One of the unexpected results of President Barack Obama’s new opening to Iran is that U.S. taxpayers are now funding both sides of the Middle East’s arms race. The U.S. is deliberately subsidizing defense spending for allies like Egypt and Israel. Now the U.S. is inadvertently paying for some of Iran’s military expenditures as well.
It all starts with $1.7 billion the U.S. Treasury wired to Iran’s Central Bank in January….
For months it was unclear what Iran’s government would do with this money. But last month the mystery was solved when Iran’s Guardian Council approved the government’s 2017 budget that instructed Iran’s Central Bank to transfer the $1.7 billion to the military.
Saeed Ghasseminejad, an associate fellow at the Foundation for Defense of Democracies, spotted the budget item. He told me the development was widely reported in Iran by numerous sources including the state-funded news services.
It is important to note that this is above and beyond the $100 billion (or whatever the number turns out to be) that Iran has received or will receive in unfrozen assets. These are US taxpayer dollars:
Republicans and some Democrats who opposed Obama’s nuclear deal have argued that the end of some sanctions would help to fund Iran’s military. But at least that was Iran’s money already (albeit frozen in overseas bank accounts). The $1.7 billion that Treasury transferred to Iran in January is different.
A portion of it, $400 million, came from a trust fund comprising money paid by the government of Shah Mohammad Reza Pahlavi, a U.S. ally, for arms sold to Iran before the 1979 revolution. Those sales were cut off in 1979 after revolutionaries took over the U.S. Embassy in Tehran and held the American staff hostage for 444 days. The remaining $1.3 billion represents interest on the $400 million principle over more than 36 years. *** According to a letter from the State Department to Representative Mike Pompeo, a Republican who has called for an investigation into the January payment, that money came out of something known as the Judgment Fund, which is “a source of funding to pay judgments and claims against the United States when there is no other source of funding.”
The rationale for payment of this $1.7 billion to Iran is unclear, but the timing suggests that it was paid in exchange for release of American prisoners:
In January, many observers, including Pompeo, said the transfer was more like a ransom payment because it coincided with the release of five Americans detained in Iran. The Iranian commander of the Basiji militia, Mohammad Reza Naghdi, said at the time: “Taking this much money back was in return for the release of the American spies.” The White House disputed this claim and said the payment was independent of the negotiation to release the American prisoners.
As usual, Iran’s government is more credible than our own.
One more thing I hadn’t realized: in the wake of the nuclear deal with the Obama administration, Iran has nearly doubled its military budget.
Iran’s 2017 $19 billion defense budget has increased by 90 percent from 2016, according to Ghasseminejad.
We now know where $1.7 billion of that came from.
The mullahs don’t think their number one security issue is global warming, so we can assume that our $1.7 billion, along with the unfrozen assets, will be spent effectively to undermine the interests of the U.S. and its allies.