US-Iran peace deal hinges on asset freeze debate - is it $12 billion or $24 billion?

The United States and Iran reached a tentative deal on Monday aimed at extending their fragile ceasefire and reopening the Strait of Hormuz, although major issues remain unresolved, including the possibility of continued Israeli military action in Lebanon.

No detailed terms of the deal were immediately released, but it is expected to take effect after a formal signature. According to the mediator, Pakistan, the agreement is to be signed in Geneva on Friday.

Until then, restrictions on shipping, a vital route for global oil and gas supplies whose closure has contributed to the international energy crisis, are likely to remain in place in the strait.

Quick answers to key questions

•5 QUESTIONS

The United States will first release $12 billion in frozen Iranian assets before formal negotiations begin, with another $24 billion unfrozen during the following 60-day negotiation period.

The Strait of Hormuz is a vital route for global oil and gas supplies, and its reopening is expected to ease pressures contributing to the international energy crisis.

The deal includes US commitments not to impose new sanctions during negotiations, as well as plans to lift existing sanctions against Iran once a final deal is reached.

Key outstanding issues include details regarding Iran’s nuclear program, control mechanisms and the management of Iran’s military capabilities, particularly ballistic missiles.

Yes, Iran is expected to get initial access to $12 billion worth of frozen assets just before the talks begin, to provide economic relief amid ongoing discussions.

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Iran’s Mehr news agency reported that the United States will release $12 billion in frozen Iranian assets ahead of the start of negotiations under the newly announced US-Iran deal.

Citing a 14-point memorandum of understanding between the two countries, the agency said the remaining $24 billion in frozen assets would be unfrozen during a 60-day negotiation period that begins after the signing of the memorandum of understanding. The agreement is expected to be formally signed on Friday at a ceremony in Switzerland.

“Half of this amount must be made available to Iran before negotiations begin,” the text, which has not been officially confirmed, specifies.

Sanctions and financial impact

A senior Iranian official told Reuters the US had agreed not to impose any new sanctions on Iran until a final deal was reached. They added that the US would waive oil sanctions on Iran for a period of time and that after a final deal, all US and UN sanctions would be lifted according to an agreed timetable.

Reuters reported that a senior Iranian official said the US had agreed to release $25 billion in frozen Iranian assets, including direct cash transfers, cooperation between regional countries and financial credit lines.

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Washington, in coordination with its regional allies, will prepare a plan for the reconstruction and development of Iran to be discussed and agreed with Tehran within 60 days, they added, as reported by Reuters.

Trump said Iran would not receive cash, but that sanctions could potentially be lifted.

The conflict has become a political burden for Trump and congressional Republicans as public frustration over higher gas prices grows ahead of November’s midterm elections. At the same time, Trump has faced pressure from within his own party from lawmakers who say Iran’s nuclear program must be completely dismantled.

During his first term, Trump withdrew the United States from the 2015 multilateral Iran nuclear deal negotiated under Democratic President Barack Obama, which lifted sanctions on Tehran in exchange for curbs on its nuclear activities and international inspections.

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After the U.S. left, Iran ramped up uranium enrichment, producing more than 400 kg (around 900 pounds) of near-weapons-grade material.

Britain, Germany, France and Italy said in a joint statement they were ready to lift sanctions on Iran in response to “clear, verifiable steps” to curb its nuclear program.

China also welcomed the agreement.

(With input from agencies)