Qatar, where funds paid by South Korea are held, seen as likely starting point for unfreezing; Iran pushes back, saying it will decide how assets are used

US Treasury Secretary Scott Bessent (right) appears on CNBC on Wednesday, saying the Treasury Department will oversee how frozen Iranian assets abroad are allocated and spent once they are released under a future agreement. [AP]
US Treasury Secretary Scott Bessent (right) appears on CNBC on Wednesday, saying the Treasury Department will oversee how frozen Iranian assets abroad are allocated and spent once they are released under a future agreement. [AP]

US Treasury Secretary Scott Bessent said Wednesday on CNBC that the Treasury Department will oversee Iran's frozen overseas funds once they are released under a future agreement.

Bessent said the unfreezing of Iran's frozen assets abroad would likely begin in Qatar. "Treasury officials in Doha will oversee how the funds are allocated," he said, signaling that the United States intends to put safeguards in place governing Iran's access to the released assets.

Starting with Iran's frozen assets in Qatar effectively means the roughly $6 billion (about 9.2 trillion won) held there — originally oil payment funds — would be unfrozen first. South Korea had been purchasing Iranian crude oil, but after the United States withdrew from the Iran nuclear deal, the Joint Comprehensive Plan of Action, in 2018 and reimposed sanctions, won-denominated accounts held in South Korean commercial banks in the name of Iran's central bank were frozen. In September 2023, the Joe Biden administration reached a prisoner-exchange agreement with Iran, and the funds frozen in South Korea were converted into euros and other currencies and transferred to an account in Doha, Qatar. When the Iran-backed militant group Hamas launched a surprise attack on Israel in October of that year, however, the account was frozen again amid concerns over Iranian involvement.

Iran has persistently pressed the South Korean government to return the funds. The widely shared view in diplomatic circles was that Iran's seizure of a South Korean-flagged vessel in the Strait of Hormuz in 2021 on marine pollution charges was a pressure tactic aimed at recovering the oil payment funds. Although the funds are no longer held in South Korean commercial banks, their continued detention in Qatar has left Iran frustrated. If the unfreezing process moves forward in Qatar, it would ease Iran's financial strain while also freeing South Korea from a complicated diplomatic entanglement.

President Donald Trump also posted on his Truth Social account that day, saying the released Iranian funds would go into a US-controlled escrow account — implying that Iran could be blocked from accessing the account if it uses the funds in a manner inconsistent with the agreement.

Bessent did not specify the total amount of frozen funds to be released under the two countries' agreement, which Qatari institution would control the account, or what legal authority the Treasury Department could invoke to prevent misuse of the funds. CNBC noted that "the specific mechanism remains opaque," amid criticism that the White House is offering Iran too much upfront without resolving key security issues.

Bessent also said Iran would use the unfrozen funds to purchase American agricultural products and medicine — a claim Trump had made earlier as well.

"The money Iran receives will come from frozen Iranian funds, and a very large proportion of it will be used to purchase American food and medicine," Bessent said, adding that the measure would "recycle" the money back into American products. He said the released funds would be used first and foremost "for the benefit of the Iranian people."

Iran's position contradicts this. Iranian officials have said there are no restrictions on how the unfrozen assets may be used and that there is no obligation to purchase American products. Iran has also maintained that it will decide for itself, based on its own interests, how to use the funds after they are released. Abdolnaser Hemmati, governor of the Central Bank of Iran, pushed back in comments to the domestic Tasnim News Agency, saying "any agricultural purchases will be based on price and quality, not conditions imposed by the United States."


kate01@heraldcorp.com