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US and Iran exchange prisoners

What happened: On Saturday Iran released American graduate student Xiyue Wang, who was imprisoned in Tehran for more than three years for espionage.

  • In exchange, the US released Iranian scientist Massoud Soleimani, who was arrested when he landed in the US in 2018 en route to a visiting-scholar position at the Mayo Clinic. He had been charged with trying to export proteins used to culture cells for medical research without a proper licence.
  • A senior Trump Administration official told reporters that he hoped Wang’s release was “a sign that the Iranians are realising that their practice of hostage-taking diplomacy really should come to an end”.
  • Negotiations for the prisoner swap were conducted through the Swiss Government because the US does not have formal diplomatic relations with Iran. In Zurich, Wang was turned over to Brian Hook, the US Special Representative for Iran. Two days before the exchange Hook called on “all nations to stand with the Iranian people” and “diplomatically isolate the regime”.
  • Yesterday Iran announced a 2020 budget based on increasing taxes, cutting energy subsidies and borrowing more money, as the country tries to reduce its reliance on oil exports under the pressure of US sanctions. President Hassan Rouhani said the budget “is designed to resist against sanctions and to announce to the world that we run this country despite sanctions”.

Context: Efforts to secure Wang’s release have taken years and included many US officials, including former US Ambassador to the UN, Bill Richardson, and former Kansas congressman Jim Slattery, who knew Iranian Foreign Minister, Mohammad Javad Zarif and Iran’s UN Ambassador, Majid Takht-Ravanchi, who graduated from the University of Kansas.

  • The turning point for a prisoner exchange came in April 2019 when Zarif spoke at the Asia Society in New York and said: “Exchange them. All these people that are in prison inside the US, on an extradition request from the US — we believe their charges are phony. The US believes charges against these people in Iran are phony. Fine, let’s not discuss that. Let’s have an exchange. I’m ready to do it. And I have the authority to do it.”
  • Six other Americans are still detained in Iran, including FBI agent Robert Levinson, who disappeared inside the country 12 years ago. The Trump Administration has arrested at least thirteen Iranians in the US in the past two years.
  • Iran’s oil revenue is expected to fall by 70 per cent next year, which equates to production of approximately 500,000 barrels per day, down from the 2.8m barrels per day before the reintroduction of US sanctions in May 2018. According to the Financial Times, the new budget is expected to total $115.3bn at the official government-approved dollar exchange rate.
  • The regime aims to make-up for the shortfall in oil revenues by selling more Islamic bonds on the domestic market, as well as increasing taxes by 13 per cent. The IMF has forecast that the Iranian economy will shrink by 9.5 per cent this year.
  • The regime’s decision last month to increase petrol prices prompted thousands of Iranians to protest, which resulted in a violent crackdown with hundreds of protestors killed by security forces.

Looking ahead: The prisoner swap could be a confidence-building measure that both sides leverage to jump start talks on other issues — like Iran’s nuclear programme — or the swap could just be a mutually beneficial, but isolated, step for both countries. For Iran, the prisoner exchange may provide some positive news for the regime under immense public pressure at home, but with new breaches of the JCPOA nuclear deal expected in the new year, the Iranian regime could find itself under more US sanctions, and possibly new sanctions from Europe, putting further strain on a weak budget and economy.