Update 4:55 p.m.: Following publication of this article, the Treasury Department told the Washington Free Beacon: "The United States did not provide a waiver for the payment of any blocked or restricted funds to Iran." The official would not provide additional information about Iran’s claims or what may have been negotiated with the Iraqis.
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The Biden administration has cleared the way for a $500 million payment to Iran's hardline regime that was being held up by sanctions, according to Iranian officials.
Hamid Hosseini, the secretary general of the Iran-Iraq Joint Chamber of Commerce, said last week that the Biden administration had "granted another sanction waiver and allowed the payment of 500 million dollars from Iraq's electricity debt to Iran." Hosseini said the agreement was made while Iraq's foreign minister was in Washington, D.C., a trip that included meetings with State Department officials.
The State Department, which has to approve sanctions waivers of this nature, would not confirm or deny the report and instead directed the Washington Free Beacon to the Treasury Department. A State Department spokesman also would not answer questions about whether this payment was raised in recent talks with the Iraqi government.
The $500 million owed to Iran was frozen in an Iraqi bank due to U.S. sanctions on trade with Tehran, Iran's state-controlled media reported late last week.
Republicans say the funds will help prop up Iran's hardline regime as it cracks down on protesters and provides lethal military equipment to Russia for Vladimir Putin's war against Ukraine. Iran over the past several months has killed, tortured, and imprisoned scores of protesters who are trying to take down the hardline regime. While the Biden administration has mostly abandoned its hopes of reviving the 2015 nuclear accord, the alleged payment indicates it is leaving the door open to granting Tehran further concessions as part of a new deal.
"The Biden administration has allowed Iran to make uncountable billions violating oil sanctions and now, again, they are sending additional billions to the Ayatollah," Sen. Ted Cruz (R., Texas), a member of the Senate Foreign Relations Committee, told the Free Beacon. "These actions obviously, acutely, and undeniably endanger the safety and lives of Americans."
This cash, Cruz said, also enables "the regime to boost Russia's all-out war against Ukraine. The administration admits that Iran is Russia's number-one military backer. It shows you what their priorities actually are."
Iraq's growing alliance with Iran is also stoking concerns in the Republican-controlled House. Lawmakers in February warned that Iraq has become an Iranian "client state" and have threatened to slash more than half a billion dollars in U.S. security aid to Baghdad.
Iran says the $500 million in funds were frozen inside Iraq's Trade Bank until the Biden administration approved its release sometime within the last month.
"Iran's money is in a bank that is under the supervision of the United States, and it is only allowed to import goods that are not sanctioned," Hosseini said in comments published by Iran's state-controlled press. "For example, last year in March, one billion dollars of goods were imported to Iran through this route, and Iran's debt to Turkmenistan was paid from this."
These frozen funds have long been a flashpoint in U.S.-Iraq relations, given Iraq's reliance on Tehran for electricity and other services. The State Department has repeatedly renewed sanctions waivers that permit Iraq to pay Iran from funds that should be frozen due to sanctions.
The Trump administration granted waivers as well, though it encouraged Iraq to wean itself off Iranian electricity. The Biden administration renewed these sanctions waivers several times, including in March 2021 and March 2022. Each waiver permitted Iraq to import electricity from Iran without facing sanctions for a period of 120 days.
Iraq has pressured U.S. officials to continue granting the waivers, claiming the country will face power shortages if it cannot pay Iran in a timely fashion. It is likely these concerns came up last month when the Iraqi delegation was in Washington to meet with the State Department and Biden administration officials.
Iran says Iraq owes around $18 billion in back payments.