Iran Renews Claim About Imminent Release Of Blocked Funds

"We can and must close the Strait of Hormuz to South Korean cargo ships and oil tankers and all ships that carry South Korean commodities … and not allow them to navigate through the Hormuz Strait as long as they have not paid their $7 billion debt to our country," Hossein Shariatmadari, the chief editor of Kayhan, wrote in an editorial note entitled "Let's Begin Imposing Sanctions From South Korea".

Since former US President Donald Trump's introduction of ‘maximum pressure’ sanctions in 2018 after withdrawing from the 2015 nuclear deal, Joint Comprehensive Plan of Action (JCPOA), the US has threatened punitive action against any third-party buying Iran’s oil or dealing with its financial sector. The funds held in South Korea by two banks are Iran’s proceeds from oil exports before the Trump sanctions.

Shariatmadari argued that countries such as South Korea use US secondary sanctions as an excuse to freeze Iranian assets, but Tehran also has effective tools to counteract US sanctions.

"We can show that their actions are not without cost and could even entail heavier costs than if they violate US sanctions [on Iran]," the firebrand editor of Kayhan, an appointee of Supreme Leader Ali Khamenei, wrote.

Shariatmadari, a well-known opponent of the JCPOA and relations with the West, also claimed Iran is entitled to close the Hormuz Strait to oil tankers and cargo ships including those carrying weapons based on the 1956 Geneva Convention on the Law of the Sea and 1982 Jamaica Treaty, if they cause harm to Iran's security. South Korea is to be punished, therefore, for harming Iran through enforcing US sanctions, he argued.

On April 6, the government mouthpiece, Iran newspaper, quoted an unnamed official as saying that a large sum of Iran's frozen assets would be released in a deal separate from the nuclear talks which have come to a halt since mid-March due to sticking issues including Iran's demand that the US remove the Revolutionary Guards (IRGC) from its list of Foreign Terrorist Organizations (FTO).

American journalist Laura Rozen wrote on Friday that the Biden administration has apparently decided not to send a counter proposal to Tehran to close the final outstanding issues. "Iran would either get a deal with the IRGC remaining on the FTO list, or no deal,” she quoted Ali Vaez, director of the Iran program at the International Crisis Group, as saying.

Farhikhtegan newspaper in Tehran said in an article titled “Releasing Iran’s Frozen Assets Through Non-Nuclear Means” on April 7 that Iran had been negotiating in parallel with the nuclear talks in Vienna to access its frozen assets and quoted an unnamed "informed source" as saying that Iran would free three American-Iranians held in Iran in exchange for the $7 billion Seoul owes to Tehran.

Tehran and Seoul have been in a diplomatic standoff since February 2020 over the frozen money. Iran’s chief negotiator Ali Bagheri-Kani who met the Korean diplomat in Vienna on January 5 demanded the unconditional release of the funds, but Washington said it would waive third-party banking sanctions for Seoul only with “everything” agreed in the nuclear talks and a final deal.

In January 2021 Iran detained a Korean tanker and in April the same year, Khamenei banned the import of home appliances made by the two leading Korean manufacturers. Iranian media said this was a "diplomatic message" to Seoul.

In a press briefing on Thursday, State Department Spokesperson Ned Price said US partners have not released any blocked funds to Iran, nor has the United States authorized or approved any such funds to Iran.

In a joint press conference with his visiting Iraqi counterpart Fuad Hussein on Wednesday, Iranian Foreign Minister Hossein Amir-Abdollahian repeated the claim, made several times in recent days by Iran’s state-controlled media, saying an "initial agreement" has been reached to release Iran's funds held by a foreign bank.

Price denied “any breakthrough” in two parallel tracks that are underway with Iran – one in Vienna for mutual return to full implementation of the JCPOA, and one on the release of all four US citizens who are unjustly held in Iran, cautioning everyone about such reports.

Iran’s trading partners have frozen tens of billions of dollars because of United States sanctions that make it illegal for third parties to engage in financial dealings with Iran.

Iran's government news website IRNA Monday reported a high-level visit by a “regional official” on Tuesday to conclude a deal to unblock $7 billion of Iran’s funds frozen abroad because of United States’ sanctions.

Foreign ministry spokesman, Saeed Khatibzadeh immediately denied the report but later told the media that an agreement to free some frozen funds does exist.

According to United Against Nuclear Iran (UANI) estimates, Iran’s daily oil exports in violation of US sanctions soared from 825,000 barrels per day in March 2020 to 1.34 million bpd in March 2022, including just under 900,000 barrels per day to China.

UANI announced on Tuesday that its campaign to identify and track rogue vessel operators engaged in the Iran's oil and gas smuggling has stymied Tehran’s efforts to circumvent sanctions, leading to 100 vessels being stripped of their flags by authorities worldwide.

The Islamic Republic has a “ghost armada” of 182 rogue foreign vessels -- distinct from but complementing Iran’s own National Iranian Tanker Company fleet – that evades tracking and scrutiny and skirts US sanctions and exploits regulatory loopholes to ship millions of barrels of oil.

Every commercial vessel must be registered to the flag of a country to have docking rights and travel globally, these flag states are responsible for enforcing regulations.

UANI detects rogue operators misusing flags as part of Iran’s smuggling activities – often accompanied by the formation of new shell and front companies, ownership and name changes, and even alterations to ships’ physical markings, as well as flag-hopping, which involves repeatedly switching a ship’s flag to different national registries.

The group then alerts relevant authorities to take action, and when the vessels are "de-flagged,” the Islamic Republic is unable to complete the transfer that generates the export revenues.

An unnamed senior State Department official said on Monday that “We have two separate negotiations underway with Iran: one for a mutual return to full implementation of the JCPOA and one on the release of all four US citizens unjustly detained in Iran”, noting that “At this stage, neither negotiation has been successfully concluded”.

“Any reports otherwise, including reports about the transfer of Iranians funds are false. Our partners have not released these restricted funds to Iran, nor has US authorized transfer,” the source said.

Warning of Iran’s propaganda campaign that regularly suggests progress on agreements to prop up its currency, the source said that such reports usually appear whenever the Iranian rial is under strong market pressure, adding that there is “no reason to think any different this time”

Iran’s currency hit a new low against the US dollar in over two months, as nuclear talks remained deadlocked.

“Given the sensitivity, we urge caution in relying on anything other than official" US confirmation on this topic, the source added.

“We are continuing to approach these negotiations with the utmost urgency and urge Iran to do the same. Iran must allow US citizens Baquer (Bagher) and Siamak Namazi, Emad Shargi, and Morad Tahbaz to return home to their loved ones”.

Iran official government news website, IRNA reported Monday that a senior foreign official would visit Iran on Tuesday to conclude a deal to free the frozen funds. The foreign ministry immediately denied the claim.

In one initiative, 70 experts writing to Biden told him that removing the Revolutionary Guard “would threaten American lives, harm Gold Star Families, and empower a terrorist organization sponsoring daily attacks against U.S. interests and allies. The delisting would be strategically shortsighted and dangerous to U.S. national security interests.”

Negotiations that started in Vienna in April last year to restore Iran’s 2015 nuclear deal known as JCPOA came to a halt in March as Tehran reportedly demanded the removal of its Islamic Revolution Guard Corps (IRGC) from the US Foreign Terrorist Organization (FTO) list.

In a second initiative, 14 Republican Senators, led by Sen. John Kennedy of Louisiana sent a letter to the White House urging President Biden not to remove the IRGC designation as a terrorist organization that they said is “responsible for hundreds of American deaths.” The Senators also voiced their opposition to a new nuclear deal with Iran that would provide Tehran with billions of dollars of sanctions relief and frozen funds.

“Not only would this removal be wildly misguided, but it would betray our partners and allies in the region—particularly Israel and the Gulf states. These allies and partners already hold concerns that the United States is reducing its regional presence. The enactment of such a deal would provide the Iranian regime access to funds that it would use to destabilize the region through terrorist proxies,” the Senators said.

Opposition to such a move intensified last month with most Congressional Republicans and some Democrats appealing on various occasions to the White House not to consider making a concession.

Last week, signals emerged form the administration that President Biden was opposed to removing the IRGC from the FTO list, but other signs pointed to the possibility that the US might take such a step while keeping the designation of IRGC’s extraterritorial Qods (Quds) Force as a terrorist organization.

In March, 49 Republican Senators issued a statement urging President Biden not to revive the JCPOA without Congressional approval. “The administration has thus far refused to commit to submit a new Iran deal to the Senate for ratification as a treaty, as per its constitutional obligation, or for review under statutory requirements that passed on a bipartisan basis in response to the 2015 deal,” they said.

The 70 experts who wrote to Biden on Monday pointed out that the IRGC “is engaged in active terrorist plots to kill former U.S. government officials,” referring to explicit Iranian threats to kill high-ranking officials of the Trump administration, including former Secretary of State Mike Pompeo.

Among the signatories were former State Department Special Envoy for Venezuela and Iran Elliot Abrams, Ilan Berman of the American Foreign Policy Council, Amb. Paula Dobriansky, former Under Secretary of State for Global Affairs, former US Senator Joe Lieberman and former US National Security Advisor Robert McFarlane.

The letter concluded by saying, “Mr. President, no deal can be worth giving terrorists a green light to kill Americans, empowering a terrorist organization to harm U.S. interests and allies, or turning our backs on American victims of terrorism. For the sake of our national security, we implore you to maintain the IRGC’s FTO designation.”