Did the US Make ‘Ransom Payments’ to Iran? No, Of Course Not.

Just in time for Throwback Thursday, there is a fresh new Iran scandal dominating the news. And like most Iran scandals, the latest is much ado about nothing. It’s not even a new event; just new details on something that happened nearly seven months ago.

The long and short of it goes something like this: As the Iran Deal neared implementation this past January, two officially unrelated events occurred around the same time. The US paid Iran $400 million and Iran released four American prisoners. Based on this timing, and because many powerful Americans love to hate Iran, this is being framed as a kind of ransom payment.

Lost in the shuffle, however, is the seemingly important fact that this $400 million belonged to Iran in the first place. In fact, the reputed ransom payment was basically a matter of the US returning stolen property. As CNN notes, the pre-revolution Iranian government moved $400 million to the US to pay for an arms deal. After the Iranian Revolution in 1979, that deal fell through, the arms were not delivered, and the US government refused to return the money. Around the same time as the Iran Deal negotiations, however, the US agreed to return this money, as well as $1.3 billion in interest.

While some could quibble about the interest calculations, these broad facts aren’t really disputed. And it seems that no one could legitimately argue that the Iranian government’s transition from (American-backed) dictatorship to an independent quasi-representative theocracy justifies the transfer of all Iranian government property and assets to whatever country happened to have jurisdiction over them at the time.

This is an important distinction because it was one of the major talking points over the Iran Deal generally. Opponents of the deal criticized it for “giving” billions of dollars to Iran, which might then be used to sponsor terrorism (which in the present context, largely means backing Hezbollah against Al Qaeda in Syria, but I digress). In the same way, many of those critics call the $400 million a ransom payment. In both cases, the implication is that Iran is gaining resources it had no legitimate claim to beforehand; and in both cases, it is wrong. The US (and its partners, presumably) has impounded vast amounts of Iranian assets since the Iranian Revolution, and the deal was simply designed to restore Iran’s access to those resources.

To see why it is appropriate for Iran to get this money back, a quick thought experiment is in order. Imagine, as happened to me recently, that your car gets towed for (allegedly) being parked illegally. When you go to the towing lot and get the car back, you don’t thank the towing company for giving you a car. It was always your car, and it still is; they just took it for a while. To believe otherwise is patently absurd. And yet, it is exactly what many of the critics of the Iran Deal are essentially arguing – that impounding someone’s (or some country’s) assets nullifies their property rights to those assets.

Note that it doesn’t ultimately matter whether you actually parked illegally or just happen to live among vengeful neighbors with too much free time on their hands. If you did something illegal, you may be required to pay fines, but your underlying ownership of the car does not evaporate. So too, it doesn’t matter whether you think Iran has been a perfect member of the international community since 1979; any transgressions or treaty violations they may have committed could open them up for penalties, trade wars, etc., not wholesale confiscation of their assets in foreign countries.

Back to the story of alleged ransom payments, we now see how mundane and uncontroversial it ought to be. The US returned money to Iran that it wrongly confiscated after 1979; and Iran released prisoners that were wrongly imprisoned. On the surface, this appears to be perfectly desirable on both counts; indeed it may be that rare instance of actual diplomacy being used by the US government in the 21st century.

In modern political discourse, that constitutes a lurid scandal of the highest order. Launching wars without Congressional approval, torture, and a global assassination program can all be tolerated, but diplomacy is beyond the pale.

Eric Schuler is the author of The Daily Face Palm blog, which focuses mostly on foreign policy and bad economics.