US denies reports of unfreezing $6 billion Iranian assets as talks begin in Islamabad

The United States on Saturday denied reports that it had agreed to unfreeze billions of dollars in Iranian assets, even as high-level delegations from both countries arrived in Pakistan for talks aimed at ending the six-week-long conflict.

A US official rejected claims that Washington had agreed to release Iranian funds held in foreign banks, including Qatar. The denial came after a Reuters report cited Iranian sources as saying the US had agreed to unfreeze around $6 billion in assets.

The source had informed Reuters that move was linked to ensuring safe passage through the Strait of Hormuz, a key global shipping route, which is expected to be a central issue in the talks.

High-level delegations arrive

Senior officials from both countries reached Islamabad for negotiations, with Pakistan playing a mediating role.

The US delegation is led by Vice President JD Vance and includes special envoy Steve Witkoff and adviser Jared Kushner. They arrived in two US Air Force aircraft and were received by Pakistan’s Army Chief Asim Munir and Foreign Minister Ishaq Dar.

The Iranian delegation, led by Parliamentary Speaker Mohammad Baqer Qalibaf and Foreign Minister Abbas Araghchi, arrived earlier.

Iranian officials were seen carrying symbolic items linked to victims of recent strikes, signalling the domestic political context surrounding the talks.

However, Tehran indicated that negotiations could not proceed meaningfully without commitments on sanctions relief and clarity regarding the situation in Lebanon.

Background on frozen funds

The $6 billion in question originates from Iranian oil exports to South Korea and has remained frozen since 2018, when the US, under then President Donald Trump, withdrew from the Iran nuclear deal and reinstated sanctions.

The funds were later transferred to Qatari-controlled accounts as part of a 2023 prisoner exchange agreement. At the time, US officials maintained that the money could only be used for humanitarian purposes such as food, medicine and other essential goods.

However, the funds were effectively re-frozen following the October 2023 attack on Israel by Hamas, given Tehran’s links to the group.

Talks amid fragile ceasefire

The Islamabad talks are being seen as a crucial step towards converting the current ceasefire into a broader agreement.

Key issues under discussion include sanctions relief, Iran’s nuclear programme, regional security concerns and freedom of navigation through the Strait of Hormuz.

Despite diplomatic efforts, significant differences remain between the two sides, with both continuing to place conditions on the scope and sequencing of any agreement.