Tehran signals progress as US ‘agrees’ to release frozen funds

DUBAI/ISLAMABAD: An Iranian source has claimed that the United States has agreed to release Tehran’s frozen assets held in Qatar and other foreign banks, calling the move a sign of “seriousness” in ongoing efforts to reach a deal during talks in Islamabad.

Speaking on condition of anonymity due to the sensitivity of the matter, the senior Iranian source told Reuters that the unfreezing of assets is directly linked to ensuring safe passage through the Strait of Hormuz — a key issue expected to dominate the negotiations.

However, Washington has not made any official statement regarding the reported decision to unfreeze Iranian funds.

The development comes as senior US and Iranian officials are engaged in high-level talks in Islamabad aimed at easing tensions and addressing critical regional issues.

The release of Iran’s frozen assets abroad is a central demand from Tehran as high-level negotiations with the United States get under way in Islamabad.

Iran is likely to push Washington to unlock billions of dollars held in foreign banks, alongside broader calls for the removal of US sanctions.

Total value of Iran’s frozen assets

The total value of Iran’s frozen assets is estimated at over $100 billion, though exact figures remain unclear.

These funds are spread across multiple countries, including South Korea, Japan, China, India, Turkey, Germany, the UAE and Qatar, where Iranian oil revenues and foreign reserves have been held under varying restrictions.

Access to these funds is critical for Iran’s struggling economy. Years of sanctions have severely limited Tehran’s ability to use foreign currency reserves, weakening the rial and fuelling inflation.

Official figures earlier this year showed inflation exceeding 60 per cent, among the highest levels in decades.

The United States has long used sanctions to restrict Iran’s access to global financial systems. In some cases, Washington has allowed limited access to funds under strict conditions.

In 2023, around $6 billion in Iranian oil revenues frozen in South Korea were transferred to restricted accounts in Qatar under a sanctions waiver, though the funds could only be used for humanitarian purposes such as food and medicine.

Historically, similar arrangements have accompanied diplomatic breakthroughs. Under the 2015 Joint Comprehensive Plan of Action (JCPOA), Iran regained access to more than $100 billion in frozen assets in exchange for curbs on its nuclear programme.

However, ten US President Donald Trump withdrew from the deal in 2018, reimposing sweeping sanctions that effectively froze those assets again.

Issue of frozen funds

The issue of frozen funds dates back to 1979, when the United States first blocked Iranian assets following the Islamic Revolution and the hostage crisis at the US embassy in Tehran.

While some funds were later released under the 1981 Algiers Accords, decades of sanctions linked to Iran’s nuclear and missile programmes have significantly expanded the volume of restricted assets.

Ahead of the Islamabad talks, Iranian officials have signalled that access to these reserves remains a top priority.

Analysts say Tehran may also link the release of funds to broader issues, including sanctions relief and guarantees tied to regional security arrangements.

Recent reports suggest that Washington may be considering limited steps, including the potential unfreezing of assets held in Qatar and other jurisdictions, though no official confirmation has been made.

With negotiations set to address both economic and security concerns, the fate of Iran’s frozen assets is expected to play a decisive role in determining whether any agreement can be reached.