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The United States is working with Qatar on a plan to make billions of dollars in frozen Iranian funds available for humanitarian spending, an early financial incentive under the recently signed Islamabad Memorandum of Understanding (MoU) aimed at ending the war, people familiar with the matter told The Wall Street Journal (WSJ) on Saturday.
The plan, not yet finalized, would give Iran access to the spending power of some of its estimated $100 billion in cash frozen worldwide, beginning with $6 billion held in Qatar.
Under the arrangement, Qatar would allow purchases of food, medicine, and other humanitarian goods ordered by Iran's central bank using frozen Iranian assets, mainly cash from oil sales locked up overseas by sanctions, the people said.
The facility could serve as a template for handling other pools of frozen Iranian cash around the world and represent a start on the first tranche of the $24 billion in blocked funds Tehran wants released as soon as possible, some of the people told the Journal.
Iran has not yet agreed to the mechanism.
It is one of several proposals that Washington is expected to raise over the next two months of nuclear discussions with Tehran, following the deal to pause the war and reopen the Strait of Hormuz, according to the people.
The Financial Times (FT) reported the funds would only be used to buy American products, according to a diplomat briefed on the deal.
"Trump took a bad Biden deal, restricted the sales to humanitarian non-sanctioned goods and ensured that it's used on American products, creating a win-win situation," the diplomat said.
"Iranians get humanitarian goods for their people, and the Iranian money is used to support American farmers," the diplomat added.
The Iranian state-affiliated Tasnim News Agency has said Tehran expects $12 billion to be released during the 60-day interim period, with funds to be released in phases tied to the reopening of the Strait of Hormuz and progress in talks toward a final settlement.
Tens of billions of dollars of Iran's oil revenue are estimated to be frozen in central banks overseas due to U.S. sanctions, including in China, India, Iraq, Japan and Qatar.
The arrangement with Qatar would come in addition to billions of dollars Iran is expected to earn from oil sales, which Washington agreed to allow immediately upon signing the agreement, including a waiver permitting Iran to export oil for the 60-day interim period.
The U.S. also announced Thursday it had lifted its naval blockade of Iranian ports.
The $6 billion was previously held in South Korea before being transferred to an account in Doha after the Biden administration reached a prisoner-swap deal with Tehran in September 2023.
At the time, the arrangement was viewed as a confidence-building measure intended to encourage Iran to cap its nuclear enrichment program, coming after nuclear talks between the Biden administration and Iran had collapsed the previous year.
Hopes for broader progress were derailed after Hamas' October 7, 2023, attack on Israel triggered a wave of regional hostilities, and the Biden administration froze the funds in Qatar.
Tehran was unable to access the money as a result.
"Even limited asset releases function as both economic lifelines and political signals of de-escalation," said Sanam Vakil, Middle East director at the London-based think tank Chatham House, who spoke to the WSJ.
"They are one of the few concrete incentives Iran can secure with Washington to stabilize its currency and ease domestic economic pressure," she added.
The arrangement comes amid continuing public friction between Trump and Iran's Supreme Leader.
Mojtaba Khamenei said on X Thursday that Trump agreed to pause hostilities "out of desperation."
Trump responded on social media: "We didn't meet out of desperation; Iran did. They are FINISHED! We'll play out the 60 days. They get no money, not ten cents!"
Khamenei gave his first official reaction to the memorandum on Thursday, conditionally endorsing the agreement based on assurances from President Masoud Pezeshkian, who pledged in his role as head of Iran's Supreme National Security Council to "safeguard the rights of the Iranian nation and the resistance front" in the region.
Khamenei stressed that Iran's acceptance of the agreement should not be interpreted as a concession to U.S. pressure, adding that future negotiations would not mean "accepting the enemy's viewpoint."
Speaking to reporters Wednesday at the Group of Seven meeting in France, Trump addressed the broader question of Iran's frozen assets. "We have taken their money; it isn't our money, it is their money, and we froze it," he said.
"At a certain point in time, I guess we're going to have to give it back," Trump said.
The FT reported Trump also said his administration would release frozen Iranian funds and lift sanctions "as soon as they behave," adding: "If we didn't give it back, nobody would ever invest in the dollar again."
Under the agreement signed Wednesday, the U.S. is committed to making Iran's frozen assets "fully available for use" and negotiating a mechanism for doing so.
A U.S. official said this week the funds will flow as long as Iran is engaging productively in talks and that Iran would get more for "good behavior," such as turning over enriched uranium.
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