Donald Trump announced Thursday that the United States will begin using frozen Iranian assets to compensate for ships and cargo damaged in the Gulf, a move Iran’s foreign minister called “an incendiary precedent” that would create “chaos” in international finance.
“These damages may be very substantial but, nevertheless, this is the fair and equitable thing to do,” Trump wrote on Truth Social. He said the money would come from “Iranian Money that the United States has in its possession, and controls.”
The announcement is a direct violation of the June Memorandum of Understanding that both sides signed to end the war. Point 11 of that agreement stated that the “United States of America undertakes to make fully available for use the frozen or restricted funds and assets of the Islamic Republic of Iran.” Instead of unfreezing them, Trump is now proposing to spend them.
Iranian Foreign Minister Abbas Araghchi responded sharply. Seizing another country’s assets to “pay for unrelated future claims is an incendiary precedent,” he said. “Ensuing chaos will not be pretty or peaceful.”
The amount of frozen Iranian assets held overseas is estimated at roughly $24 billion. Most of it is in South Korean, Japanese, and Iraqi banks, funds Iran had accumulated from oil sales before sanctions were tightened. Under the June MOU, those funds were supposed to be released in two tranches: half immediately upon signing the memorandum, and the remainder after negotiations on the nuclear issue.
Neither tranche was ever fully disbursed. The ceasefire collapsed three weeks after it was signed.
The practical mechanics of Trump’s plan are unclear. Much of the frozen money is not physically held by the United States but by third-country banks that would need to cooperate with any seizure. Whether those banks would risk their relationships with Iran, and with other sovereign depositors watching, remains an open question.
The asset seizure threat is the latest in a series of escalatory moves that have marked the collapse of the June truce. On the same day Trump made the announcement, ship tracking data showed only one tanker crossing the Strait of Hormuz, the lowest number since May 7. The strait is effectively closed to normal commerce, and Trump’s latest financial maneuver is unlikely to reopen it.
Iran has not yet announced a specific retaliatory measure, but Araghchi’s warning of “chaos” suggests the Foreign Ministry is preparing options. If Tehran retaliates by freezing or seizing assets of US allies in the region, the financial war could spread well beyond the two countries.