Iran could receive at least $300 billion for post-war reconstruction and economic development under the preliminary agreement with the United States. But behind the eye-catching promise lies a question:
who will provide the money?
Washington insists US taxpayers will not foot the bill. The funding mechanism will instead be worked out over the next 60 days, putting the focus on Iran’s wealthy Gulf neighbours and private investors as possible backers.
What Does The US-Iran MoU Promise?
The memorandum says Washington “undertakes with regional partners to develop a definitive mutually agreed plan with at least $300 billion for the reconstruction and economic development” of Iran.
“The mechanism for the implementation of this plan will be finalised as part of a final deal within 60 days. All required licenses, waivers, and permissions needed for the relevant financial transactions will be granted by the United States of America,” it adds.
US Vice President JD Vance has said Iran would receive the economic benefits only if it proves that it has complied with the terms agreed during that period.
Is The US Paying Iran $300 Billion?
Before the agreement was signed, US President Donald Trump dismissed reports that Washington would pay Iran $300 billion as “fake news”. Vice President JD Vance similarly stated in an interview with The New York Times that Iran will “never get a dime” from American taxpayers and that “not a cent of American money” would go to Tehran under the arrangement.
The US role, according to the MoU, is to work with regional partners to develop the reconstruction plan and grant the licences, waivers and permissions required for the financial transactions.
Jake Sullivan, who served as national security adviser under former President Joe Biden, told NPR that Iran was expecting the $300 billion to come from outside sources, with Washington committed to helping secure the investment.
He described that commitment as “something entirely new”.
“That is something that never happened in the Obama-era deal,” Sullivan said.
How Is The Fund Expected To Work?
Reuters, citing sources familiar with the negotiations, reported that the fund is being conceived as a privately financed investment vehicle rather than a conventional aid or reparations package.
According to the report, more than half of the proposed amount has already been pledged by private-sector participants from multiple regions.
Reuters also reported that the vehicle would contain no government money and would remain separate from discussions over sanctions relief and Iran’s frozen overseas assets.
Who Could Provide The Money?
The MoU refers to “regional partners” but does not name them.
Vance has suggested that Arab states and international investors interested in Iran’s economic development could support the initiative.
The regional countries being discussed are widely understood to include Iran’s wealthy Gulf neighbours. But none has publicly committed money to the fund so far, according to Al Jazeera.
That is a major complication because Gulf states were themselves targeted by Iranian drones and missiles during the war.
Saudi Foreign Minister Prince Faisal bin Farhan declined to discuss the details of the fund when asked about it. He said trust would have to be rebuilt before economic cooperation could be considered.
“We’re going to have to have a conversation on how we rebuild that trust, how we rebuild that relationship before any concept of economic cooperation, mutual investment or anything like that can rationally be addressed,” he said.
The UAE, which bore the brunt of Iran’s attacks during the war, had repeatedly demanded reparations from Tehran, although its language became less confrontational in the weeks before the agreement.
At the same time, the UAE was one of sanctions-hit Iran’s main trading partners before the war.
Why Would Gulf States Consider Investing?
The proposed fund is one of several economic incentives being offered to Iran as part of the negotiations.
Anna Jacobs, a non-resident fellow at the Arab Gulf States Institute, said the purpose of including the fund in the MoU appeared to be to show Tehran what it could gain by complying with the agreement.
“I think the idea of mentioning this fund in the MOU is to show Iran all the carrots that are available if they abide by the MOU and show goodwill in negotiations moving forward,” she told AFP.
Jacobs said Iran badly needed reconstruction funding and that the possibility of greater long-term investment could help support further de-escalation.
“But the question is whether trust can be restored to allow for that,” she added.
Any Gulf role would also be shaped by concerns over how the money is used. AFP reported that regional investors would want guarantees that funds were not diverted towards rearming Iran or supporting its proxies.
Why Has The Proposal Triggered Opposition In Washington?
The scale of the proposed fund has drawn criticism from both Democrats and Republicans.
Some Democratic lawmakers have argued that resources of that size could instead be directed towards US priorities such as housing, healthcare and education.
Republican critics have focused on the possibility that Iran could receive a much larger economic benefit than it did under the 2015 nuclear agreement.
Republican Senator Lindsey Graham argued that Western countries should not help finance Iran’s reconstruction while its current government remained in power. He compared such support to giving post-war Germany a Marshall Plan “with the Nazis still in charge” — a reference to the US programme that funded Europe’s recovery after the Second World War.
Are Sanctions Relief And Frozen Assets Part Of The $300 Billion Fund?
According to Reuters, the proposed $300 billion investment vehicle would remain separate from both sanctions relief and frozen assets.
The MoU provides for the end of “all types of sanctions” once a final agreement is signed. It also says Washington would immediately issue waivers allowing Iran to sell oil. The agreement further pledges to make Iran’s frozen overseas assets “fully available”.
Vance has said mediator Qatar and Trump’s son-in-law Jared Kushner developed “a very interesting solution” for releasing Iran’s frozen money, with the United States and Qatar having approval over the process.
He said the assets would not be used to “finance terrorism”.
According to Vance, any money released under that arrangement could instead be used by Iran to purchase American agricultural products such as soybeans, corn and wheat.
How Is This Different From The 2015 Iran Nuclear Deal?
Under the 2015 Joint Comprehensive Plan of Action, or JCPOA, the United States did not provide Iran with American money.
Instead, sanctions were lifted after Iran complied with nuclear restrictions, allowing Tehran to regain access to its own frozen overseas assets and resume oil exports.
The new preliminary agreement goes further economically by committing Washington to help develop a reconstruction and investment plan worth at least $300 billion.
Jake Sullivan has also argued that the two-page MoU lacks several of the nuclear safeguards contained in the 159-page JCPOA.
Under the 2015 agreement, Iran shipped 97 per cent of its enriched uranium stockpile abroad and international inspectors received extensive access to nuclear facilities.
Sullivan said the new memorandum does not require Iran to reduce or cap its nuclear activities, allows it to retain its enriched uranium stockpile inside the country and leaves inspection and verification arrangements to later negotiations.
