The Obama administration may have facilitated several cash payments to Iran even before its controversial $1.7 billion transfer to the country, potentially putting even more liquid money in the hands of nefarious actors backed by the Islamic Republic, according to testimony presented Thursday at a congressional hearing.
The assessment came hours after the administration reshaped its explanation for paying the $1.7 billion sum via planeloads of cash, secretly flown to Tehran last January and February. President Obama has previously said that the payment had to be made in cash because the United States does “not have a banking relationship with Iran,” but administration officials at the hearing supplemented that account, saying that the transfer occurred in cash because Iran demanded “immediate payment” due to “critical economic needs that they had.”
The administration’s evolving explanation has brought attention to the full range of financial transfers made to Iran stretching back to 2014. Testimony given at Thursday’s hearing suggested that, if cash was the only possible means of transfer, those past transactions may also have been performed in cash.
“If there was no mechanism through the formal financial system to send Iran the $1.7 billion in settlement money, the $11.9 billion in [Joint Plan of Action] sanctions relief funds from its oil escrow accounts, and the $20 billion from Iran’s total liquid, unencumbered assets following the implementation of the [Iran nuclear deal], Iran received as much as $33.6 billion in cash,” said Mark Dubowitz, executive director for the Washington-based Foundation for Defense of Democracies, in written testimony to the House Financial Services Committee.
Dubowitz called the $33.6-billion figure “the worst-case scenario,” adding that it also could have been denominated “in gold and other precious metals.”
Experts at the hearing noted the ease with which Iran could use $1.7 billion of untraceable, liquid funds toward illicit activities, including terror financing.
“Because the money was delivered in cash, the payment bolstered the strength of the Islamic Revolutionary Guard Corps and augmented its ability to finance and conduct terrorism,” said Michael Rubin, resident scholar at the American Enterprise Institute and former Pentagon official, during testimony. “Payment in cash is especially problematic, as it hampers the ability of the intelligence community and the Treasury Department to trace it.”
Earlier, officials testified that they could not be certain Iran would not use the $1.7 billion on illicit activities.
“I can’t speak to every dollar that’s going to go in or out of Iran,” said Christopher Backemeyer, deputy assistant secretary for Iranian affairs at the State Department.
State Department spokesman Mark Toner said the day prior that the administration did not know “categorically” what Iran spent the money on, but reiterated that the funds have, “without being able to say 100 percent that it’s the case,” “gone primarily to bolster the economy which has been in many senses, debilitated by years of sanctions.”
The administration sent $400 million in foreign currency to Tehran in January on an unmarked cargo plane, which officials say represent the initial payment for a decades-old arms deal with Iran gone awry. The remaining $1.3 billion, which officials say is accrued interest, was taken from a taxpayer-fueled fund run by the Treasury Department and sent in installments days later.
