de-escalation efforts” are effectively just a way for the Biden administration to reach a short-term nuclear agreement with the Islamic Republic while avoiding Congressional review, which is legally required under the Iran Nuclear Agreement Review Act (INARA) for any such deal. These efforts also provide the White House with an excuse to avoid addressing the deep-seated issues with the U.S. policy on Iran, attempting to maintain a status-quo of sorts until after 2024. While the status quo is maintained, however, the Islamic Republic will continue to arrest and detain foreign and dual nationals as hostages, build its stockpile of enriched uranium, brutally oppress the Iranian people, and fund terrorism around the world.

Image courtesy of Kaveh Kazemi/Getty Images.