U.S. Helping Iran Access Billions in Frozen Funds

Official: U.S. must step in to ease financial access for Iran

John Kerry
John Kerry / AP
April 5, 2016

The Obama administration is helping Iran access billions of dollars in funds that are tied up in international banks across the globe by rewriting regulations and other measures, according to testimony Tuesday by a top U.S. official, who admitted that these assets could be used to fund terrorism.

The United States has been engaged in an effort to ease longstanding financial restrictions on Iran and has taken steps to aid the Islamic republic as it seeks to access billions of dollars in frozen assets, some of which could be used to fund the country’s global terrorist enterprise, a top State Department official testified to Congress.

The disclosure of this effort comes amid reports that the Obama administration is pursuing a plan that would grant Iran unprecedented access to the U.S. dollar and American financial markets, a move the administration had vowed would not take place under the comprehensive nuclear agreement.

Thomas Shannon, the State Department’s undersecretary for political affairs, informed lawmakers that efforts to aid Iran’s access to funds includes direct engagement from the Obama administration.

"There will be instances in which we need to help Iran access that money by clarifying the regulations under which money can be transferred to them," Shannon said under questioning from the Senate Foreign Relations Committee.

As sanctions on Iran are lifted, the United States must alter financial regulations to ensure that Iran can access frozen assets stored in banks across the globe.

"We have found that as Iran seeks those funds there are banks that are unclear about the nature of the regulatory structures and what sanctions have been lifted and what have not," Shannon said. The administration "believes that it is in our national interests to ensure the commitments we made are being followed through on. This is part of a larger engagement we’ve had with the Iranians on different aspects of our commitments."

Shannon later admitted that this money could be used by Iran to fund terror operations and destabilizing activities in the region.

"In regard to whether or not Iran continues to fund terrorist related activities or destabilizing active in the region, there’s no doubt that’s true and we’re seeing it, whether its in Syria, whether its in Lebanon and Hezbollah, whether its in Yemen with what they’re doing with the Houthi rebels," Shannon said in response to questions from Sen. David Perdue (R., Ga.).

Senators also pressed Shannon on reports that the administration seeks to grant Iran access to the U.S. dollar.

Secretary of State John Kerry appeared to confirm these reports on Tuesday morning, when he stated in an interview that Iran "absolutely" deserves access to the U.S. banking system.

Shannon was forced to walk Kerry’s statement back, telling lawmakers that reports of this action are untrue.

"The point the secretary was making was we have commitments under the [nuclear agreement] and we need to live up to those commitments and ensure the Iranians are receiving for what they have done, what they believe we have committed to," Shannon said, again emphasizing the "importance of ensuring Iran has access to the assets that are now open to them."

Asked by Sen. Bob Corker (R., Tenn.), the committee’s chairman, to deny the reports, Shannon was adamant they are "not true."

Corker expressed skepticism, telling Shannon that the administration has already broken several of its promises to Congress regarding the nature of the nuclear agreement.

"I’ve actually talked to administration officials who don’t know where those rumors [about U.S. dollar access] are coming from and are somewhat disconcerted by it," Corker disclosed. "I talked to [senior Treasury Department official] Adam Szubin last night, who was very reassuring that we are doing nothing to accommodate dollar transactions."

Kerry’s most recent comments cast doubt on this claim, Corker said.

"I don’t think the administration is on the same page and I think there are some people who are invested in this and have developed relationships and I think are trying to bend this in a way that will benefit Iran," Corker said.

Shannon also was pressed on the administration’s shifting position on Iranian ballistic missile tests. While the administration initially maintained that such tests were a violation of United Nations resolutions governing the nuclear agreement, it has stated in recent days that they only appear to be "inconsistent" with it.

Several lawmakers expressed concern that the administration has reneged on a promise to ensure that Iranian ballistic missile test remain banned under U.N. Security Council Resolution 2231, which governs the nuclear agreement.

"From our point of view, UNSCR 2231 prohibits Iran from launching ballistic missiles," said Shannon, who also admitted that the language in this resolution is weaker than past versions regarding such tests.

"In international parlance there is a distinction here, but for me it is a distinction without difference," Shannon said. "I believe [recent Iranian missile tests] violated the intent of 2231."

Shannon promised that the Obama administration would block upcoming arms sales between Russia and Iran.

Under the nuclear agreement, the U.N. Security Council has final say over sales of weapons to Iran, including a new agreement by Russia to sell Iran advanced Su-30 fighter jets.

"The sale of Su-30 fighter aircraft is prohibited" by UNSCR 2231, Shannon said. "We would block the approval of any sale of fighter aircraft."

The administration remains concerned with keeping diplomatic lines of communication open with Iran.

"We believe it is in the U.S. national interest to continue a dialogue with Iran," Shannon said, emphasizing the need for "keeping this hand of friendship and lines of communication open and standing strong and resolute."