On Jan 16 Iranian and then U.S. sources revealed Iran had released four of the American hostages it had been holding [a]. At the same time the U.S. transferred $1.7b to Iran, released 7 Iranians jailed for illicit activities, dropped charges against another 14 who were being pursued, and made additional concessions that journalists subsequently revealed.
The White House declared the swaps were diplomatic victories that boosted American security and Secretary Kerry praised Iranian FM Zarif for assisting in the diplomacy [b][c].
But there were immediate indications that some parts of the deal – though not necessarily the $1.7b transfer – boosted Iran’s military. Bloomberg View reported that two of the Iranians let off the hook had been targeted for helping the Iranian military boost Syrian dictator Assad [d]. Reuters reported that President Obama commuted the sentence of an Iranian national linked to Iran’s missile program and dropped a $10 million U.S. claim against him [e]. Weekly Standard reporter Lee Smith emphasized that the administration had paid off American victims of Iranian aggression and terrorism who had claims against Tehran [f].
Today’s Bloomberg View article by Eli Lake reveals that the $1.7b part of the transfer also directly boosted the IRGC, in addition to all of the IRGC-linked Iranians who were released or no longer pursued. The full article is pasted below. Key part:
Saeed Ghasseminejad, an associate fellow at the Foundation for Defense of Democracies, spotted the budget item. He told me the development was widely reported in Iran by numerous sources including the state-funded news services. “Article 22 of the budget for 2017 says the Central Bank is required to give the money from the legal settlement of Iran’s pre- and post-revolutionary arms sales of up to $1.7 billion to the defense budget,” he said.
The Obama administration has been opaque about nearly every detail of the transfer, slowplaying both journalists and Congress.
It took a full day for reporters to get the administration to explain how it would even justify the transfer: on Jan 17 Secretary Kerry said the transfer was payment had been for a decades-old legal dispute about the U.S. selling military equipment to pre-revolutionary Iran [g]. It took several more days for officials to reveal where the money was coming from: on Jan 20 NSC spokesperson Price went on Twitter to argue with journalists over whether the deal was a ransom, and – after being repeatedly asked – he conceded the money was coming from the Judgment Fund, which he preemptively spun as something “previous Administrations have used for similar settlements” [h]. The next morning the WFB confirmed the Judgment Fund was taxpayer funded [i].
Lawmakers also found it challenging to get clarification from the administration in the days after the paymnet. On Jan 21 the WSJ reported that lawmakers were calling for an inquiry into the payment [j]. The same day the WFB reported on potential legislative moves to get at the transfer [k]. On Jan 22 the AP published a roundup of lawmaker reactions and questions that the administration wasn’t answering [l].
That went on for months.
As of March questions from the Hill were still not being answered: on March 17 the WFB reported that the State Department was refusing to respond to Congressional inquiries sent months before [m]. When the State Department did respond to one of the letters, it revealed that the administration had been negotiating over the hostages for three years [n]. The Daily Mail ran the story under the headline “Obama administration paid Iran $2billion ‘ransom to free US prisoners’ after years of secret talks – but claims it’s settlement for arms deal scrapped 37 years ago” [o].