H.R. 5961 Memo

H.R. 5961, or the ‘‘No Funds for Iranian Terrorism Act,” is a reckless piece of legislation that would force the U.S. to renege on the recent prisoner swap with Iran and bar Iranian funds held abroad from being used to purchase food and medicine. 

NIAC Action strongly opposes H.R. 5961 and urges Members of Congress to vote against it as it is expected to receive a vote on the House floor next week.

The legislation would force the President to sanction any foreign financial institution that “participates in, or facilitates a transaction using or involving” funds that were “transferred from accounts in the Republic of Korea to Qatar” under the September prisoner swap deal.

Amid the September deal that freed five Iranian-American hostages, including individuals who had been held in Evin Prison for many years, the United States issued a waiver to allow the transfer of Iranian assets held in South Korea – which accumulated under a waiver from the Trump administration – to banks in Qatar. 

As the Biden administration has indicated, these funds are under the stewardship of Qatar and under close observation by the U.S. Treasury Department and can only be spent on humanitarian goods, or food and medicine, with the approval of the Treasury Department. There appears to be an informal hold on the funds following the October 7th Hamas attack on Israel, which U.S. intelligence and other sources indicate was launched by Hamas alone without the foreknowledge of Iran or other actors.

If passed, this legislation would result in: 

1. An unprecedented cancellation of humanitarian exemptions that are supposed to prevent food and medicine from being subject to sanctions;
2. Biden reneging on his own deal, self-sabotaging any future negotiations with Iran;
3. Reduced credibility and leverage to get hostages free, including in Gaza. 

Qatar played a direct intermediary role in the September prisoner swap deal with Iran and has an ongoing role to play in holding Iranian funds and ensuring that they are only spent on humanitarian goods, with the advice of the U.S. Treasury Department. Critically, Qatar is arguably the key player in ongoing negotiations to free hostages held by Hamas, having already brokered an agreement to free two Americans from their imprisonment and pursuing broader humanitarian releases. Iran, as well, has influenced the release of American hostages in the past and could theoretically play either a productive or spoiler role in negotiations. Threatening to sanction Qatar amid its ongoing support of U.S. diplomacy to free Americans and Israelis alike would simply make no sense.

H.R. 5961 would force the Biden administration to fully renege on the prisoner swap deal. This would be deeply unwise and risk significant blowback to U.S. interests: 

• Humanitarian exemptions must be kept sacrosanct, or ordinary civilians in Iran who do not choose their government will suffer even further under crushing economic sanctions;
• The U.S. must not erode its diplomatic credibility amid critical regional negotiations aimed in part at deterring Iran and regional militias from escalating the crisis in Israel;
• The U.S. must ensure that if it agrees to a deal to free prisoners it will uphold its end of the bargain, not renege once its people are safe. This is critically important both in the short, medium and long-term for the safety of U.S. citizens and those of our partners and allies.

The Ranking Member of the House Foreign Affairs Committee, Rep. Gregory Meeks (D-NY), and his Democratic colleagues warned against the bill and sought sensible changes during the committee mark-up which were rejected by the Republican majority. 

“[I]f we blow up this agreement by passing this bill, we, the United States, will be the ones breaking yet another sensitive, negotiated agreement with Iran. Our word and integrity will no longer be good in negotiations. This prisoner agreement has eliminated a long-standing obstacle for improving U.S.-Iranian relations for the purpose of preventing Iran from ever obtaining a nuclear weapon. And I’m not suggesting we try to befriend Iran, quite the opposite…None of the bad options we possess to stop Iran’s nuclear ambitions are better than the diplomatic track which has already proven successful. Remember it was the United States who violated the JCPOA, not Iran. Pulling out of this hostage agreement will be the second time we violated an agreement with Iran’s leaders. Passage of this bill would mean potentially slamming this door closed on future diplomacy, leaving us with only dangerous and highly risky options of confronting Iran’s nuclear program. The prisoner swap confirms to the Iranian regime and others watching that the United States is a reliable negotiating partner. This is a crucial basis for the reopening of formal nuclear negotiations in the future. We must keep this possibility alive.”

Rep. Jason Crow (D-CO) also sought to advance an amendment to exempt humanitarian transactions involving the fund given the long-standing U.S. interest in supporting humanitarian trade. Regrettably, it was not adopted, though he did make a convincing national security argument for defending humanitarian exemptions under Iran sanctions, which would be gutted by H.R. 5961:

“The United States has a very long history of providing humanitarian aid to oppressed peoples and oppressed populations, even in instances where there are malign and oppressive regimes to which we are very adverse…we provide humanitarian aid for people in oppressive areas because helping them meet their basic needs, making sure that they have medicine, that they are healthy, that they have food, actually helps them resist. Oppressive regimes deprive their people of basic needs because it is a mechanism of control. And when we help meet those needs, we are actually undermining the tools of control of those regimes. That’s why it’s in our national security and foreign policy interest to do this. And I would be very concerned about any bill or any sanctions program or change to a sanctions program that takes away a very powerful tool to help oppressed people resist oppression in a manner that’s consistent with the interests of the United States.”

Again, we urge Representatives to reject H.R. 5961 if it is brought up for consideration.