The Dotted Line Iran Will Not Sign
Good news is that in USA-Iran war, the missing pilot of shot/crashed aircraft has been rescued. The deadline set by President Trump is about to expire tomorrow. He had claimed that the negotiations are continuing but Iran has always denied it. Let us assume that there is some back channel talk between the two. What is the deadlock?
For that we shall have to go into history of wars of USA with oil-rich countries.
Oil Wars
Iraq
Every war the United States has fought in the post-2001 era has ended in a bank. It is called Federal Reserve. It is situated in New York.
In May 2003, weeks after Baghdad fell, the Coalition Provisional Authority opened the Development Fund for Iraq at the Federal Reserve Bank of New York. All money seized from Iraq was deposited in it. All money Iraq earns by oil sale is deposited in it and spent on descretion of USA.
Audits by the Special Inspector General for Iraq Reconstruction found that $8.8 billion of the $23 billion disbursed through the DFI simply could not be accounted for.
Paul Bremer, who ran the CPA, spent over 90% of the Development Funds for Iraq while less than 5% of the $18 billion Congress set aside for reconstruction was actually spent.
In 2020, when Baghdad called for U.S. troop withdrawal, Washington reportedly considered restricting Iraq’s access to its Fed account, after which Iraq’s position softened.
Libya
Libyan Investment Authority (LIA), a sovereign wealth fund established in 2006 to invest surplus oil revenues. In February 2011, within 72 hours of Gaddafi’s brutal public address, the United States issued an executive order freezing nearly $30 billion of Libyan state assets held in U.S. banks.
The LIA’s assets were separately frozen under UN Security Council Resolution 1973. The fund was estimated at over $60 billion at that time. The freeze is still in effect. For years, billions of dollars sat in cash, losing value to inflation while billions in administrative charges are being paid for third parties.
Unlike Iraq, Libya’s account arrangement was primarily through U.S. commercial banks and European institutions rather than the Federal Reserve directly.
Afghanistan
The Taliban took over Afghanistan in August 2021. Before takeover, Da Afghanistan Bank held approximately $7 billion in reserves at the Federal Reserve Bank of New York, plus $2 billion in Europe.
The ostensible reason was that U.S. did not recognize the Taliban as the country’s new government, and federal law obligated financial institutions to pay only to a lawful government.
Remember the Taliban had entered into an agreement at Doha, Qatar and it duly stated that USA does not recongnize the Taliban. But they did not understand the implications. They were tricked. This explain their hostility toward USA and its proxy Pakistan.
Later Biden went a step further. He directed to move $3.5 billion to a trust fund for humanitarian assistance, and reserve the other $3.5 billion for potential legal claims by families of 9/11 victims. Clever by half?
Venezuela
Trump passed an executive order in January 2026 and declared Venezuelan oil revenue “sovereign property of Venezuela held in custody by the United States.” It was a forced custody without consent. The Fed got the imperial receivership of sovereign funds of another country.
Iran
Iran has seen all of it. The wars for protection of emocracy and the price being deposited in Federal Reserve in one name or another. It has been preparing itself for this day for a long time. It chose to build tunnels instead of schools or hospitals.
Carter froze Iran’s $8 billion in 1979. The Algiers Accords of 1981 brought partial relief. Yet, as of 2021, Iran had frozen assets scattered across multiple countries: $7 billion in South Korea, $6 billion in Iraq, $20 billion in China, $1.5 billion in Japan, $1.6 billion in Luxembourg.
The Deadlock
Every negotiation since, JCPOA included, had one condition that Iran should re-enter the dollar system on Washington’s terms. The 2015 agreement unlocked over $100 billion. Trump tore it up in 2018. The assets refroze. Iran’s nuclear program accelerated. The nuclear program is not the objective of either side. It is what both sides hold up to avoid naming what the negotiation is actually about. Real game is to get Iranian oil revenue into channels Washington can monitor, throttle, and shut off when needed.
Iran has refused it since 1979 and called it sovereignty. This is the deadlock between the two and Iran will not give it up till it has a last soldier standing.
It may force the Trump to do unthinkable but possible. He may order total destruction of oil facilities or worse the power facilities in Iran.
That is the new bet on the table, in the ongoing poker game.
Also see:
- USA fires its Army Chief: https://sandeepbhalla.in/trump-fires-army-chief-of-staff/
- President Trump’s historic but meaningless speech: https://sandeepbhalla.in/interpreting-trumps-speech-on-war-with-iran/