Prisoner exchange deal with Iran for $6 billion in spotlight after Hamas attack on Israel

An emergency personnel works to extinguish a fire after rockets were fired from the Gaza Strip, as seen from the city of Ashkelon, Israel on October 7, 2023. Photograph: Amir Cohen/Reuters. Obtaining licensing rights

WASHINGTON (Reuters) – A surprise attack on Israel by the Palestinian group Hamas on Saturday and the Israeli response killed more than 1,100 people and focused attention on the Iran-backed Islamist group.

US Secretary of State Anthony Blinken said on Sunday that Iran has not yet been able to spend a single dollar out of $6 billion in funds that were unfrozen in the prisoner exchange deal between the United States and Iran in September.

Blinken also said he “has not yet seen evidence that Iran directed or was behind this particular attack, but there is certainly a long relationship.”

What is the Iranian prisoner exchange deal?

In August, details of a complex agreement approved by President Joe Biden were announced. Five US citizens arrested by Tehran were allowed to leave the country in exchange for transferring $6 billion in Iranian funds that had been frozen in South Korea. Meanwhile, five Iranians detained in the United States were allowed to leave.

How much is $6 billion?

The six billion dollars were Iranian funds that were frozen in South Korean banks. After Washington, under former President Donald Trump, imposed a comprehensive embargo on Iranian oil exports and sanctions on its banking sector in 2019, these Iranian oil revenues were blocked in Seoul.

Where is the $6 billion now?

The funds were not distributed to Iran. The Qatari Central Bank oversees the funds that remain in Doha.

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“The facts are that there was no involvement of American taxpayer money,” Blinken told CNN’s “State of the Union” on Sunday. “These were Iranian resources that Iran had collected from selling its oil stuck in a bank in South Korea.”

US officials said that under the terms of the Iranian prisoner deal, the money could only be used for humanitarian purposes, including purchasing food or other goods outside Iran for import.

US Treasury Undersecretary for Terrorism and Finance, Brian Nelson, said, “All funds deposited in restricted accounts in Doha as part of arrangements to secure the release of five Americans in September remain in Doha. Not a penny has been spent.” “These restricted funds cannot go to Iran, they can only be used for future humanitarian purposes. Any suggestion to the contrary is false and misleading.”

A State Department spokesperson said that because of due diligence requirements related to the swap, “it will take several months for Iran to spend these funds.” “As we have said many times, it can only be used to purchase food, medicines, medical devices and agricultural products for the Iranian people.”

What do critics of the deal say?

Most Republicans vying to be the party’s 2024 presidential nominee have tried to link Biden’s deal with Iran to the attacks, with some claiming, incorrectly, that he or American taxpayers funded the attacks on Israel.

Nikki Haley, the former governor of South Carolina and a 2024 Republican presidential candidate, said allowing Iran to access those funds under any circumstances improves its budget situation, freeing up money that can be used elsewhere.

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She said: “Let’s be honest with the American people and understand that Hamas knows, and Iran knows that they are moving money as we speak, because they know that six billion dollars will be released. This is the reality.”

Reporting by Reuters offices. Edited by Heather Timmons, Idris Ali, and Lisa Shoemaker

Our standards: Thomson Reuters Trust Principles.

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