Did Obama send $1.7 billion in cash to Iran as Trump claims?

After a month of war in Iran, US President Donald Trump addressed the nation, trying to explain his rationale for the conflict that has sent oil prices into a tizzy. In a 19-minute speech from the White House, Trump said Iran’s missiles and drone systems have been “dramatically curtailed, and their weapons factories and rocket launches are being blown to pieces.”

The US president also described the military action as a major success and called on Americans, who are uneasy about its costs, to keep things in perspective. He estimated that the war should wind down within three weeks.

Amid his prime-time address, Trump also took a jibe at former US President Barack Obama, saying, “He made a mistake with Iran.” The American leader further added that his predecessor had “given them $1.7 billion in cash… in an attempt to buy their respect and loyalty, but it didn’t work.”

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Is this claim made by Trump true? We examine.

What did Trump say about Obama paying cash to Iran?

In his prime-time address to the nation, Donald Trump said he wanted to “discuss why Operation Epic Fury is necessary for the safety of America and the security of the free world.”

He also took the opportunity to slam his predecessors, saying, “From the very first day I announced my campaign, I vowed that I would never allow Iran to have a nuclear weapon. This fanatical regime has been chanting ‘Death to America’ for 47 years — and it should have been handled long before I arrived in office.

“Essentially, I did what no other president was willing to do. They made mistakes, and I am correcting them.”

He then turned his attention to Barack Obama, stating that the former US leader “had made a mistake with Iran,” referring to the Iran nuclear deal — the Joint Comprehensive Plan of Action (JCPOA) signed during the Obama administration.

Trump added, “I terminated Barack Hussein Obama’s Iran nuclear deal, a disaster. Obama gave them $1.7 billion in cash… in an attempt to buy their respect and loyalty, but it didn’t work. They laughed at our president and went on with their mission to have a nuclear bomb.”

He further said, “His (Obama’s) Iran deal would have led to a colossal arsenal of massive nuclear weapons for Iran. They would have had them years ago, and they would have used them. It would have been a different world. There would have been no Middle East and no Israel right now, in my opinion, and the opinion of a lot of great experts.”

What was this settlement that Obama made?

While Trump’s claim isn’t factually incorrect, there’s a context to it. The $1.7 billion was part of a settlement linked to funds that originally belonged to Iran but had been frozen since the 1970s. In fact, this money became a cause of disagreement between Washington and Tehran.

Before the 1979 Islamic Revolution, the United States had signed hundreds of contracts with Iran, then an ally, to sell it military equipment. When the hostile Islamist regime took power, the military sales relationship collapsed, leaving hundreds of millions of dollars of outstanding claims between the two countries.

In 2016, the Obama administration resolved the matter by agreeing to return $1.7 billion to Iran. This included an initial $400 million, considered the principal amount, and an additional $1.3 billion as accumulated interest. Obama described the settlement as financially beneficial for the United States, noting Iran had sought more than $10 billion in arbitration at The Hague.

At the time, the Obama administration confirmed that the payment was made in cash using foreign currencies, including euros and Swiss francs. That’s because sanctions had effectively cut Iran off from the global banking system.

Obama had even said: “The reason that we had to give them cash is precisely that we’re so strict in maintaining sanctions and we do not have a banking relationship with Iran, that we couldn’t send them a cheque and we could not wire the money.”

Moreover, a fact-check by the Center for Arms Control and Non-Proliferation has revealed that the money paid to Iran wasn’t a direct payment from Washington to Tehran. Instead, the funds were Iranian foreign assets, which the international sanctions regime prevented Iran from accessing.

What else did Trump say in his Iran address?

Apart from slamming Obama, Trump in his address said that the US military was on track to complete its objectives “very shortly.” However, he stopped short of offering a firm timeline for an end to hostilities.

The US president was also unclear on whether US military operations could end before Iran reopened the Strait of Hormuz. He called on countries that rely on oil from West Asian nations to shoulder the burden of reopening the vital waterway, saying the US doesn’t need energy supplies from the region.

Trump also responded to the criticism that he had dragged the US into a prolonged conflict. He listed the lengths of World War I, World War II, Vietnam, and the Korean and Iraq wars to argue that his military campaign has been far shorter than past wars.

“It’s very important that we keep this conflict in perspective,” Trump said.

He maintained that the war was worth it to eliminate what he argued was the threat from Iran. “This is a true investment in your children and your grandchildren’s future,” he said.

Inputs from agencies