Amid all the fuss over President Obama’s “ransom” payment to Iran to free US hostages, less scrutinized is the president’s justification for airlifting cash to Tehran: that we owed them the money. It deserves more attention, because the administration has failed to make its case.
To review: On Wednesday, the Wall Street Journal reported that the Obama administration not only paid $400 million in cash to Iran on Jan. 17, but $1.3 billion more in cash in two subsequent shipments — all in Swiss francs, euros and other currencies. The administration claims the payments were returning money Iran paid in 1979 under the Foreign Military Sales program for military equipment it ordered but did not receive, plus interest.
It’s a misdirection. And as Congress returns from its recess, it’s time to focus on two key questions the administration has been refusing to answer ever since the beginning of the year: How was the payment calculated, and was it really due?
In his Jan. 17 announcement, Obama cast the payment as a favorable settlement of Iran’s claim for its 1979 payment. He said he had potentially saved “billions of dollars” Iran could have pursued at the Iran-US Claims Tribunal at The Hague. But the administration has repeatedly refused to answer questions about the merits of the claim or the amount of the payment.
Not for lack of trying on the part of Congress.
On Feb. 3, Rep. Edward J. Royce (R-Calif.), chairman of the House Foreign Affairs Committee, requested “all legal analyses .?.?. evaluating the likelihood of Iran prevailing in this dispute” and a “detailed explanation of how the interest payment to Iran of $1.3 billion was calculated.”
Six weeks later, Assistant Secretary of State for Legislative Affairs Julia Frifield responded that the United States “could well have faced significant [additional] exposure in the billions of dollars,” because “Iran was of course seeking very high rates of interest,” and “we are confident that this was a good settlement for the American taxpayer.”
But she provided neither a legal analysis of the claim nor a calculation of the interest paid.
The State Department’s response also noted that the United States “has a significant counterclaim against Iran arising out of the [Foreign Military Sales] program” seeking “substantial damages.” But the administration has declined to explain the nature and amount of its counterclaim, or why it paid Iran’s claim and left its own counterclaim for future litigation.
Moreover, the administration had more than $400 million in other claims against Iran, arising under the “Victims of Trafficking and Violence Protection Act,” for court judgments it holds against Iran for terrorist attacks against Americans. That law specifically provided that “no funds shall be paid to Iran .?.?. from the Foreign Military Sales Fund, until [such claims] have been dealt with to the satisfaction of the United States.”
In a Jan. 29 letter, Sen. Roy Blunt (R-Mo.) asked why the administration had paid Iran its claim before Iran satisfied the VTVPA claims — which total $465 million plus interest. The administration responded it had resolved the VTVPA claims “by securing a favorable resolution on the interest owed” Iran.
But in a June 1 letter to Secretary of State John Kerry, Royce computed the maximum Iranian claim arising out
of the 1979 payment as $1.8 billion — before considering any offsets in American claims against Iran.
We currently don’t know whether, after such offsets, the United States owed Iran anything at all.
In his Aug. 4 press conference, the president contended that “we were completely open with everybody” about the payment to Iran. He said his lawyers assessed that “there was significant litigation risk” regarding Iran’s claim.
But the administration hasn’t disclosed how it calculated its payment, or the amount of its counterclaim, or how the VTVPA claims were resolved by the payment, or why the administration thought Iran would prevail in a lawsuit that surely would have considered counterclaims.
Since the administration has withheld the legal analysis, the computation, the details of the offsets and counterclaims and the explanation of why it paid Iran without first consulting the relevant congressional committees, we need more information to evaluate the administration’s repeated insistence that this was a good deal.
We need — to be specific — the information Congress has been requesting for more than seven months.