Fierce Debate Rages In Iran After Frozen Funds Are Unblocked

The stark warning shows tensions remain high in and around the Strait of Hormuz, where Iran seized tankers in late April and early May, while Washington and Tehran are implementing a deal to free five US citizens held hostage in Iran and the US allowing $6 billion in Iranian funds held in South Korea to be unfrozen. The US Navy has warned in recent weeks that the Islamic Republic staged more than 15 attacks and seizures of vessels in the past two years.

"The International Maritime Security Construct is notifying regional mariners of appropriate precautions to minimize the risk of seizure based on current regional tensions, which we seek to de-escalate," Commander Timothy Hawkins, spokesman for the Bahrain-based US Fifth Fleet, said late on Saturday.

"Vessels are being advised to transit as far away from Iranian territorial waters as possible."

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The warning also shows that Washington has little trust in Tehran’s intentions, even though they have secretly negotiated the latest deal. Some sources say that the agreement goes beyond freeing the hostages, and the United States will agree to the release of all Iranian funds frozen abroad, including in Iraq ($11 billion) and Japan ($3billion) in exchange for Tehran agreeing not to enrich uranium beyond 60-percent purity. Tehran is said to have already accumulated enough enriched uranium for producing at least two nuclear bombs.

The Biden administration has been beefing up US forces in the Persian Gulf region for weeks, deploying F-16 and F-35 warplanes, additional naval vessels, and Marines, as it has been working on the deal with Iran. The US on August 1 offered to provide armed troops to commercial vessels transiting the Strait of Hormuz, a narrow waterway where it is difficult to stay far away from Iran’s territorial waters.

Iran has also been putting up a show of force in recent weeks. The Islamic Revolutionary Guard (IRGC) held drills around three Iranian islands in the Persian Gulf contested by the United Arab Emirates, and claimed that it has added a 600-kilometer-range new missile to its arsenal “for defending the islands’ territory.”

Hossein Salami the commander of the IRGC delivered another speech on August 5, praising what he called unprecedented advances the Islamic Republic has made in naval power. In typical veiled language Salami said that “the enemy’s presence instead of posing a threat became an opportunity…and we expanded our defense and military” capabilities.

About a fifth of the world's crude oil and oil products pass through the Strait of Hormuz, a choke point between Iran and Oman at the mouth of the Persian Gulf.

If reports about a larger unwritten deal between Tehran and Washington, including issues other than hostages are true, it will come at an opportune moment for political leaders in both countries.

Some believe that President Joe Biden wants to reduce the likelihood of incidents and tensions with Tehran, especially a nuclear breakout before his re-election bid next year. Iranian hardliners who control the government, face serious economic and political challenges at home. Renewed mass protests and deteriorating economic conditions have left them with little choice but to negotiate for terms that would offer them some financial relief.

Mohammad-Reza Farzin's post on social media appeared to confirm comments a day earlier by Washington, which said there would be restrictions on what Iran could do with any funds unfrozen under an emerging deal that has led to the release of five Americans from prison to house arrest in Tehran.

White House spokesperson John Kirby said Iran could only access the funds for basic necessities of humanitarian nature. An estimated $6 billion in Iranian assets have been held in South Korea.

"Essentially, the funds can only be accessed for food, medicine, medical equipment that would not have a dual military use," he said. "And there will be a rigorous process of due diligence and standards applied with input from the US Treasury Department."

However, It is not clear how the US will control the disbursements of the funds, which will be kept in six Iranian bank accounts in Qatar in euros, as any transfer of funds will be outside US control of dollar-denominated transactions.

Earlier, Iran's foreign ministry and government media insisted that the unfrozen funds would be under Tehran's direct and unrestricted control.

The five Americans will be allowed to leave Iran once the funds are unfrozen, a source familiar with the matter told Reuters.

"Congratulations to the foreign exchange diplomacy team for successfully releasing seized foreign currency resources," he said in the post on X.

He added that the costs of converting the funds from South Korea's won currency to euros would be accepted by the "third country" where the money would be deposited to buy "non-sanctioned goods".

However, most Iranian social media users were explicit in stating that the Iranian American dual nationals are hostages, not individuals who were wrongly imprisoned, a euphemism that even some US sources and figures tend to use.

President Ebrahim Raisi’s Deputy Chief of Staff for Political Affairs, Mohammad Jamshidi wrote in a tweet on Thursday night: “After releasing Iran’s Frozen assets in Iraq, the release of all of Iran’s funds in South Korea has started. The prisoners the United States is interested in will remain in Iran until the money is fully transferred to Iran.”

Meanwhile in a tweet in English, Jamshidi wrote: “Hopefully, Iranians held hostage by the US will be freed. US prisoners in Iran will leave simultaneously with the irreversible release of our illegally held citizens and the full transfer of illegally held assets in South Korea, similar to the recently freed assets in Iraq.”

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An Iranian commented on social media, “There is no money. This is a credit held by banks in Qatar for purchasing food and medicine,” and that "Well-connected individuals are getting ready to embezzle the money."

A former reformist lawmaker reacted to the news by tweeting "Can one ever be humiliated more than this? According to Iran’s laws, those prisoners are Iranian citizens, and their release has nothing to do with the United States. By the way, If they were spies, why they are being released, and if they were not spies, why they have been arrested?”

Conservative journalist Vahid Hajipour quoted Fars News Agency in a tweet as having reported that Iran’s frozen money in South Korea will go to Qatar and will be used to import goods that are not subject to US sanctions. Hajipour added: "This is exactly the same mechanism that was used for Iran’s frozen money in Iraq. What does this mean? It means that it is the United States that makes the decision about which goods can be bought by Iran’s money.” Using the Islamic Republic officials’ jargon about the deals between Iran and the United States, Hajipour added: “Welcome to watch Iran’s dignified diplomacy.”

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Meanwhile, a member of the Iranian nuclear negotiator team, Mohammad Marandi wrote on Twitter: "This is a dishonest claim manufactured by bitter people. Iran will have full and direct access to its released assets, there will be no Qatari companies involved, Iranian banks will have full control, and they can purchase goods and services without any limitation or restriction." Marandi was responding to US an Iran-watcher who had quoted Ali Vaez of the Iran Crisis Group as having said: " All Iran can do...is submit orders to a bank in Doha for food and medicine and a limited number of medical equipment...The bank in Doha would pay for the goods, and Qatari companies would deliver them to Iran. Iran has no direct access to the funds at all.'

In an optimistic analysis published by Etemad Online website political analyst Abdolreza Faraji Rad opined that the development is part of a wider unwritten agreement between Iran and the United States which is supposed to also cover other issues. Although Faraji wrote the piece in a way as if a nuclear deal is going to be within reach, the media in Europe and United States reported that any wider agreement is meant to also restrict Iran's regional military ambitions and prevent its proxy groups from attacking US bases in the region. 

Meanwhile, Nour News, a media outlet close to Iran's Supreme Council of National Security also wrote that although negotiations between Tehran and Washington took a long time to lead to an agreement, "Now the situation is changing."

On July 20, the EU Council adopted a decision introducing a fresh sanctions framework aimed at Iran's involvement in supporting Russia's military. This framework includes a ban on exporting components for Unmanned Aerial Vehicles (UAVs) from the EU to Iran, as well as provisions for potential travel bans and asset freezes targeting individuals connected to Iran's UAV program.

The candidate countries - North Macedonia, Montenegro, Albania, Ukraine, Republic of Moldova, and Bosnia and Herzegovina - along with EFTA members Iceland and Liechtenstein, have aligned themselves with this Council decision. This alignment signifies their commitment to adapting their national policies to reflect the provisions outlined in the decision.

The European Union commended these countries for their commitment and welcomes their alignment with the sanctions.

This alignment comes in the wake of a contentious international debate sparked by the delivery of Iranian-manufactured drones to Russia. This issue gained significant attention following Russia's invasion of Ukraine. While Iran initially refuted allegations of supplying Shahed suicide drones to Russia, Foreign Minister Hossein Amir-Abdollahian later admitted to the transfers in November 2022. He asserted that the deliveries occurred before the Ukrainian conflict commenced, and on a limited scale.

However, Ukrainian authorities strongly contested Iran's account, presenting substantial physical evidence suggesting ongoing and substantial drone deliveries from Iran.

In response to these allegations, the European Union, along with the United Kingdom, the United States, and Canada, implemented punitive measures against Iran.

Farhikhtegan newspaper, affiliated with Ali Akbar Velayati, a close advisor to Supreme Leader Ali Khamenei, said in an article published Saturday that a parliamentary committee in charge of the bill has eliminated the only possible benefit of the bill aimed at reducing police confrontations with people. 

The main idea of the bill was to introduce a new way for hijab enforcement in the streets that would not lead to violent confrontation between police and people, reminiscent of the death of Mahsa Amini that ignited nationwide protests last September, shaking the foundations of the clerical regime. It put the emphasis on non-policing measures, rather than hijab patrols who confront the people on the streets.

The bill, which was sent to the Islamic Consultative Assembly by the administration of President Ebrahim Raisi, initially was comprised of only 15 articles. Now undergoing its final deliberations, it has become more unwieldy with 70 articles while the parliament has decided to discuss it without an open session in fear of further backlash.

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According to lawmaker Ahmad Naderi, a member of the parliament's presidium, a joint committee will make “the decision on the bill's passage into law discreetly and without being presented in the open session of the parliament.”

“The bill, fraught with suspicions and flaws both from a legal and societal perspective, has become a topic of national discussion,” said Farhikhtegan daily. “Now even more alarming news is being heard,” added the paper, explaining that lawmaker Amirhossein Bankipour has made the hijab patrols by police as the only viable option to crush the civil disobedience movement that is translated into society as women unveiling in public. “This means going back to square one,” said the article. 

The uprising last September has made it increasingly difficult for the clerical regime to enforce the mandatory Islamic dress code. Since the beginning of the ‘Women, Life, Freedom’ movement, tens of thousands of girls and women have shed their compulsory hijab. The regime seeks to criminalize hijab defiance, but no branch of the government wants to be solely responsible for complications and the risk of social backlash.

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According to Farhikhtegan newspaper, the bill has evolved to the point where instead of rectifying the existing issues, its new addendums will further exacerbate the situation.

In recent weeks, the regime has intensified measures to intimidate people against defying hijab such as shutting down restaurants, cafes, small businesses and even online shops. The regime has also summoned students and has moved to make university lectures online in fear of renewed protests. However, the common belief is still the same: Regime cannot retain control of women’s dress code on streets. 

Veteran hardliner lawmaker Hossein-Ali Haji-Deligani said that to keep its head above water, the regime must act promptly. “Every day, the situation worsens, thus requiring preventive actions; otherwise, we risk entering irrecoverable circumstances. Due to inaction, defiance against hijab has deteriorated further, and if we don't stop its progress, it will sweep us away,” he said, justifying the haste and secrecy in finalizing the hijab bill. 

Responding to Haji-Deligani, political analyst Ali-Hossein Ghazizadeh said, “The regime is rushing to secretly approve the bill. This bill represents the last arrow in the quiver of the regime to confront the women who have come to make history. Mark my word! This bill does not work; the flood that has been unleashed will sweep you all away,” he said in a tweet. 

Reformist activist Saeed Shariati quipped on a television debate earlier in the week that it is not "religious minorities" but the "irreligious majority" who do not adhere to the regime's interpretation of Islamic laws.