"Smart diplomacy"—or dollar diplomacy? The US government quietly delivered the equivalent of $400 million in cash to Iran on Jan. 16 this year, the same day that Tehran released four detained American citizens, sources including US officials tell the Wall Street Journal. The cash, which was sent in currencies including Swiss francs because of a US ban on doing business with Iran in dollars, was part of a $1.7 billion agreement Washington reached with Tehran over an Iranian-US arms deal made just before the revolution that brought the Ayatollah Khomeini to power in 1979. President Obama didn't disclose the payment when discussing either the prisoner release or the arms deal settlement.
Administration officials say the timing of the payment was a complete coincidence—and since the failed 1979 arms deal was headed to an international court in the Hague, the settlement probably saved American taxpayers billions of dollars. "Not only were the two negotiations separate, they were conducted by different teams on each side, including, in the case of the Hague claims, by technical experts involved in these negotiations for many years," says State Department spokesman John Kirby. Some of the Journal's sources, however, say Iranian negotiators demanded the cash delivery as part of the prisoner exchange—and Iranian officials openly boasted about the US having bowed to pressure. (Another dual US-Iranian citizen is now believed to be in Iranian custody.)