Seizure of Iranian assets for war compensation, more pressure tactic than policy
By Delaram Ahmadi
Staff writer
Several media outlets reported on Saturday that the United States is examining a proposal to use Iranian assets held abroad to compensate Persian Gulf Arab states for war-related damages. If accurate, however, serious questions remain about how such a plan could be implemented. Iran Daily discussed the issue with Javad Heirannia, an international affairs expert. He argues that the proposal faces significant legal obstacles and is likely only part of Washington’s pressure campaign aimed at compelling Iran to accept US terms.
IRAN DAILY: How feasible is such a proposal, and what obstacles would Washington face in implementing it?
HEIRANNIA: Arab states and Western countries have already moved in this direction to some extent. Both a Human Rights Council resolution and a draft resolution introduced in the Security Council at Bahrain’s initiative raised the issue of compensation from Iran. However, whether such compensation can be legally linked to the US government is a different matter.
Moreover, these are Iranian funds frozen in foreign banks. They are not under the direct control of the US government, meaning Washington is not in a position to authorize such a transfer. Even if the funds were held in American banks, there would still be legal complications in handing them over to Arab states.
Roughly $24 billion is held in foreign banks and remains inaccessible to Iran because of SWIFT-related sanctions. There is also approximately $7 billion in oil-related revenues stemming from Iranian oil seized by the United States in international waters. Even there, allocating those funds for this purpose would raise legal concerns, because the destination and use of those funds must be clearly defined under legal procedures. Under its own legal framework, the US government cannot simply authorize the Treasury Department to spend those funds in Arab countries.
In addition, Iran has stated that some Arab countries were part of the network involved in aggression against Iran. From a legal standpoint, that argument could itself call into question the compensation claims raised in those resolutions. Iran could even pursue claims of its own and seek compensation.
What options and tools does Iran have to respond? Would Tehran rely primarily on legal and diplomatic channels, or could it also resort to geopolitical and security leverage?
Both options are available. Iran could make use of its geopolitical leverage in the Strait of Hormuz and use it as a pressure point on Arab states and the United States to discourage them from pursuing such a proposal.
At the same time, Tehran could pursue legal action through international organizations and institutions regarding compensation from countries that played a role in the aggression. If such a plan were formally advanced by the US, Iran could also challenge it before international legal bodies.
Furthermore, if the US administration were to adopt such a decision, I believe it would seriously disrupt the negotiation process and could even lead to its collapse.
To what extent would Persian Gulf Arab states welcome such a proposal?
Given the current environment, and the fact that these countries are seeking to prevent tensions from escalating, I think they are likely to pursue a cautious approach. At least for now, I do not believe they are particularly eager to press ahead with compensation claims, especially through this specific US-backed mechanism.
The Arab states are making considerable efforts to ensure that the ceasefire, which paved the way for negotiations, ultimately leads to an understanding and eventually a comprehensive agreement. Qatar, Kuwait and Bahrain are entirely dependent on the Strait of Hormuz. Even countries such as the UAE, which can export oil through Fujairah, and Saudi Arabia, which can use its East-West pipeline in Yanbu, remain within the reach of Iran and forces aligned with it in the region.
Any escalation could further delay the full reopening and normalization of traffic through the Strait of Hormuz. Iran has also stated that both Saudi Arabia’s East-West pipeline and the UAE’s Fujairah port fall within the broader strategic framework of Hormuz-related security considerations. Given these realities, I do not think Gulf Arab states are currently interested in taking steps that could fuel further tensions.
What impact could such a proposal have on negotiations between Tehran and Washington?
Such a proposal could fundamentally undermine the negotiations because it would shift them into an entirely different phase. One of the central issues in the talks is the release of Iran’s frozen assets, along with questions regarding the scale of the release, how the funds would be spent, and whether Iran would retain control over their management.
At present, three scenarios are under discussion. The first is a limited fund in which the money would be placed under US management and used exclusively for humanitarian goods.
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