Congress May Free Up Billions in Iranian Money, But Not for Iran

This week Congress passed a defense authorization bill, and hidden within was a provision that could release hundreds of millions of dollars.^[1] This money, now beyond reach, would assist victims of terrorist attacks struggling to collect damages from foreign governments.^[2] However experts say it also may undermine one of the administration's key foreign policy achievements: improved relations with Libya. ^[3]

Though some terrorist victims and their families have won huge damage awards, very little can be collected from sovereign nations, such as Iran, which ignore the judgments.^[4] The new law potentially allows for a wide range of assets to be seized, doing away with a previous requirement that the nation had to have day-to-day control over the assets.^[5]

The full scope of the law's impact is difficult to judge, as plaintiff and business lawyers are still trying to interpret it; if the bill is a broad as it potentially could be, Iran may have hidden assets worth $4 billion to $6 billion in the United States that are now fair game.^[6]

This is what prompted Sen. Frank Lautenberg (D-N.J.) to push for the legislation the bill "achieves my goal of providing justice for American victims of terrorism at the hands of terrorist states like Iran and Libya," he said.^[7]

The change in U.S. law also threatens the growing engagement between the United States and Libya since its decision to end its support of terrorism and give up weapons of mass destruction.^[8] U.S. businesses have rushed to invest in Libya, but the deals may be put on hold because of the new litigation risks created by this law.^[9]

Libya faces pending liabilities over the 1989 bombing of Pan Am Flight 103 that killed 270 people, and the 1986 bombing of a German disco, which killed two U.S. servicemen and wounded 79 Americans.^[10]

President is however authorized to waive cases for Iraq because of the threat of litigation from crimes committed by Saddam Hussien, but not other countries.^[11] The White House says Bush will sign the bill despite the impact on Libya.^[12]

"We are concerned about the impact section 1083 would have on other countries, such as Libya, who are emerging from their past and establishing stronger relations with the United States and the U.S. private sector…..We would welcome the opportunity for a more comprehensive solution," said White House National Security Council spokesman Gordon Johndroe.^[13]

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^[1] Glenn Kessler, Bill's Provision May Help Terror Victims Gain Redress, Washington Post, January 26, 2008; Page A12, available at http://www.washingtonpost.com/wp-dyn/content/article/2008/01/25/AR2008012503069.html?hpid=moreheadlines (last visited January 26, 2008).
^[2] Id.
^[3] Id.
^[4] Id.
^[5] In the past, for example, victims have even tried to claim Persian artifacts in museums in an effort to win payment from Iran.
^[6] Id., The Congressional Research Service lists nearly 40 cases in which more than $6 billion in damages have been awarded -- and says there are dozens more that could be refiled. A federal judge last September ordered Iran to pay more than $2.6 billion to nearly 1,000 family members and a handful of survivors of a 1983 bombing of a Marine barracks in Lebanon that killed 241 soldiers, but he acknowledged there was little chance the money would ever be collected
^[7] Id.
^[8] Id.
^[9] Id.
^[10] Id.
^[11] Id.
^[12] Id.
^[13] Id.