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The Reasons of Financial Dispute of U.S. and Iran

In the year 1979, the revolutionary government of Iran hostages 52 people at the U.S. embassy and U.S. served a diplomatic relations with Tehran. Due to such incident, the Washington froze the $12 billion or Iranian asset which was held on our shores. The crisis then was resolved in 1981 at a conference in Algiers and Iran then was returned with the $3 billion and given other funds to pay towards creditors. After that, the two nations established a tribunal that was called as the Iran United States Claims Tribunal in order to settle claims that are both leveled by each of the government against others.

The main issue of the two governments was with the $400 million payment for the military equipment that was made by the government of the Shah of Iran before the uprising in 1979. The U.S. also banned the delivery of the weapons as well as the jets during the hostage crisis and they also froze the $400 million advance payment. Based on the statement made by Gary Sick who was a former National Security Council official and who served as the principal White House aide during the Iranian Revolution and hostage crisis said that “The Pentagon handled arms purchases from foreign countries.” He also added that “Defense took care of the details. So the $400 million scheduled purchase was a government-to-government transaction. The U.S. government was holding the money. That’s why it was so difficult to resolve.”

Back in 2015, the issue stood before a panel of nine judges which includes three independent jurists who were near a decision on binding arbitration. Based on the Obama administration officials, the U.S. was actually concerned with the case of where the tribunal will mandate an award to multiple billions of dollars. Gary Sick said that “The Iranians wanted $10 billion, I estimate that the tribunal would have awarded them $4 billion. That’s what the lawyers were saying. It’s not as much as they wanted, but a lot more than we paid.”

U.S. negotiators also convinced Iran to move the dispute from arbitration towards a private settlement. Both sides then reached on an agreement in 2015 and that both the U.S. and Iran reached on to a comprehensive pact for them to curtail the development of Iran of its nuclear weapons. The financial deal then lead to the call with where the U.S. refunds the $1.7 billion to Tehran which consist of the original $400 million contract for military equipments and $1.3 billion on the interests. The U.S. likewise need to make big payments for IRan due to its 35 year old deal on its weapons that were not received.

The suspicion is that teams that works on the financial, weapons and hostage negotiations collaborated and that the hostage release was the sweetener needed in order to clinch the controversial nuclear agreement.

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