Frozen Iranian Funds: Where Are They? Why Are They Still Out of Reach?

## Introduction

## What Are Iran’s Frozen Funds? The term "frozen funds" refers not to a single account or bank balance, but to Iran’s foreign currency reserves—primarily oil export revenues accumulated over years—now restricted or blocked due to international sanctions and banking restrictions. According to the International Monetary Fund (IMF), Iran’s total foreign reserves were estimated at around $120 billion in 2018. However, this figure includes all external assets, not just those immediately available for use.

As explained by economist Frederic Schneider, frozen funds fall into several categories: - Officially held assets: under court orders or subject to international sanctions. - Trade proceeds: such as oil or gas export revenues that cannot be repatriated due to sanctions. - Legally contested funds: trapped in ongoing court cases or secondary sanctions proceedings.

## Where Are Iran’s Frozen Funds Located? Contrary to common perception, most of Iran’s frozen funds are not in the United States. Instead, they are held abroad—especially in China, which is Iran’s largest oil buyer. Estimates suggest China holds as much as $50 billion in Iranian assets. Iraq also holds a significant portion—between $10 billion and $15 billion—linked to Iranian gas and electricity exports. Qatar, meanwhile, holds approximately $6 billion in funds that were originally frozen in South Korea and transferred to Doha in 2023 as part of a prisoner exchange deal with the U.S., though Washington later restricted access to these funds.

Other assets are believed to be held in India, Japan, Luxembourg, and other jurisdictions. Within the U.S., only around $2 billion in Iranian funds are directly subject to American jurisdiction, but these are tied up in court judgments and compensation cases, making their release politically and legally sensitive.

## Why Does the U.S. Have Influence Over Funds Outside Its Borders? The answer lies in U.S. secondary sanctions, which target not only Iran but also third parties—banks, corporations, or financial institutions—that engage with it. Any entity facilitating the movement of Iranian funds risks U.S. penalties, including exclusion from the global financial system or heavy fines. This extraterritorial reach gives Washington significant leverage, even over funds located abroad.

Thus, financial institutions worldwide must weigh the risks of dealing with Iran against the benefits, often choosing to avoid involvement altogether—effectively freezing Iranian assets indirectly.

## What Could Iran Gain From Recent Agreements? Recent international agreements, including a memorandum of understanding, include commitments to issue exemptions for Iranian oil exports and to release some frozen assets. However, the actual transfer of funds to Iran remains uncertain and likely to be gradual.

Key obstacles include: - Legal barriers: such as ongoing court cases or judgments in U.S. courts. - Banking restrictions: fear of secondary sanctions deters global banks from processing transactions. - Political instability: shifting international policies toward Iran.

## What’s Next? Ongoing negotiations are expected regarding the release of frozen Iranian funds, as Iran seeks to improve its economic position post-sanctions. However, full access to these funds is unlikely in the near term due to entrenched legal, financial, and political complexities.

Partial releases may improve Iran’s economic ties with certain countries but will not resolve its broader economic challenges.