In the news
On 18 September, after two years of tense negotiations, five US citizens who had been detained in Iran were released in exchange for the US agreeing to unfreeze USD six billion in Iranian oil. Iran’s money was held in South Korean banks namely the Industrial Bank of Korea and Woori Bank. 

Following the release, US President Joe Biden stated: “Reuniting wrongfully detained Americans with their loved ones has been a priority.” 
 
Iranian President Ebrahim Raisi stated that the exchange could be “a step in the direction of a humanitarian action between us and America” and “it can definitely help in building trust”.

On 19 September, the Ministry of Foreign Affairs of Republic of Korea apprised: “Our government has been closely negotiating with the United States, Iran and the related countries on resolving the frozen assets and we expect the issue to be resolved amicably.” 

The South Korean government said that Iranian funds that had been frozen in the country's banks following the US sanctions on Tehran had now been released to Qatari banks. The effective transfer of the cash to a third country in tight coordination with the pertinent countries was confirmed in a joint statement from the Korean Ministry of Foreign Affairs and the Ministry of Finance. The government has also expressed optimism that after the unfreezing of the Iranian cash, relations between Seoul and Tehran will improve. 

Issues at large
First, the tensions between the US and Iran. An increase in tension between Iran and the US came following the Trump administration’s withdrawal from the Iran nuclear deal, the Joint Comprehensive Plan of Action (JCPOA), in 2019. Since August 2023, the increasing military drills in the Gulf waters further increased tensions. In August, more than 3,000 US personnel were deployed in the Red Sea after the US accused Iran of seizing several international civilian ships in July, which Iran denied. In response, Iran accused the US of fuelling instability and insecurity in the region. Besides, Iran has been critical of regular joint military drills between Israel and the US. In January, the US and Israel carried out its largest joint military exercise, Juniper Oak 2023. 

Second, the US sanctions. Trump's reimposition of US trade sanctions in 2019 and 2020 against Iran forced governments and businesses from Europe and Asia to refrain from doing business with Tehran, posing a challenge to Iran's oil exports. In 2022 and 2023, the US Department of the Treasury imposed 38 and 19 sanctions, respectively. On 18 September, the Biden administration announced fresh sanctions on former Iranian President Mahmoud Ahmadinejad and the Iranian Ministry of Intelligence regarding the disappearance of a US citizen. 

Third, the internal divide within the US. The Republicans criticised Biden for his move, claiming that the deal would motivate Iran and other countries to detain US citizens further. Former President Donald Trump expressed his concern, stating that the deal had amounted to a “terrible precedent.” Mike McCaul, the chairman of the House Foreign Affairs Committee, stated that the prisoner swap “creates a direct incentive for America’s adversaries to conduct future hostage-taking.” Arkansas Senator Tom Cotton accused Biden of “paying ransom to the world’s worst state sponsor of terrorism.” Meanwhile, the opinions within the Democrats are divided. A large section has defended the deal as it paves the way for a larger Middle Eastern cooperation. The Democratic chair of the Senate Committee on Foreign Relations, Bob Menendez, lauded the release of the detainees and stated: “They should have never been detained in the first place, and I welcome them back to the loving embrace of their families. This is a moment to celebrate.” A centrist Democrat, Dean Phillips, stated that the prisoner exchange was “disconcerting on the surface,” and has requested for a closure on the overall deal. 

In perspective
First, although the deal according to Biden has proven to be successful, the backlash he received from the Republicans has made his candidacy in the forthcoming election uncertain. However, Biden sees the deal as an achievement that will engage the US to a larger perspective in the Middle Eastern corridor. His administration, through prisoner swaps and unfreezing of Iranian funds, is expected to build trust that creates conditions for further discussions on Iran’s nuclear programme. He further seeks to engage with the Middle Eastern countries as his election strategy and to restore the long-lost ties with the adversaries. 

Second, despite the backlashes, this deal is significant for both countries in terms of the progression of the nuclear deal. Establishing similar deals will likely foster better diplomatic ties between Iran and the US.