How Iran, US clinched rare detainee swap and funds release

© Reuters. FILE PHOTO: The Iranian and U.S. flags are seen printed on paper in this illustration taken January 27, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

By Parisa Hafezi

(Reuters) -Iran and the U.S. were to swap five detainees each on Monday after Qatar mediated a deal between the arch foes that also unfroze $6 billion of Tehran's funds.

HOW IS THE EXCHANGE HAPPENING?

Implementation of the deal was triggered when Qatar confirmed that the funds had been transferred to bank accounts in Doha, a source briefed on details of the matter told Reuters.

Under the deal, the five Americans with dual nationality are expected to leave Tehran for Qatar's capital Doha and then fly to the United States. In return, five Iranians held in the U.S. will be released.

The Iranian Foreign ministry spokesperson said on Monday two of the Iranians being released would return to Iran while two would stay in the U.S. at their request. One detainee would join his family in a third country.

The transfer of Iran's funds has drawn Republican criticism that President Joe Biden, a Democrat, is in effect paying ransom for U.S. citizens. The White House has defended the deal.

An important unanswered question is whether the deal may lead to future agreements in disputes that range from Iran's nuclear standoff with the U.S. to Tehran's influence across the Middle East, including Hezbollah, its heavily armed proxy in Lebanon on Israel's border.

HOW WAS THE DEAL NEGOTIATED?

The agreement was the culmination of months of diplomatic contacts, secret talks and legal manoeuvring, with Qatar at the heart of negotiations, sources and officials familiar with the discussions told Reuters.

Doha hosted at least eight rounds of clandestine indirect meetings between Tehran and Washington since March 2022.

The earlier rounds were devoted chiefly to Tehran's nuclear dispute with Washington, but over time the focus shifted to prisoners as the negotiators realised that nuclear talks would lead nowhere due to their complexity.

The first public glimpse of the deal came on Aug. 10 when Iran allowed four detained U.S. citizens to move into house arrest from Tehran's Evin prison. A fifth was already confined at home.

A month later, Washington waived sanctions to allow the transfer of Iran's funds to banks in Qatar, which will have a monitoring role to ensure Iran's clerical rulers spend the funds on non-sanctioned goods.

WHO ARE THE PRISONERS?

The detained Iranian Americans who will be allowed to leave Iran include businessmen Siamak Namazi, 51, and Emad Shargi, 59, as well as environmentalist Morad Tahbaz, 67, who also has British nationality. The fourth and fifth prisoners have not been identified.

The five Iranians to be released by the U.S. are Mehrdad Moin-Ansari, Kambiz Attar-Kashani, Reza Sarhangpour-Kafrani, Amin Hassanzadeh and Kaveh Afrasiabi, according to Iran's mission to the United Nations.

They were held in the U.S. mainly for "breaching the U.S. sanctions on Iran".

WHY WERE IRAN'S FUNDS FROZEN IN SOUTH KOREA?

In 2018, then U.S. President Donald Trump ditched Tehran's 2015 nuclear deal with six world powers. He also reimposed harsh U.S. sanctions designed to choke off Iran's oil exports as part of a "maximum pressure" campaign on the Islamic Republic.

Seoul, normally one of Iran’s largest oil customers, received a waiver in 2018 from the United States to continue purchases of Iranian oil for several months.

However, after Washington placed a total ban on Iran’s oil exports and sanctions on its banking sector in 2019, Iranian revenues of $7 billion were blocked in Seoul.

Tehran has lost nearly $1 billion of its initially deposited assets in Seoul due to the depreciation of the South Korean currency against the U.S. dollar, Iranian authorities have said.

WILL IRAN NORMALISE TIES WITH U.S.?

Hostility to the U.S. has always been a rallying point for Iran's clerical establishment, despite political isolation and sanctions-related economic hardship since Washington severed ties with Tehran shortly after the 1979 Islamic revolution.

Supreme Leader Ayatollah Ali Khamenei could tolerate a limited thaw with the "Great Satan" amid growing public anger over severe economic challenges, but normalisation of ties with Washington would mean crossing the Islamic revolution's red line, Iranian insiders have said.

The clerical leadership fears that normalised relations with Washington could weaken the legitimacy of the Islamic Republic and its influence in the region as well as harming the authority of Khamenei domestically, they said.