U.S. now says $400 million to Iran was contingent on release of prisoners

Reporting from Washington —  The Obama administration said Thursday that a $400-million cash payment to Iran seven months ago was contingent on the release of a group of American prisoners.

It is the first time the U.S. has so clearly linked the two events, which critics have painted as a hostage-ransom arrangement.

State Department spokesman John Kirby repeated the administration’s line that the negotiations to return the Iranian money — from a military-equipment deal with the U.S.-backed shah in the 1970s — were conducted separately from the talks to free four U.S. citizens in Iran. But he said the U.S. withheld the delivery of the cash as leverage until Iran permitted the Americans to leave the country.

“We had concerns that Iran may renege on the prisoner release,” Kirby said, citing delays and mutual mistrust between countries that severed diplomatic relations 36 years ago. As a result, he explained, the U.S. “of course sought to retain maximum leverage until after the American citizens were released. That was our top priority.”

Both events occurred Jan. 17, fueling suspicions from Republican lawmakers and accusations from GOP presidential nominee Donald Trump of a quid pro quo that undermined America’s longstanding opposition to ransom payments.

Trump spokesman Jason Miller sought to blame Democratic rival Hillary Clinton for the payment, even though it happened almost three years after she departed as secretary of State. He said the money was “likely used to fund terrorism,” without providing evidence, and said Clinton had proved herself unfit to be president.

Kirby spoke a day after the Wall Street Journal reported new details of the crisscrossing planes on that day. U.S. officials wouldn’t let Iran bring the cash home from a Geneva airport until a Swiss Air Force plane carrying three of the freed Americans departed from Tehran, the paper reported. The fourth American left on a commercial flight.

Earlier this month, after the revelation the U.S. delivered the money in pallets of cash, the administration flatly denied any connection between the payment and the prisoners.

“Reports of link between prisoner release & payment to Iran are completely false,” Kirby tweeted at the time.

The money comes from an account used by the Iranian government to buy American military equipment in the days of the shah. The equipment was never delivered after the shah’s government was overthrown in 1979 and revolutionaries took American hostages at the U.S. Embassy in Tehran. The two sides have wrangled over that account and numerous other financial claims ever since.

President Obama has said his negotiators secured the U.S. a good deal on a busy diplomatic weekend that also included finalizing the seven-nation nuclear accord. But he and other officials have consistently denied any linkages.

“We actually had diplomatic negotiations and conversations with Iran for the first time in several decades,” Obama said Aug. 5, meaning “our ability to clear accounts on a number of different issues at the same time converged.”

“This wasn’t some nefarious deal,” he said.

The agreement was the return of the $400 million, plus an additional $1.3 billion in interest, terms that Obama described as favorable compared to what might have been expected from a tribunal set up in The Hague to rule on pending deals between the two countries. U.S. officials have said they expected an imminent ruling on the claim and settled with Tehran instead.

Some Iranian officials immediately linked the payment to the release of four Americans, including Washington Post reporter Jason Rezaian, who had been held in Iranian prisons.

Another of the prisoners, pastor Saeed Abedini, also had linked the two events. He said that as the prisoners waited for hours at an airport to leave Iran, a senior Iranian intelligence official informed them their departure depended on the plane with the cash. U.S. officials had pinned the delays on difficulties finding Rezaian’s wife and mother, and ensuring they could depart Iran with him.

House and Senate Republicans have peppered the administration for more details about the transaction.

“If it quacks like a duck, it’s a duck. If a cash payment is contingent on a hostage release, it’s a ransom. The truth matters and the president owes the American people an explanation,” Sen. Ben Sasse (R-Neb.) said Thursday.

Sen. Mark Steven Kirk (R-Ill.), chairman of the Senate banking national security subcommittee, said he saw congressional hearings as necessary for answering questions.

The House Financial Services Committee hasn’t yet decided whether to hold hearings. Rep. Sean Duffy (R-Wis.), who chairs the financial services oversight and investigations subcommittee, asked the Treasury and Justice departments and the Federal Reserve last week to provide all records related to the $400-million payment as well as the names of government officials who authorized the payment and those who objected to the cash transfer. Duffy wants responses by Aug. 24.

Congress returns from a lengthy recess after Labor Day.

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