A contentious deal to unfreeze $6bn of Iranian oil revenues has been plunged into uncertainty amid reports that the Biden administration has persuaded Qatar to withhold the funds in breach of a previous agreement following the devastating attack by the Palestinian group Hamas on Israel.
There has been mounting pressure from both Democrats and Republicans for the White House to deny Iran access to the revenues in the face of speculation over how big a role Iran played in the weekend’s attack by Hamas, Tehran’s close ally and proxy.
CBS reported that the US had reached a “quiet understanding” with Qatar – which played a mediating role in last month’s agreement that saw the release of five Americans imprisoned by Iran – to keep the funds locked in a bank account specially set up in the Gulf kingdom.
“CBS News has learned that the US reached a ‘quiet understanding’ with Qatar not to release any of the $6bn in Iranian oil money that was transferred as part of a US-Iranian prisoner swap,” the network’s chief White House correspondent, Nancy Cordes wrote on X, the social media platform previously known as Twitter.
Iran’s mission to the United Nations in New York city criticized any move to hold up the revenues, saying in a statement: “The US cannot renege on the agreement. The money rightfully belongs to the people of Iran, earmarked for the government to facilitate the acquisition of all essential and sanctioned requisites for Iranians.”
The US deputy treasury secretary, Wally Adeyemo, had earlier told a behind-closed-door session of congressional Democrats on Capitol Hill about a “quiet agreement” to retain the cash, saying that it “isn’t going anywhere anytime soon”.
The administration’s signals appeared designed to dampen controversy surrounding the funds – frozen as a result of sanctions imposed by the Trump administration in 2019 – after five Democratic senators demanded they be re-frozen in the wake of the Hamas assault, which has so far left 1,300 dead in Israel.
The $6bn has also become a line of attack for Republicans, particularly , the former president and the party’s frontrunner for next year’s presidential nomination, who has mischaracterised the money as “US taxpayer dollars” which he said was used to finance Saturday’s attack.
The White House national security council spokesman, John Kirby, declined to confirm any change in its status but repeatedly stressed that it had been untouched since the release of the five imprisoned Americans on September 18. “It’s still sitting in the Qatari bank account, all of it, every dime of it. None of it has been accessed by anybody,” he told a White House press briefing on Thursday, side-stepping questions about any new agreement to withhold it.
“The [Iranian] regime was never going to see a dime of that money. This account was set up by the previous administration for this exact purpose. We have done nothing different. All that we have done is just moved the money from South Korea – where it was inaccessible – to Qatar, where it’s more accessible.”
Under the terms of the agreement, he added, the money would not be accessible to Iranian regime officials but to “approved vendors” who would be allowed to use it for humanitarian and medical purposes. “We have always had the ability to provide oversight over the dispersal of these funds,” Kirby said.
At the core of the controversy is speculation over what hand Iran’s theocratic rulers might have played in planning the attack by Hamas, an Islamist group which Tehran has financed over many years.
Amid suggestions that the assault’s unprecedented magnitude and sophistication would surely have needed an Iranian hand, US intelligence agencies have said they have discovered no evidence of this. Instead, officials have cited early indicators that Iran had no advance knowledge of the attack and was taken by surprise, a view greeted by widespread scepticism among Republicans.
Critics of the exchange deal contend that regardless of whether the $6bn – originally earned from oil sales to South Korea – is actually touched, the money is “fungible”, meaning Iran could still exploit it by re-allocating funds originally earmarked for other purposes.
Trita Parsi, of the Washington-based Quincy Institute for Responsible Statecraft, said re-freezing the funds would signal acceptance of this argument and warned that it could kill any future US-Iran diplomacy. “This would be the second time in five years that the US has reneged on an agreement with Iran,” said Parsi. “But the last time was the Trump administration pulling out of the JCPA nuclear accords agreed with Barack Obama. This is very different – it’s Biden’s own deal that he made four weeks ago.
“Even if we accept that the JCPA is dead, it doesn’t mean that some kind of agreement down the road cannot be pursued. However, reversing after four weeks on this issue makes it very difficult to have any diplomacy going forward, because the image in Iran is that the US is a serial betrayer of any agreement it signs.”
Seasoned Iran watchers have reacted doubtfully to speculation that the country’s rulers played a decisive role in Hamas’s attack.
“There’s definitely a convergence of interests between Hamas and Iran,” said Vali Nasr, a Middle East specialist at Johns Hopkins school of advanced international studies. “But that doesn’t mean that Iran directed this and Hamas said, OK we are going to do it. The truth is that Hamas would be in charge.
“Where Iran comes in – and I don’t know how much planning they would be involved in – is that what we saw in this attack was an upgrade to the capabilities and sophistication of Hamas as a fighting force.”