The Biden administration may approve a sanctions waiver on Tuesday that will allow Iran to access at least $10 billion in previously frozen funds held in Iraq, a closely watched decision that comes just a month after the Tehran-backed terror group Hamas launched an attack on Israel that left 1,200 dead.
The waiver would extend the multibillion-dollar sanctions relief first issued in July that expires tomorrow. It allows Iraq to transfer frozen electricity payments into Iranian-owned bank accounts in Europe and Oman. The waiver renewal is driving concerns that the Biden administration is maintaining financial avenues for Tehran as the country’s terrorist proxies foment chaos across the Middle East.
"The world is living in a post-Oct. 7 world, but the White House is still running an Oct. 6 policy toward Iran," Richard Goldberg, a senior adviser at the Foundation for Defense of Democracies and sanctions expert who previously served on the White House National Security Council, told the Washington Free Beacon, referring to Hamas’s attack last month. "Why should Iran have any access to more than $10 billion after sponsoring one of the worst terrorist attacks against American citizens and the worst massacre of Jews since the Holocaust? It would make more sense to freeze all of these accounts and keep every penny out of Tehran's hands."
While the Biden administration paused a $6 billion ransom payment to Iran following a pressure campaign in Congress, the Iraq-Europe-Oman sanctions waiver would signal the United States is still trying to provide financial relief to the hardline regime. Iranian military officials warned Monday that the Gaza war has already "spilled over into neighboring Lebanon and may even widen in scope" as Iranian-armed Hezbollah fighters become more active in the conflict. Tehran also has been rallying Arab nations against Israel, threatening to prolong the war and open more fronts.
The Trump administration first allowed Iraq to import electricity and gas from Iran, but only on the condition that the payments were kept in an escrow account in Baghdad. The Biden administration continued to issue that waiver, and then broadened it in July so that Iraq could move more than $10 billion outside the country, enabling Tehran to draw on the funds for its budget and humanitarian needs. In late October, the governor of the Central Bank of Iran reportedly discussed expediting Iran's access to the funds with his Omani counterpart.
In testimony before Congress late last month, Goldberg advised Congress to lock down the $10 billion as punishment for Tehran’s role in supporting Hamas’s war on Israel.
The Biden administration insists that, like the $6 billion held in Qatar, Iran can only use the $10 billion for non-sanctioned purposes.
Critics argue that since money is fungible, the access allows Iran to free up cash in other places for illicit activities.
Republican lawmakers in Congress made this argument when they pressured the Biden administration to halt its $6 billion ransom payment to Iran, arguing that even though the money was allocated for humanitarian purposes, it helped the hardline regime divert funds into terror groups like Hamas and Hezbollah.
Iranian leaders in recent days have emphasized the importance of the electricity payments, reportedly telling Omani leaders they should "accelerate the use of these new foreign exchange resources" and signaling the regime is relying on the Biden administration to continue freeing up this cash.
The State Department declined to comment on the sanctions waiver or confirm whether it will be renewed this week.