WASHINGTON, Jun 7: The US Treasury Department is weighing a plan that would redirect frozen Iranian assets toward compensating American-aligned Gulf states for damage linked to Iranian military action during the ongoing conflict, a move that, if pursued, would mark one of the more aggressive uses of financial pressure Washington has deployed against Tehran in recent memory.
The plan, reported by CBS News on Saturday, was described by a source familiar with Treasury Secretary Scott Bessent’s thinking, and speaks to just how far the Trump administration may be willing to go as diplomacy between the two countries continues to sputter.
At the heart of the effort is a directive that Bessent is likely to issue to Treasury officials: examine every available legal and financial authority to determine how Iranian assets, whether frozen in foreign bank accounts, held as cash reserves, or tied up in physical holdings like oil tankers and other state-linked property, might be legally repurposed and funneled into reconstruction and repair efforts across the Gulf.
Notably, Iran, which has also suffered immense devastation in the months long war , that started on Feb 28, wants the release of frozen assets for its economy. Iranian negotiators has demanded over USD 270 billion in compensation from the United States for war damages and destruction of its infrastructure caused in conflict.
Meanwhile, Gulf allies are engaged in compiling detailed assessments of the damage since hostilities escalated, a process that would lay the groundwork for any formal claims. Officials are also looking at whether those assets could cover not just future rebuilding costs, but losses already incurred over the course of the conflict,a scope that would substantially raise the financial stakes.
As war started on 28 Feb, Iran has carried out missile and drone strikes across the Gulf, with Saudi Arabia, the United Arab Emirates, Kuwait, Bahrain, Qatar, and Oman all said to have felt the effects. Diplomatic efforts to end the conflict have made little headway, and what limited progress existed has been further complicated by fresh accusations flying in both directions over ceasefire violations.
Iran’s Foreign Ministry accused the United States of undermining the fragile truce through recent U.S. Central Command strikes on Iranian radar installations at Goruk and Qeshm Island.
The Iranian Foreign Ministry issued a stark warning, saying continued U.S. military action signals a fundamental lack of seriousness about de-escalation and inches the entire region closer to something far larger and harder to contain.
Iran also placed the responsibility for any further deterioration squarely on the United States, and called on its Gulf neighbors not to allow their territory or infrastructure to be used as staging grounds for American operations against it a pointed message to countries that host substantial U.S. military presence.
On the diplomatic front, Iranian officials have grown increasingly vocal about what they say must happen before any agreement can move forward.
As distrust is immense between US and Iran, Mohsen Rezaei, a senior adviser to Supreme Leader Mojtaba Khamenei, framed the release of roughly USD 24 billion in frozen Iranian assets as a “test of trust”.
Iranian Deputy Foreign Minister Kazem Gharibabadi went further, stating that Tehran expects at least half of its overseas frozen assets to be unfrozen the moment Phase I of memorandum of understanding is signed, calling it a foundational confidence-building measure without which no meaningful negotiation can proceed.
Iran has also appealed to the United Nations and international bodies to step in more forcefully, arguing the situation risks spinning beyond bilateral management. (UNI )
