Sunday, August 21, 2016

Iran "Ransom" Scandal Is Back...and It's Still Nonsense

The purported Iran "ransom" scandal is back in the news after the State Department confirmed that it didn't allow Iran to take possession of the cash until the release of the American prisoners was confirmed. The State Department called it "leverage" while anyone looking for a reason to disparage Iran or President Obama calls it "ransom". The question is who is right?

When this story first broke, we argued that the whole issue was much ado about the nothing. In spite of the latest news, that assessment still stands.

To see why, first it is important to clarify the definition of ransom. Wikipedia uses the following definition, which seems appropriate: “Ransom is the practice of holding a prisoner or item to extort money or property to secure their release.”

Assuming the payment of $400 million was a prerequisite for the prisoner exchange to occur, as it now appears, a very narrow interpretation of the facts would call it either ransom or a bribe. Arguably, since prisoners were released on both sides rather than just from Iran, the payment would be more of a bribe to ensure the transaction took place. However, given that bribing a foreign government and paying ransom to it, are similarly blameworthy, this distinction is not critical. What matters is whether the payment truly constituted either in any meaningful sense. I would argue it does not.

The reason is that the US already acknowledged that it owed this money (and more) to Iran. This is critical. The connotation of ransom is that the kidnappers are trying to get money that does not otherwise belong to them, thus making it akin to theft. Obviously, the average criminal doesn’t kidnap for the purpose of trying to collect a legal debt that already exists. That would be absurd.

When I make my mortgage payment to US Bank, I’m not being extorted. It’s true that if I did not pay, they could eventually foreclose on the house and evict me. However, we don’t consider it extortion because there was a debt involved. Meanwhile, if criminals threatened to seize my house unless I paid them, this clearly would be extortion. The question of whether a debt existed beforehand is fundamental. And just as we don’t think it’s extortion when a legal debt is involved, it seems we shouldn’t think of it as ransom if the payment in question is, in fact, a repayment of funds that were already owed.

Based on this, one of two conclusions on the latest Iran scandal could be warranted. If one believes the debt involved to be legitimate, then the Obama Administration’s actions in the negotiations itself are not problematic. The US paid a debt that was owed; a prisoner swap ensued; and two longstanding issues that inspired hostility on both sides of the relationship—and thereby increased the chance for another needless war—have now been put to rest.

Alternatively, if one believes the debt in question is not legitimate and the US government did not owe any money to Iran, then the Obama Administration’s settlement is a problem, and constitutes either a bribe or ransom. In this case, the entire $1.7B that the US agreed to pay should be the amount that we object to. Unless we assume the US government will shirk on the unpaid balance, there is no reason to be up in arms exclusively about the $400 million paid in January.

If there’s an argument to be made about why the US did not owe Iran any money related to the old contract, then let’s hear it. Otherwise, it is difficult to understand why this should be a big scandal. Surely, the circumstances of the payment were cartoonishly suspicious (literally, flown-by-night), and the Obama Administration's shifting position on the story looks like a scandal--first, the negotiations on the debt and the prisoners were totally separate, and now we know there was some overlap. But the Obama Administration's failure to stick with a single version of events over the past few weeks does not change the facts of the underlying story. And that story is not a scandal; it is, instead, a very rare instance of diplomacy being used in the Obama years instead of coercion.

Also, it’s also worth noting that the $1.7B settlement is not a new story. The Wall Street Journal is (understandably) trying to play up the importance of their reporting, but all that’s new here is the timing and form of the payment—not that payments were going to be made. The settlement itself was widely reported back in January. So again, if we’re going to object, it seems like we should have been objecting to it in January, when the US agreed to pay the money, not just now that we learned some of the money was actually paid.

If you're a libertarian or someone else who supports peace, the knee-jerk criticism of the Obama Administration is somewhat understandable. It stems from a bias I share—namely, that if the Obama Administration did it, it’s probably awful. This bias has proven to be an extraordinarily reliable predictor in foreign policy over the past eight years, but it’s not right all of the time. And Iran is one of the cases where it's wrong.

Indeed, the Iran nuclear deal, and the side deals at issue here, is essentially the only significant foreign policy action President Obama undertook that moved the US closer to peace. US policies elsewhere in the region were an utter disaster for peace--a disaster that is still playing out to this day, in Afghanistan, Syria, Libya, and Yemen, to name just a few. But Iran is the one issue he ultimately helped improve. And he deserves credit for that, just as surely as he deserves to be impeached for overthrowing a sovereign government in Libya.

The point here is that there are plenty of legitimate and well-founded reasons to criticize President Obama. There is absolutely no need to manufacture scandals. 

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