Iran is entering negotiations with the Trump administration with an eye on tens of billions of dollars locked abroad that could help revive its crisis-hit economy, The Wall Street Journal reported, citing Iranian and other Middle East officials.
Tehran says its total assets frozen overseas are at least $100 billion. Other estimates are lower, the Journal reported. The Iranian government’s priority is to unblock an initial $24 billion in phases, according to the newspaper.
Some of the assets have been frozen for decades, dating to the 1979 revolution, but the bulk consists of more recent payments for Iranian oil sales. When Trump withdrew from the Obama-era nuclear deal in 2018 and reinstated sanctions, money owed to Iran for crude oil purchases got stuck in the banking systems of countries including China, India, South Korea and Japan.
China, the largest buyer of Iranian oil, holds an estimated $20 billion to $50 billion of the frozen funds, the Journal reported, citing Iranian and other officials. Even after the war started, China continued to secretly buy Iranian oil, and Iran has been able to tap some of those funds to purchase Chinese machinery and auto spare parts, according to previous Journal reporting.
Iraq, a major buyer of Iranian electricity and natural gas, has been prevented by U.S. restrictions from paying for those services. The Trump administration last stopped allowing Iraq to pay Iran for power supplies, the Journal reported.
India was Iran’s second-largest oil buyer before the 2018 sanctions, but Indian banks were forced to withhold payments. South Korea held about $7 billion in payments, much of which was later transferred to Qatar as part of a prisoner exchange with the U.S. However, Washington has not allowed Qatar to release those funds, which were meant for humanitarian purposes, and current negotiations heavily focus on granting Iran access to them.
Iranian assets are also held in Japan, Luxembourg, Oman, and even in the United States, the Journal reported, though figures for those countries were not specified in the report.
The U.S. is able to stop countries from paying Iran for oil because almost all global oil deals are transacted in dollars, giving the Treasury Department the ability to block financial institutions from the dollar system if they violate sanctions, a tool used increasingly in the past two decades.
Releasing some of the frozen cash would allow Iran’s leaders to increase the value of the country’s currency and lower inflation, Esfandyar Batmanghelidj, chief executive of the Bourse & Bazaar Foundation, a think tank focused on economics, told the Journal. But “Iran will still have a very strong incentive to pursue broader sanctions relief,” he said.