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Iran, US on verge of prisoner swap under Qatar-mediated deal

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When $6 billion of unfrozen Iranian funds are wired to banks in Qatar as early as next week, it will trigger a carefully choreographed sequence that will see as many as five detained U.S. dual nationals leave Iran and a similar number of Iranian prisoners held in the U.S. fly home, according to eight Iranian and other sources familiar with the negotiations who spoke to Reuters.

As a first step, Iran on Aug. 10 released four U.S. citizens from Tehran’s Evin prison into house arrest, where they joined a fifth, who was already under house arrest. Later that day U.S. Secretary of State Antony Blinken called the move the first step of a process that would lead to their return home.

They include businessmen Siamak Namazi, 51, and Emad Sharqi, 59, as well as environmentalist Morad Tahbaz, 67, who also holds British nationality, the U.S. administration has said. The Tahbaz and Shargi families did not respond to requests for comment. A lawyer for the Namazi family declined to comment.

The identities of the fourth and fifth Americans, one of whom according to two sources is a woman, have not been disclosed. Reuters couldn’t establish which Iranian prisoners, in turn, would be swapped by the U.S.

At the centre of the negotiations that forged this deal between the superpower which Iran brands the “Great Satan” and the Islamic Republic which Washington calls a state sponsor of terrorism is the tiny but hugely rich state of Qatar.

Doha hosted at least eight rounds of talks involving Iranian and U.S. negotiators sitting in separate hotels speaking via shuttle diplomacy, a source briefed on the discussions said, with the earlier sessions focused mainly on the thorny nuclear issue and the later ones on the prisoner releases, Reuters reported.

Doha will implement a financial arrangement under which it will pay banking fees and monitor how Iran spends the unfrozen cash to ensure no money is spent on items under U.S. sanctions, and the prisoners will transit Qatar when they are swapped, according to three of the sources.

“Iran initially wanted direct access to the funds but in the end agreed to having access via Qatar,” said a senior diplomat. “Iran will purchase food and medicine and Qatar will pay directly.”

Reuters pieced together this account of previously unreported details about the extent of Qatari mediation of the secret talks, how the deal unfolded and the expediency that motivated both parties to clinch the prisoner swap deal. Reuters interviewed four Iranian officials, two U.S. sources, a senior Western diplomat, a Gulf government adviser and the person familiar with the negotiations.

All of the sources requested anonymity because of the sensitivity of a deal which hasn’t been fully implemented.

A State Department spokesperson said the U.S. was not ready to announce the exact timing of the prisoner release. The Department also declined to discuss the details of what the spokesperson termed “an ongoing and highly sensitive negotiation.”

The U.S. administration has not commented on the timing of the funds transfer. However, on Sept 5, South Korean foreign minister Park Jin said efforts were under way to transfer Iran’s funds.

“The U.S.-Iran relationship is not one characterized by trust. We judge Iran by its actions, nothing else,” the State Department spokesperson added.

Washington consented to the movement of Iranian funds from South Korea to restricted accounts held by financial institutions in Qatar, but no money is going to Iran directly, the spokesperson added.

Qatar’s Ministry of Foreign Affairs did not respond to Reuters’ request for comment on the details of negotiations, Qatar’s role in the talks or the terms of the final agreement.

Iran’s foreign ministry and its U.N. mission did not respond to detailed questions regarding this story, read the report.

The sources’ account of the negotiation shows how the deal sidestepped the main U.S.-Iran dispute over Iran’s nuclear aims, culminating in a rare moment of cooperation between the long-time adversaries, at odds on a host of issues from Iran’s nuclear program to the U.S. military presence in the Gulf.

Ties between the U.S. and Iran have been at boiling point since Donald Trump quit a nuclear deal with Iran as U.S. president in 2018. Reaching another nuclear deal has gained little traction since then, as President Joe Biden prepares for the 2024 U.S. election.

The State Department spokesperson also said there had been no change in Washington’s overall approach to Iran, “which continues to be focused on deterrence, pressure and diplomacy.”

Once the funds are transferred, they will be held in restricted accounts in Qatar, and the U.S. will have oversight as to how and when these funds are used, the State Department spokesperson added.

The potential transfer has drawn Republican criticism that Biden, a Democrat, is in effect paying ransom for U.S. citizens. But Blinken told reporters on Aug 10 the deal does not mean that Iran would be getting any sanctions relief, explaining that Washington would continue to push back “resolutely against Iran’s destabilising activities in the region”.

The Qatari-led mediation gained momentum in June 2023, said the source briefed on the discussions, adding at least eight rounds of talks were held since March 2022, with earlier rounds devoted mainly to the nuclear issue and later ones to prisoners.

“They all realised that nuclear (negotiation) is a dead end and shifted focus to prisoners. Prisoners is more simple. It’s easy to get and you can build trust,” he said. “This is when things got serious again.”

The Iranian, diplomatic and regional sources said that once the money reaches Qatar from South Korea via Switzerland, Qatari officials will instruct Tehran and Washington to proceed with the releases under the terms of a document signed by both sides and Qatar in late July or early August. Reuters has not seen the document.

The transfer to banks in Qatar is expected to conclude as early as next week if all goes to plan, the source briefed on the talks said. Reuters was unable to identify the banks involved.

“American prisoners will fly to Qatar from Tehran and Iranian prisoners will fly from the U.S. to Qatar, and then be transferred to Iran,” the source briefed on the talks told Reuters.

According to two Iranian insiders, the source briefed on the negotiations and the senior Western diplomat, the talks’ most complex part was arranging a mechanism to ensure transparency in the money transfer and respect for U.S. sanctions. The $6 billion in Iranian assets – the proceeds of oil sales – were frozen under sweeping U.S. oil and financial sanctions against Iran. Then president Trump in 2018 reimposed the sanctions when he pulled Washington out of a deal under which Iran had restricted its nuclear program.

Issues discussed included how to ensure Iran only spent the money on humanitarian goods and securing guarantees from Qatar on its monitoring of the process.

“To salvage the negotiations from collapse, Qatar pledged to cover the banking fees for the funds’ transfer from Seoul to Switzerland, and subsequently to Qatari banks, while also taking on the responsibility of expense oversight,” an Iranian insider briefed about the talks told Reuters.

The central bank governors of Iran and Qatar met in Doha on June 14 to discuss the funds transfer, a second Iranian insider and the source briefed on the talks said.

According to Reuters the Central Bank of Iran and the Qatar central bank declined to comment.

The talks were led by U.S. Special Envoy for Iran Robert Malley — now on unpaid leave because his security clearance is under review — and by U.S. Deputy Special Envoy Abram Paley and Iran’s chief nuclear negotiator, Ali Bagheri Kani, said one Iranian official, two sources briefed on the negotiations and the Western diplomat.

Mehdi Safari, Iran’s deputy foreign minister for economic affairs, joined the Iranian delegation at two meetings in Qatar for talks on the funds transfer, one senior Iranian diplomat told Reuters. Qatari Minister of State at the Foreign Ministry Mohammed Al-Khulaifi was the go-between mediator.

Malley declined to comment. Paley, Kani and Al Khulaifi could not be reached directly for comment.

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Iran, US continue escalating attacks, recriminations over peace deal

US Central Command said earlier that its forces had carried out fresh strikes after a Panama-flagged tanker was attacked by an Iranian drone on Saturday.

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Iran and the US continued their attacks in the Gulf as each accused the ​other of violating an increasingly precarious interim deal signed less than two weeks ago to end their four-month-old war, Reuters reported.

Shortly after President Donald Trump warned the US might “militarily complete the job”, Iran early on Sunday ‌launched missiles and drones on US military sites in Kuwait and Bahrain, continuing a series of escalating attacks.

Beyond the Gulf, Israel said it had struck Iran-backed Hezbollah militants in southern Lebanon as fighting continued in an area Tehran says is key to its peace deal with Washington.

The U.S. military said earlier it had struck Iran again, hours after a tanker was hit in the Strait of Hormuz, the world’s most important energy shipping route, which Iran had largely cut off for most of ​the conflict.

The 14-point U.S.-Iran interim agreement was meant to halt the fighting, which the US and Israel started on February 28, and reopen the strait to shipping while ​talks proceeded on more deep-seated issues, such as Iran’s nuclear programme.

One round of mediated talks, led by Vice President JD Vance and Iran’s parliamentary speaker, Mohammad Baqer Qalibaf, ⁠was held in Switzerland a week ago and Washington then waived sanctions on Tehran, but the fighting and recriminations have since resumed and intensified.

“There may come a point when we are no longer able to be ​reasonable, and will be forced to militarily complete the job that we very successfully started,” Trump posted on social media. “If that happens, the Islamic Republic of Iran will no longer exist!”

About an hour after Trump’s post, ​the Kuwaiti army said its air defences were responding to “hostile” missile and drone attacks, while sirens sounded in Bahrain, according to that country’s interior ministry.

Iran’s Islamic Revolutionary Guard Corps said its navy and air forces had launched missile and drone operations targeting US military sites in Kuwait and Bahrain in response to recent US strikes against Iran, read the report.

The Guards said in a statement the US strikes had violated the ceasefire and “will result in the complete halt of all diplomatic processes”, according to state-run Press ​TV. The IRGC navy command said American bases in the region “will experience hell in the coming days”.

A US official, confirming the attacks on US facilities, told Reuters there were no reported US casualties or major damage to US ​sites in the Middle East but that the situation was still unfolding.

Hours later, alarms sounded for a second time in Bahrain, and the foreign ministry there condemned the attacks as a deliberate and repeated violation of the kingdom’s sovereignty ‌and security. It ⁠urged the U.N. Security Council to hold an urgent session to hold Iran accountable.

US Central Command said earlier that its forces had carried out fresh strikes after a Panama-flagged tanker was attacked by an Iranian drone on Saturday.

“Iran was given a chance to honor the ceasefire agreement but elected not to,” Central Command said in a statement, adding that its strikes were “in direct response to continued Iranian aggression against commercial shipping” and targeted Iranian military surveillance, communications, air defence, drone storage and mine-laying facilities.

Iranian state broadcaster IRIB said explosions were heard in Sirik in southern Iran, without providing details. The Guards said “America’s blind shots at ​Sirik will not resolve our dominance over the Strait ​of Hormuz. But our shots at violators will ⁠remind the rest of the vessels of the clear passage route.”

Saturday’s tanker attack in the strait followed one on a cargo ship on Thursday that triggered the latest escalation. Iran is seeking to assert control over the strait, which carried one-fifth of global oil and LNG supplies before the war and which had just begun ​to reopen after months of disruption, Reuters reported.

Hundreds of ships, including tankers laden with oil, have been blockaded inside the Gulf since war broke out. As they began ​leaving through the strait over ⁠the past two weeks, oil prices have tumbled close to pre-war levels on the surge in supply.

Washington has been promoting a southern lane along the coast of Oman, while Tehran, which ultimately aims to charge fees for use of the strait, wants ships to use a northern route through its waters and under its control.

In Lebanon, Israel said on Sunday it had killed Hezbollah militants armed with rocket-propelled grenades and struck a rocket launcher in the ⁠Nabatieh area.

Iran ​accuses the US of violating its commitment under the peace deal to sustaining a ceasefire in Lebanon, which US ally Israel invaded ​in March in pursuit of Hezbollah.

Israel, which is not a party to the US-Iran deal, and Lebanon have repeatedly agreed to US-brokered ceasefires, the latest on Friday. But these have had only limited effect, with Israel insisting it will not withdraw from Lebanese territory it ​has seized and Hezbollah repeatedly rejecting calls to give up its arms as long as Israeli troops remain in place.

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US strikes Iran in response to attack on cargo ship in Strait of Hormuz

The U.S. did not immediately respond to Iran’s report of striking American targets, a tactic that has sought to undermine U.S. allies in the region during the conflict.

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The U.S. military attacked Iran on Friday in response to an Iranian drone strike on a cargo ​ship in the Strait of Hormuz, with each country accusing the other of violating terms of a ceasefire agreed on last week, Reuters reported.

U.S. Central Command said aircraft struck missile and drone ‌storage locations and coastal radar sites, later publishing a grainy black-and-white video of an explosion labeled “unclassified.” A U.S. official reported the operation had concluded.

Iran said a projectile struck the area around a pier in Sirik in southern Iran, and that Iranian naval forces responded by striking U.S. military targets in the region. Tehran did not provide details about what may have been hit.

Elsewhere, however, there were signs of progress in ending the four-month-old conflict, as Israel and Lebanon signed an agreement to end the fighting between Israel ​and Iran-backed Hezbollah. Both sides framed the deal as an initial step that calls for Hezbollah to disarm and Israel to withdraw troops from Lebanon, but it was not clear how it would ​be enforced. Hezbollah said it would not cooperate.

Tehran has said it would control the Strait of Hormuz and warned Gulf ⁠states not to side with Washington after Thursday’s attack on a cargo ship traveling near Oman’s coast. President Donald Trump blamed the attack on Iran and said it violated last week’s interim agreement.

“The unwarranted aggression against commercial shipping by ​Iranian forces clearly violated the ceasefire,” U.S. Central Command said in its statement announcing strikes, which it called “a powerful response to yesterday’s attack on a commercial ship that was transiting the Strait of Hormuz.”

The U.S. military said it ​would continue to provide “safe passage coordination and support” to commercial vessels transiting the strait.

Vice President JD Vance, once seen as a skeptic on U.S. intervention in Iran but now a Trump administration point person on the conflict, said the Americans have honored the ceasefire deal, also known as a memorandum of understanding.

“Iran signed a ceasefire agreement. We have honored it. If they have disagreements about how the MOU is being applied, they can pick up the phone. But violence will be met with violence,” ​Vance said on X.

Iranian state media, citing an unnamed military source, reported the strike at the port of Sirik after an explosion was heard there. The source said several warning shots had been fired from Sirik ​toward vessels that violated Strait of Hormuz regulations about five hours earlier, adding two warning missiles had also been launched from the nearby Karpan area toward the strategic waterway, read the report.

On Saturday, Iran’s Mehr news agency cited the head of ports at ‌eastern Hormozgan as ⁠saying that there was no damage to the port of Sirik after the attack by the U.S. The official said the port was operating normally with no damage reported to facilities and equipment.

Iran’s Revolutionary Guards said that in response its navy “struck the locations where the terrorist U.S. military is stationed in the region” and warned that any further U.S. attacks would be met with a broader response, according to the statement carried on state media.

The ceasefire agreement gives Iran control over ship traffic in the strait, the Guards said.

“However, the United States, by provoking various fronts, sought to violate this commitment, and the necessary response was given and will continue to be given. ​If the aggression is repeated, our response will ​be broader than this,” the Revolutionary Guards said.

The U.S. did not immediately respond to Iran’s report of striking American targets, a tactic that has sought to undermine U.S. allies in the region during the conflict.

Ebrahim Azizi, the head of the Iranian parliament’s national security committee, said in response to the latest strikes that Trump has failed to show a ​commitment to the principles of negotiation or ceasefire.

“This reckless violation of the ceasefire will, as always, lead to retreat and regret on their part,” Azizi posted ​on X.

Before the renewed outbreak ⁠of violence, oil prices fell about 3% on Friday, on course for steep weekly losses, in response to oil tankers exiting the Strait of Hormuz, the conduit for one-fifth of global oil and LNG supplies before the U.S. and Israel launched the war on February 28, Reuters reported.

Saudi Aramco resumed crude loadings at its Ras Tanura terminal in the Gulf, the world’s biggest oil port, after a nearly four-month halt, shipping data showed.

Fertilizer shipments through the strait have also picked up, helping to ⁠assuage concerns ​about a spike in global food prices.

U.S. Secretary of State Marco Rubio — wrapping up a tour of the Gulf to reassure regional allies ​about the interim pact — issued a joint statement with the Gulf Cooperation Council calling for “free, unconditional, and unrestricted navigation” in the strait without tolls or “attempts to assert control.”

Iran’s foreign ministry said the strait should be governed by Iran and Oman, while Ali Akbar Velayati, top adviser ​to Iran’s supreme leader, warned Washington’s Gulf allies their survival depended on Tehran’s tolerance.

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Iran’s Pezeshkian says without missiles his country would be ‘just like Gaza’

The Iranian president stressed that Tehran’s defensive capabilities are not open to negotiation.

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Iranian President Masoud Pezeshkian has defended Iran’s ballistic missile program, saying the country would have suffered the same fate as Gaza without its missile capabilities.

Speaking during a visit to Pakistan, which has played a mediating role in discussions between Tehran and Washington aimed at securing a lasting end to the Middle East conflict, Pezeshkian said Iran’s missiles serve as a critical deterrent.

“If the missiles we have for our defense did not exist, Israel and the United States would have ploughed Iran just like Gaza, showing no mercy to either the old or the young,” he said.

The Iranian president stressed that Tehran’s defensive capabilities are not open to negotiation.

“We will never negotiate with anyone, under any circumstances, ever, about our defensive capabilities,” he added.

Before the recent conflict, the United States had pushed for Iran’s ballistic missile program and its support for regional armed groups to be included in talks over Tehran’s nuclear activities.

However, U.S. President Donald Trump has recently signaled a more flexible position on the missile issue. Speaking at the G7 summit in France last week, Trump said, “If other countries have them, it’s a little unfair for them not to have some,” referring to missile capabilities.

 
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