US weighing use of frozen Iranian assets to fund Gulf ally reconstruction

Iran: 'Neither war spoils nor a compensation fund'

$24 billion in frozen assets emerges as central sticking point in ceasefire talks

Tehran says Gulf states owe Iran reparations, not the other way around

Iranian Deputy Foreign Minister Kazem Gharibabadi (left) shakes hands with Russian President Vladimir Putin at the Boris Yeltsin Presidential Library in St. Petersburg, Russia, in April. [AP]
Iranian Deputy Foreign Minister Kazem Gharibabadi (left) shakes hands with Russian President Vladimir Putin at the Boris Yeltsin Presidential Library in St. Petersburg, Russia, in April. [AP]

By Seo Ji-yeon, The Herald Business

Iran pushed back sharply Sunday after reports emerged that the United States is considering using frozen Iranian assets to fund war damage reconstruction for its Gulf allies — an issue that has become the central flashpoint in ceasefire negotiations between the two countries.

Iranian Deputy Foreign Minister Kazem Gharibabadi said on X that "Iranian assets are neither Washington's war spoils nor a compensation fund for its allies," according to Reuters.

Responding to reports that Washington was exploring using the assets to cover war damage sustained by Gulf states, Gharibabadi said those countries "are not in a position to demand reparations."

Reuters had earlier reported that the US government was examining ways to use frozen Iranian assets to support the reconstruction and recovery of Gulf allies that suffered damage from Iranian attacks.

Treasury Secretary Scott Bessent directed staff to calculate the scale of damage Iran inflicted on Gulf states, according to the report. Washington is also looking at using the assets not only for future damages but also for costs already incurred.

During the war, Iran launched missile and drone strikes targeting US military bases in Kuwait and Bahrain, as well as facilities linked to the United States and Israel across the Gulf region.

On Saturday, Iran fired ballistic missiles at US military bases in Kuwait and Bahrain. The US said it intercepted six of the missiles, while one failed to reach its target. Kuwait said the attack caused some material damage but no casualties.

Gharibabadi warned that any seizure or transfer of Iranian assets without Tehran's consent would violate international law.

"Seizing, transferring and distributing Iranian assets without the consent of the Iranian government would be a new violation of international law," he said, adding that the US would bear responsibility for such actions "while claiming it wants negotiations."

He added that Iran "will take appropriate countermeasures" if such steps are carried out.

The dispute has surfaced amid ongoing negotiations between Washington and Tehran over a memorandum of understanding to end the war.

Iran is currently demanding the partial unfreezing of its assets held in the United States. As preconditions for any ceasefire agreement, Tehran is seeking the return of billions of dollars in frozen funds, the lifting of US and international sanctions, and recognition of its influence over the Strait of Hormuz.

Washington, however, is moving in the opposite direction by exploring ways to redirect those same assets toward war damage recovery, widening the gap between the two sides.

Gharibabadi went on the offensive, accusing some Gulf states of having facilitated US and Israeli military operations against Iran.

"Some regional countries provided their territory and facilities for attacks against Iran," he said. "Rather than seeking reparations, they should fully compensate Iran for the damage it has suffered."


sjy@heraldcorp.com