U.S. Settlement of Iran Claims Tribunal Claim was Prudent but Possible Linkage to Release of Americans Is Regrettable

By John Bellinger
Monday, January 18, 2016, 11:53 AM

The State Department announced yesterday that the United States and Iran had agreed to settle one of the largest remaining claims outstanding at the Iran-US Claims Tribunal in the Hague and that in doing so, the United States had agreed to pay Iran roughly $1.7 billion, consisting of $400 million of Iranian money placed in a Trust Fund to buy U.S. military equipment in the 1970s, plus roughly $1.3 billion in partial payment of interest. We do not have all the details, but this strikes me as a prudent legal/financial settlement and consistent with an approach I have urged for many years, although the timing of yesterday’s announcement makes it appear that it was ransom paid for yesterday’s release of five Americans. It is also unfortunate that the Administration could not settle the remaining claims before the Iran-US Claims Tribunal, so that the 35-year-old vestige of the 1979 hostage crisis can be shut down.

I have previously argued in op-eds in both the Washington Post ("The Iran Talks We Should Stop") and the Wall Street Journal ("This Other Deal With Iran Is Obsolete") that the Tribunal, which began operations in 1981, has proved successful over the years but has outlived its original utility and should be terminated. Over the past three decades, the tribunal has issued more than 600 awards and settled more than 4,700 claims. The tribunal has awarded more than $2.5 billion to U.S. claimants and $1 billion to Iranian claimants. In its early years, the Tribunal focused on claims by Americans whose property was expropriated by Iran, but in recent years it has been hearing large claims by the Iranian government against the U.S. government for allegedly blocking exports of billions of dollars in military equipment ordered by the shah of Iran during the 1970s. There was a significant risk that the Tribunal might rule against the U.S. in these cases and order the U.S. Government to pay very large awards to Iran. I have argued that, as part of the Iran-US nuclear deal, “Iran and the U.S. should agree on an overall financial settlement for all remaining claims.”

Even if the financial settlement is prudent, the timing and possible linkage to Iran’s release of the five American nationals yesterday are unfortunate. Although it is good to see the Americans finally released, and Administration officials deserve credit for this diplomatic success, it would still be regrettable if Iran received monetary compensation in exchange for Americans detained and held illegally. If the two actions were not linked, the Administration should not have announced the Claims Tribunal settlement on the same day the Americans were released.

The State Department press release notes that “There are still outstanding Tribunal claims, mostly by Iran against the U.S. We will continue efforts to address these claims appropriately.” It is possible that the Obama Administration and the State Department also tried to settle these remaining claims (which include an Iranian claim against the U.S. for allegedly interfering in Iran’s internal affairs), but that Iran refused to agree. If so, this is also unfortunate, as it could take another decade to resolve these remaining cases at the Tribunal.