Iran loses access to $6 billion fund as US and Qatar change their minds

A deal gone sour

Last month, the US and Iran reached a historic prisoner swap deal that saw the release of four Americans and 10 Iranians who were held in each other’s countries on various charges. The deal was hailed as a breakthrough in the tense relations between the two nations, and a sign of hope for the revival of the 2015 nuclear deal that was abandoned by former US president Donald Trump in 2018.

However, the deal also involved a controversial transfer of $6 billion in frozen Iranian funds from South Korea to Qatar, where Iran could access them for humanitarian purposes. The funds were part of the $50 billion that Iran had in foreign banks before the US reimposed sanctions on its oil and banking sectors.

The transfer of the funds was supposed to be completed by the end of September, but it has now been blocked by the US and Qatar, according to reports from The Telegraph and Financial Times .

Why did the US and Qatar change their minds?

The reports claim that the US is under pressure to freeze the funds after the Hamas attack on Israel in May, which was allegedly funded by Iran. The US also accuses Iran of supporting other militant groups in the region, such as Hezbollah in Lebanon and the Houthis in Yemen.

The US has the right to block the funds because it has a veto power over any transactions involving the New York-based Clearing House Interbank Payments System (CHIPS), which is used to process international payments. The US can also impose secondary sanctions on any country that facilitates Iran’s access to the funds.

Qatar, which is a close ally of the US and hosts a large US military base, has reportedly agreed to cooperate with the US decision. Qatar also has its own interests in maintaining good relations with its Arab neighbors, especially Saudi Arabia and the United Arab Emirates, which are rivals of Iran in the region.

What are the implications of this move?

The blocking of the funds is a major setback for Iran, which is facing a severe economic crisis due to the US sanctions and the Covid-19 pandemic. The funds were meant to help Iran buy food, medicine, and vaccines from abroad.

The move also jeopardizes the prospects of reviving the nuclear deal, which is currently being negotiated in Vienna between Iran and the remaining signatories of the agreement: China, France, Germany, Russia, and the UK. The US is indirectly involved in the talks through a European intermediary.

Iran has demanded that the US lift all sanctions imposed by Trump as a condition for returning to full compliance with the nuclear deal. The US has insisted that Iran must first reverse its breaches of the deal, such as enriching uranium beyond the agreed limits.

The blocking of the funds could further erode the trust between the two sides, and increase the domestic pressure on both governments to abandon the talks. In Iran, hardline conservatives who oppose any engagement with the US have won a landslide victory in the presidential election in June, and are expected to take office in August. In the US, President Joe Biden faces opposition from some members of Congress and allies in Israel and Saudi Arabia who want a tougher stance on Iran.

The consequences of blocking Iran’s $6 billion fund

The US and Qatar have decided to block Iran from accessing $6 billion in frozen funds that were part of a prisoner swap deal last month. The move is motivated by political and security reasons, and could have serious consequences for Iran’s economy and humanitarian situation. It could also endanger the ongoing efforts to revive the nuclear deal, which is seen as a key factor for regional stability and global security. The question remains: how will Iran react to this development, and what other options are available for humanitarian aid to Iran?