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The US-Iran prisoner swap, briefly explained

For Iran’s struggling economy, the deal is more about money.

Men wearing suits with hands clasped in their laps are seated in rows. President Ebrahim Raisi sits in the front row and wears a black turban on his head.
Iranian President Ebrahim Raisi visits the holy shrine of Hazrat Zeinab on May 3, 2023, in Damascus, Syria.
Borna News/Matin Ghasemi/Aksonline ATPImages/Getty Images
Ellen Ioanes covers breaking and general assignment news as the weekend reporter at Vox. She previously worked at Business Insider covering the military and global conflicts.

A deal for Iran to release seven Americans in exchange for access to $6 billion in assets and clemency for five Iranians held in the US has been successful, the Biden administration confirmed Monday morning.

The agreement was negotiated by the US and the Islamic Republic of Iran over a period of two years, according to the New York Times, and was facilitated by Oman, Qatar, and Switzerland. The prisoner exchange is a positive step — one of a few de-escalatory measures between the two nations in recent months — but it’s not a signal that US-Iran relations are fundamentally changing.

Five Americans held in Evin prison, as well as two family members, are on their way from Tehran to Doha, Qatar, where they will stay briefly before heading to DC to be reunited with their families. About $6 billion in Iranian assets has also been transferred to Qatar where the US and Iran will have oversight of that money.

The funds had been held in South Korean banks for years. And though there are humanitarian exemptions to the US’s sanctions regime, the potential consequences of violating those sanctions had a chilling effect, to the extent that the South Korean banks were afraid to comply with US sanctions policy and release the money.

Banking institutions in several European countries reportedly had those same concerns, according to the Associated Press; as part of the deal, the Biden administration issued a sanctions waiver earlier this month that was intended to ease those concerns and facilitate the transfer of funds through banks in Germany, Ireland, and Switzerland to Qatar, which will administer the funds to Iran.

Iran has been in an economic crisis for years, due in part to state corruption and incompetence — but also due to harsh US-led sanctions. The sanctions have had such a chilling effect that South Korean banks holding the Iranian assets in question have refused to release them, even to purchase necessities like food and medicine, despite humanitarian carveouts built into sanctions policy.

Three of the American prisoners, Siamak Namazi, Morad Tahbaz, and Emad Sharghi, have been held in detention on unsubstantiated charges of espionage and have served at least half of their sentence. Namazi’s mother and Tahbaz’s wife were also prevented from leaving Iran while their family members were in prison and are currently en route to Doha. Two other prisoners have not yet been identified in the press. Two of the Iranians held by the US will remain in the country, according to Iranian Foreign Ministry spokesperson Nasser Kanaani.

The US Treasury Department will also levy additional sanctions against Iran’s Ministry of Intelligence and former President Mahmoud Ahmadinejad, according to two senior US officials, though those sanctions have not yet been announced as of this writing.

“Of course this is not resolving anything, any of the major differences between Iran and the US. It is just kicking the can down the road,” Ali Vaez, Iran project director at the International Crisis Group, said in a Monday panel discussion.

The negotiations were complex and took more than two years

Details of the negotiations themselves are scarce, but as CNN reported last month, they are the culmination of more than two years of complex and sensitive talks — made even more challenging by the fact that the US and Iran have no diplomatic relationship.

Qatar, Oman, and Switzerland were instrumental in hammering out the final deal, acting as the mediators between the Islamic Republic and US officials during sensitive meetings in Doha, Qatar’s capital. Iranian officials had refused direct meetings with Washington, but Switzerland manages US affairs in Iran, and Oman has significant experience negotiating similar agreements, including one in May between Belgium and Iran.

“These two Gulf countries, Oman and Qatar, believe that the other is playing a useful role — there’s no competition between Oman and Qatar in terms of trying to establish one or the other as the main back channel or diplomatic bridge between Iran and the West,” Giorgio Cafiero, CEO of Gulf State Analytics, told Vox in an interview when the deal was announced. “They are working in tandem and they have many of the same interests in terms of easing tensions between Iran and its regional and international adversaries.”

Qatar in particular plays a critical role in relations between the US and Iran because its close relations with both countries make that a necessity; as Cafiero told Vox, Qatar depends on the US for its national security but is a partner with Iran in the world’s largest gas field, the South Pars/North Dome gas-condensate field in the Persian Gulf. Coordination on development in the field is critical for Qatar as one of the world’s largest producers and exporters of liquefied natural gas (LNG).

Ties with Iran were also critical during the Saudi blockade of Qatar from 2017 to 2021. “The Qataris had to rely on Iranian ports and Iranian airspace for much of their international trade during that crisis,” Cafiero said.

Participating in and trying to manage de-escalatory talks between the two nations is critical to Qatar’s national interest — which may be why the emirate has stepped up to play such a critical role in the negotiations. “Qatar does not want to see an armed conflict between Iran and the United States,” Cafiero said. “That scenario would be extremely dangerous for Doha from the standpoint of Qatar’s economic and security interests.”

In addition to being a mediator between the US and Iran, Qatar will also essentially manage the $6 billion in Iranian assets, with US oversight. That money, proceeds from oil sales to South Korea under sanctions waivers, was transferred by the US to a South Korean account under the Trump administration. Despite exemptions for purchasing humanitarian essentials, South Korean administrators had frozen the funds due to the chilling effect of US sanctions, Vaez told Vox in an August interview.

“Qatar has done the heavy lifting, putting the financial mechanism together” to help put the deal over the finish line, he said in an interview in August.

Ultimately the funds are the important part of the deal for Iran — not the Iranian nationals that the US will release. As Vaez told Vox, the Iranian health ministry estimates that 60 percent of citizens do not have enough to eat, and there is limited access to life-saving advanced medicine like cancer treatments.

The Iranian economy has been in free fall due to major nationwide protests against the police killing of Mahsa Amini, a young Kurdish woman, last September, for wearing her hijab improperly. Now, the exchange rate for the Iranian rial is approximately 500,000 to 1 US dollar, compared to 298,200 to the dollar a year ago, and inflation is at about 47.5 percent, the Statistical Centre of Iran reported last month.

Despite a de-escalatory success, things still aren’t great between the US and Iran

Although Iran has engaged in de-escalatory actions with adversaries like Saudi Arabia and the US, that does not mean that the regime has fundamentally changed, Vaez said. “The Biden administration is doing this deal with its eyes open,” Vaez said, calling the deal “transactional, not transformational.”

Relations between Iran and the US continue to be strained, as evidenced by the US threat to put Marines aboard US-flagged vessels in the Strait of Hormuz. As Vox’s Jonathan Guyer wrote in August:

The Biden administration says that the Iranian threat to tanker traffic is the reason for the deployment of sailors and Marines. Iran seized two oil tankers in a week this past spring. Iran also intercepted a Tanzanian-flagged tanker on July 6, a day after the US Navy intervened to dissuade Iran from nearly seizing two ships. Iran has said that it sees itself as responsible for the security of the Gulf, not least because of its long coastline, and claimed it has not illegally seized tankers.

The two adversaries are on an “imperfect track of de-escalation,” Ellie Geranmayeh, deputy director of the Middle East and North Africa program at the European Council on Foreign Relations, said in a panel discussion Monday morning. Though Iran has slowed its enrichment of uranium according to an International Atomic Energy Agency (IAEA) report, Iran on Friday also withdrew the designation of several IAEA inspectors who were monitoring the country’s nuclear program. That oversight was a key part of the former Joint Comprehensive Plan of Action, which then-President Donald Trump withdrew the US from.

In Iran, though Supreme Leader Ayatollah Ali Khamenei likely supports the deal, Vaez said, there are factions within leadership that see the arrangement as “a humiliating oil for food arrangement,” referencing a UN program from the 1990s intended to offset the devastating consequences of sanctions against Iraq.

Overall, the regime has framed the deal as a major victory in state media, and as an important step in President Ebrahim Raisi’s program to stabilize the currency.

Mohammad Reza Farzin, the head of Iran’s central bank, confirmed on state television that $5.9 billion had hit the Qatari accounts Monday. Though US officials have stressed that the money is to be used only for humanitarian purchases, the Islamic Republic’s Ministry of Foreign Affairs claimed last month that “the decision on how to use these unfrozen resources and financial assets lies with the Islamic Republic of Iran,” CBS reported. Seyed Mohammad Marandi, identified as a media advisor to the Iranian negotiating team, claimed that Iran has “full and direct access” to the funds, and that “no Qatari company” is managing the assets.

Update, September 18, 11:25 am ET: This story was originally published on August 12 and has been updated multiple times, most recently to include details about the completion of the deal.

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