That $400 Million Secret Payment to Iran Isn't Quite What You Think It Is

Photo credit: Corey Barnes
Photo credit: Corey Barnes

The Drudge Report, Fox News, Donald Trump, and a host of other right-wing institutions are in a tizzy today over a report in the Wall Street Journal that the United States government sent a secret plane stuffed with $400 million in Swiss francs and euros directly to Tehran back in January, at precisely the same time Iran agreed to release four American detainees. “Obama Paid $400M ‘Ransom’ to Iran,” is how the New York Post is playing the story. Trump himself is calling it a “scandal.” What people seem to be missing is the fact that, while the Journal is the first to report that the payment was made in cash, literally everything else about the story—the money, the prisoner release, the quid pro quo allegations—was reported back in January.


First, a little backstory to explain how we got to this point: Earlier this year, the United States entered into an agreement with the Iranian government aimed at freezing Iran’s nuclear weapons program. As part of a whole bunch of peripheral issues surrounding that deal, there was a matter of four American citizens that were being detained in Iran on rather dubious charges, as well as $1.7 billion that Iran was demanding from the U.S. in restitution for an arms deal that went south back in the 1970s.

Back then, the U.S. and the government of the Shah agreed on a $400 million deal for fighter jets. The Shah delivered the money, but then he was deposed in the Iranian Revolution of 1979, so the Americans never delivered the jets. The American government did, however, hang on to the cash.

Ever since, the Iranian government has been trying to re-claim the payment in international courts, along with $1.3 billion in interest that’s accumulated over that time. As one of those peripheral issues, the U.S. agreed to pay the money back. This was pretty well known among people paying close attention, because President Obama said as much when it was all announced back in January. The New York Times reported at the time:

Mr. Obama also announced the resolution of another argument between Tehran and Washington that dates to the Iranian revolution, this one over $400 million in payments for military equipment that the United States sold to the shah of Iran and never delivered when he was overthrown. The Iranians got their money back, with $1.3 billion in interest that had accumulated over 37 years.

On or about the same day that the initial payment of $400 million was made, the four Americans were released, with three on a Swiss Air Force plane headed to Geneva, and one headed back to the United States.

At the time, there was speculation from U.S. Speaker Paul Ryan and others that the payment amounted to a ransom for the four Americans. White House press secretary Josh Earnest attempted to deflect those charges in press conference on January 19, 2016:

Q: [O]n Sunday, we learned that the United States made a payment to the government of Iran of $1.7 billion. Was this tied to the deal that led to the freedom of the Americans that were being held in Iran?

MR. EARNEST: Jon, this is actually the result of a long-running claims process that had been at The Hague. In 1979, there was obviously an Iranian revolution that abruptly severed relations between our two countries. And prior to that revolution, the U.S. government had entered into an agreement with the then-Iranian government to transfer about $400 million in military equipment to the Iranian government. Once the revolution took place, obviously that equipment was not transferred, but we also didn’t return Iran’s money either.... And for more than 30 years now, the Iranians have been using this claims process at The Hague to try to recover that $400 million....

Q: Okay, but as I understand it, the Department of State announced this payment of $1.7 billion to the government of Iran just before the plane carrying the freed Americans landed in Geneva. You’re really telling me that this is an absolute coincidence that this payment just happened to coincide with the precise moment when the American prisoners were flying to freedom?

MR. EARNEST: Jon, I think we’ve made pretty clear that this is not a coincidence. The fact is, these kinds of diplomatic opportunities—

Q: [B]ecause Paul Ryan has suggested this was a ransom payment. You saw his statement.

MR. EARNEST: He’s wrong about that.

Of course, it’s tough to take those denials without a large grain of salt. A deal was signed, a payment was made, four Americans were released, the U.S. released seven Iranians on its own—things like that happen coincidentally every day. But whether you believe it or not, the issue of whether the $400 million payment to the Iranians was ransom was very publicly discussed seven months ago.


You wouldn’t know that to read the Journal story, though, which opens with the news that the payment took the form of a cash airlift:

The Obama administration secretly organized an airlift of $400 million worth of cash to Iran that coincided with the January release of four Americans detained in Tehran, according to U.S. and European officials and congressional staff briefed on the operation afterward.


The story makes no reference, aside from single a link to the Journal’s prior coverage of the deal, to the fact that the payment was a matter of public record. The cash bit was indeed secret, but reasonable (and unreasonable!) readers are interpreting the story as a scoop about a previously unreported payoff.

Politico, for example, covered Trump’s attack over the deal by saying “the previously unreported $400 million sent in January was the first installment of the White House’s $1.7 billion settlement with Iran.” Foreign Policy wrote that “Republican lawmakers are fuming Wednesday over a report that the U.S. government secretly sent the equivalent of $400 million to Iran last January.”


As for the quid pro quo allegations, the Journal story also brings nothing new to the table. It helpfully relays that, while the White House denied that the payment was related to the detainee release, the Iranian government boasted of precisely the opposite:

Revolutionary Guard commanders boasted at the time that the Americans had succumbed to Iranian pressure. “Taking this much money back was in return for the release of the American spies,” said Gen. Mohammad Reza Naghdi, commander of the Guard’s Basij militia, on state media.


But those claims were made at the time, in public, back in January.

The Journal’s overreach is unfortunate, because the details on how the cash made its way to Tehran are interesting, to say the least:

President Obama approved the shipment of the $400 million. But accumulating so much cash presented a logistical and security challenge, said U.S. and European officials. One person briefed on the operation joked: “You can’t just withdraw that much money from ATMs.”

Mr. Kerry and the State and Treasury departments sought the cooperation of the Swiss and Dutch governments. Ultimately, the Obama administration transferred the equivalent of $400 million to their central banks. It was then converted into other currencies, stacked onto the wooden pallets and sent to Iran on board a cargo plane.


The cash was made up of Swiss francs, euros, and other non-dollar currencies and was loaded aboard the unmarked cargo plane which landed in Iran. Because apparently electronic wire transfers aren’t good enough anymore, or something, and we want our diplomatic payments to be made in as untraceable manner as possible.

(As an aside, countries do maintain gold and foreign currency reserves as a matter of due course, so the fact that governments have any cash at all isn’t so strange.)


No, there’s no real way to prevent any government from spending money how it pleases. But when Iran is propping up Syria’s Bashar al-Assad regime and funding terrorists the world over, making a cash payment out of Swiss bank accounts probably wasn’t the best idea.

Nor is it a good idea to misleadingly frame a good little scoop about a cash delivery as a blockbuster revelation of a $400 million payment. Some readers aren’t smart enough to tell the difference.


The Wall Street Journal did not respond to a request for comment.

Deputy Editor, Jalopnik. 2002 Lexus IS300 Sportcross.



I still think it’s shady that we gave $400m in untraceable cash to a regime that funds a lot of really really bad opposed to the somewhat-bad groups we’re funding.