The State Department informed Congress late Tuesday that it would waive sanctions on Iran's illicit oil trade so that the country can access frozen funds from South Korea and Japan, the same day the Department of Justice announced charges on an Iranian spy network that sought to kidnap an American.
The waiver, signed by Secretary of State Antony Blinken, allows the "transfer of Iranian funds in restricted accounts to exporters in Japan and the Republic of Korea," according to a notification sent to Congress by the State Department. The waiver allows Iranian money that had been frozen as a result of American sanctions to be freed up without violating the law. "Allowing these funds to be used to repay exporters in these jurisdictions will make those entities whole with respect to the goods and services they exported to Iran, address a recurring irritant in important bilateral relationships, and decrease Iran’s foreign reserves," the waiver states.
The waiver was announced on the same day the Justice Department announced new charges against a network of Iranian intelligence agents who sought to kidnap an American journalist and bring her to Iran. The charges include kidnapping conspiracy, sanctions violations conspiracy, bank and wire fraud conspiracy, and money laundering conspiracy charges.
The sanctions relief also comes as the United States and Iran get closer to finalizing a revamped nuclear deal that will even further unwind sanctions on Tehran. Congressional Republicans are likely to oppose the move, which lessens economic pressure on Iran at a time when it is still funding regional terror groups and building out its nuclear weapons program. Sanctions of Iran's oil trade were a hallmark policy of the Trump administration, which sought to cut Iran's exports down to zero and deny the regime a key source of income.
Richard Goldberg, the former director for countering Iranian weapons of mass destruction on Trump's White House National Security Council, said the waiver will relieve pressure on Iran's floundering economy and give it access to much-needed cash.
"There’s a reason we talk about accessible foreign exchange reserves versus inaccessible foreign exchange reserves. If you free up money that’s trapped in foreign accounts for Iran to pay off debts, you are bailing out the regime and rescuing the mullahs from a balance of payments crisis," said Goldberg, a senior adviser at the Foundation for Defense of Democracies. "This is a bailout, plain and simple. And to announce it right as DOJ tells us Iran tried to kidnap an American journalist out of New York City—that’s a national outrage."
A State Department spokesman said Blinken signed the sanctions waiver to give Japan and Korea another 90-days to complete transactions with Iran.
"The secretary of state previously signed a waiver to allow funds held in restricted Iranian accounts in Japan and Korea to be used to pay back Japanese and Korean companies that exported non-sanctioned items to Iran," the spokesperson said. "These repayment transactions can sometimes be time consuming, and the secretary extended the waivers for another 90 days."
The State Department says the waiver "does not allow for the transfer of any funds to Iran," and will make whole Japanese and Korean companies that exported non-sanctioned goods and services before U.S. sanctions were tightened by the previous administration.
Sen. Bill Hagerty (R., Tenn.) said the Biden administration is rewarding Iran with an economic bailout.
"President Biden today is giving the Iranian regime—the world’s biggest state sponsor of terrorism—an economic bailout by freeing up billions of dollars that U.S. sanctions had frozen in foreign banks," said Hagerty. "I personally spent months working with the then-Japanese Prime Minster and his cabinet to put in place these crippling and biting sanctions, which had real and tangible results, only today to see them begin to be blown apart with the stroke of a pen in exchange for nothing. President Biden is doubling down on his Iran appeasement policy just as it was revealed that Iranian officials were plotting to abduct an American citizen in New York City, and as the regime is continuing to use missiles and proxy militants to attack Americans in Iraq and Syria."
The Treasury Department did not immediately respond to request for comment.
Update July 14, 7:24 a.m.: This post has been updated with comment from Sen. Hagerty.