Obama's 'unprecedented' $400m cash payout to Iran

Obama's 'unprecedented' $400m cash payout to Iran
US state department historian unable to find a historical precedent for country's cash payment to Iran, which critics claim was 'ransom money'.
3 min read
28 Aug, 2016
The Obama administration has been reluctant to reveal details about a Iran cash transfer [Getty]
The US' controversial $400 million cash payment to Iran has come under further scrutiny after a government historians claimed the move was "unprecedented" in modern US history.

When asked if the US had made other similar payments, the state department historian's office could not provide a single example of cash being used to settle an international dispute.

As part of the deal, a plane landed in Iran with pallets filled with Euros, Swiss Francs and other foreign currency. 

Crucially, the transaction happened on the same day five US prisoners held in Iran were released.

It raised speculation that the money was a ransom payment for the Americans, something which the White House has been keen to deny.

Washington insisted that the prisoner release - which saw five Americans and seven Iranian captives freed - was not linked to the payment and the timing was coincidental, but later backtracked.

US officials said that it was returning cash from a 1970s Iranian military order that was not fulfilled because of the Islamic Revolution, but later said it was used as "leverage" for the prisoners but this was not something "unusual".

Digging for a precedent

According to AP, a precedent was found by Professor Alan Henrikson of Tufts University - who reached as far back as 1848 to the Treaty of Guadelupe Hidalgo that ended the Mexican-American War.

The settlement required the US to pay its southern neighbour a sum of around $482 million in today's value.

The transfer was fixed "in consideration of the extension acquired by the boundaries of the United States" - an ambiguous way of describing the US' compensation payment to Mexico for its massive loss of territory, including California.

In turn, the Americans were required to make an immediate payment of $3 million in the form of Mexico's gold or silver coin. The rest of the payment was carried out in installments.

"Ambiguity is often needed in diplomacy in order to achieve agreement," Henrikson told AP.

"What is important, in my view, is that both sides to a negotiation clearly understand, even if only tacitly, what is being agreed upon when ambiguity is used. This is not all that subtle, actually. It is life".

In the recent case of President Barack Obama's deal with Tehran, ambiguity has ruled, with officials still determined not to reveal how the US will pay Iran a bill of $1.3 billion in interest.

This is in addition to the US government's initial reluctance to acknowledge the payment,until reports by the Wall Street Journal emerged on the huge cash transfer.

While the US has made several payments to help settle disputes in recent decades, none have involved the airlifting of pallets of cash from one country to another.

Republicans had alleged that Iran would use a sanctions windfall worth hundreds of billions of dollars to fund terrorism.

Trump issued a statement on what he called the "terror money airlift," saying the money would "undoubtedly find its way into the hands of terrorists."