Little precedent exists for $400 million cash delivery to Iran
WASHINGTON — A $400 million cash delivery to Iran to repay a decades-old arbitration claim may be unprecedented in recent U.S. history, according to legal experts and diplomatic historians, raising further questions about a payment timed to help free four American prisoners there.
The money was sent to Iran on Jan. 17, the same day it agreed to release the prisoners. The Obama administration claimed for months that the events were separate, but recently acknowledged the cash was used as leverage until the Americans were allowed to leave Iran. Only then did the United States allow a plane with euros, Swiss francs and other foreign currency loaded on pallets to take off in the other direction for Tehran.
“There’s actually not anything particularly unusual about the mechanism for this transaction,” White House press secretary Josh Earnest said last week of the initial cash payment.
But diplomatic historians and lawyers with expertise in international arbitration struggled to find similar examples.
Asked to recall a similar payment from the United States using cash to settle an international dispute, the office of the State Department historian could not provide an example.
The acknowledgment that the prisoners and the payment were linked, and the unusual cash delivery, have fueled Republican claims that a “ransom” was paid.
President Obama said this month that cash was used because the United States and Iran don’t have a banking relationship after years of sanctions on Iran, making a check or wire transfer impossible.
The $400 million was the principal owed by the United States on a 1970s Iranian account for buying American military equipment. After Iran’s 1979 overthrow of the U.S.-backed shah and the embassy hostage crisis in Tehran, the weapons were never delivered. Iran has wanted the money back plus interest ever since. Seven months ago, two sides put the matter to rest with a $1.7 billion settlement.
Alan Henrikson, diplomatic history professor at the Fletcher School of Law and Diplomacy at Tufts University, found a precedent by reaching back to the 1848 Treaty of Guadelupe Hidalgo that ended the Mexican-American War.
The accord called for the United States to pay Mexico $15 million, an amount worth about $482 million in today’s money, he said. The payment was determined “in consideration of the extension acquired by the boundaries of the United States,” wording designed to compensate Mexico for a massive loss of territory.