A Welcome Humanitarian Deal between the U.S. and Iran

The Biden administration has just completed implementing the deal with Iran that it announced last month. It is a humanitarian agreement that secures the freedom of five American hostages in Iran in return for the release of an equivalent number of Iranian prisoners in the United States. In parallel, the Biden administration has also agreed to unfreeze nearly $6 billion worth of Iranian oil revenue stuck for years in South Korean banks that Tehran can use to purchase food and medicine.

This agreement has much to recommend it. It ends the suffering of American hostages in Iran and could give a much-needed economic reprieve to the Iranian people. It also helps clear the atmosphere for direct engagement between Tehran and Washington about how to reduce frictions in the Middle East and explore options for ensuring that Iran’s nuclear program remains purely civilian.

But as with any diplomatic engagement involving America’s bitter adversaries, it was bound to spark as much backlash as relief, and that is exactly how things have played out.

Critics contend that this understanding amounts to a ransom payment to a regime that has brutally killed hundreds of Iranian protesters last year and is indirectly responsible for killing Ukrainians by providing drones to Russia. But as the Biden administration’s supporters have noted, this objection is not quite accurate. No cash will flow from the United States, and no money will go to Iran. Instead, frozen Iranian assets in South Korea have been transferred to Qatar, into carefully monitored accounts, via painstakingly constructed, airtight channels, that can be used only for humanitarian trade.

American posture on sanctions will thus remain unaltered: in fact, a good way to look at the deal is that the Biden administration is merely conforming its policy to existing U.S. sanctions laws that exempt humanitarian trade. Iran should have been able to use its restricted assets abroad to buy food and medicine all along. The reason it wasn’t is overcompliance by international banks, which fret over falling afoul of Washington’s complex sanctions regime. 

The banks’ skittishness, compounded by Iranian corruption and mismanagement, has disrupted supply chains in Iran and inflated prices of food and medicine, to the extent that according to Health Ministry officials, nearly 60 percent of Iranians suffer from malnutrition. Ironically, one of the American hostages, Mr. Namazi, wrote about these perverse effects of sanctions in the New York Times in 2013, two years before authorities in Tehran snatched him up for the supposed crime of holding an American passport in addition to his Iranian one.

Another criticism is that Iran will now have additional funds for repression at home and destabilization in the Middle East. The argument has some logic: money is, after all, fungible. But tragically there is no evidence that Iran would forego these activities one way or the other. It has faced no shortage of bullets or anti-riot gear during months of protests. And Iran’s support for its regional partners and for the manufacture of drones and missiles has been unremitting regardless of the amount of dollars in its coffers – indeed, it likely began funneling more cash in these directions under the biting financial restrictions of former President Donald Trump’s “maximum pressure” campaign. The Iranian regime, when having to choose between guns and butter, prizes the former. As such, the marginal benefit of continuing to freeze these assets at the cost of hurting ordinary Iranians seems non-existent. 

The real contradiction lies with the deal’s opponents, who profess to stand with the Iranian people but wish to constrain them in buying food and medicine. What’s more, even the Trump administration created a similar banking channel, known as the Swiss Humanitarian Trade Arrangement, to facilitate the flow of humanitarian goods to the Iranian people amid its harsh “maximum pressure” tactics. 

Some critics allege that such agreements could encourage Iran to take more hostages. But hostage situations invariably raise this knotty issue, and few if any American leaders would pass a purity test in how they deal with it. Numerous American presidents have struck hostage deals that proved controversial at home, weighing the cost of appearing to reward adversaries such as Iran and Russia for such unsavory practices against the imperative of freeing U.S. citizens from wrongful captivity. Other Western nations face similar challenges. Several European governments have also made contentious bargains with Iran in the past few months, which continues to hold other dual and foreign nationals. 

This agreement does not change the perverse incentives in U.S.-Iran relations: Tehran unjustly detains dual nationals as Iranians while swapping them as foreigners; while Washington contributes to the suffering of the Iranian people in seeking to punish their authoritarian leaders. But it does put an end to the anguish of many families caught between two implacable foes. It also removes an unfair burden on South Korea, which was involuntarily saddled with Iran’s restricted assets. The humanitarian rationale would be sufficient but there could be other benefits as well: the deal could help build confidence and lay the groundwork for a much-needed diplomatic settlement to defuse the nuclear standoff between Iran and the West. In the meantime, Americans can celebrate a homecoming for five people who should never have been detained, and have been away from their loved ones far too long.