Legal experts warn that a proposed $300 billion investment fund for Iran faces significant challenges due to existing U.S. sanctions related to the Islamic Revolutionary Guard Corps.
A proposed $300 billion investment fund for Iran, outlined in a memorandum of understanding between the U.S. and Iran, may encounter substantial legal hurdles under current U.S. sanctions law. This raises questions about the feasibility of the plan, even if both nations move toward a final agreement.
The memorandum, digitally signed by President Donald Trump and Iranian President Masoud Pezeshkian, aims to end hostilities and restore traffic through the Strait of Hormuz. As part of a 14-point plan, the U.S. has agreed to lift sanctions on Iran, allowing Tehran to increase its oil revenue and regain access to certain segments of the international banking system, among other measures.
However, one of the most ambitious components of this framework—the proposed $300 billion private investment fund for Iran’s reconstruction and development—may conflict with a longstanding U.S. determination that Iran’s construction sector is controlled, either directly or indirectly, by the Islamic Revolutionary Guard Corps (IRGC).
This issue is not merely technical; it questions whether one of the central economic promises of the Trump-Iran framework can realistically be executed under existing U.S. law. If the fund relies on investments in sectors already identified by Washington as IRGC-controlled, experts suggest that the administration may need to depend on temporary waivers or new licenses. This legal structure could deter long-term investors and complicate any final deal.
Miad Maleki, a senior fellow at the Foundation for Defense of Democracies and a former executive at the Treasury Office of Foreign Assets Control, highlighted the complexities surrounding the fund. He emphasized that the legal and sanctions-related issues are more intricate than simply determining whether Congress would need to approve it.
“I think Congress is unavoidable for a durable version of that investment,” Maleki stated. “If we have a final deal, the U.S. government and its allies will need to help Iran establish this fund or gain access to it.”
Maleki noted that while the president possesses significant unilateral authority to ease restrictions, such as revoking relevant executive orders or directing the Treasury Department to issue general licenses, this does not guarantee the fund would be stable enough to attract serious investors.
“Technically, the fund could be activated through some kind of executive action alone, but it would only be on paper and would need to be renewed every 180 days,” he explained, referring to waivers for mandatory sanctions linked to Iran’s construction sector.
He added that the uncertainty surrounding sanctions, coupled with political risks and an unreliable partnership, makes it challenging for investors to commit to long-term projects in Iran. “It’s hard to find someone who would invest based on something that may not be renewed, especially in the context of Iran, where conditions can change rapidly,” Maleki said.
This situation raises broader questions about whether negotiators genuinely expected the memorandum to evolve into a final, durable agreement. Maleki expressed skepticism, stating, “The more I’ve examined this memorandum of understanding, particularly the sanctions paragraphs, the more I doubt that the negotiators were counting on a final deal to be reached.”
He further elaborated, “If a final agreement is achieved and the commitments made need to be fulfilled, this $300 billion investment fund is not something that can realistically be established. It would be almost close to impossible to bring it to fruition.”
Maleki suggested that one possible interpretation of the U.S. position is that it may see its role as limited to providing sanctions relief, leaving Iran and potential investors to determine whether the fund can actually be created. “We’re going to give them the waivers they need. If they can’t find investors, that’s their problem,” he explained, reflecting on one potential perspective of the negotiators’ approach.
The Treasury Department and the Iranian mission to the United Nations did not immediately respond to requests for comment on this matter.
The legal challenges surrounding the investment fund could become a contentious issue in Congress. Since waivers under the Iran Freedom and Counter-Proliferation Act (IFCA) are limited to 180 days and require justification to Congress, any long-term investment framework for Iran may compel the administration to repeatedly justify why sanctions related to an IRGC-controlled sector should be suspended.
Critics have raised alarms that the proposed agreement offers Iran significant economic advantages while postponing some of the most challenging nuclear and security issues for future negotiations. Maleki noted that the U.S. had previously established considerable leverage over Iran through sanctions, military pressure, and blockades, but may now be relinquishing that leverage in exchange for the reopening of the Strait of Hormuz.
<p”We reached a point where we had leverage that no U.S. president has ever had with Iran,” he remarked. “Yet we gave that away for this, for the opening of the Strait of Hormuz.”
Maleki further predicted that Iran would likely exploit the situation to delay rather than expedite a final agreement. “Iran is going to revert to its strategy of dragging out negotiations, using the incentives of sanctions relief as a means to buy time,” he said. “I do not believe the Iranian regime will rush to finalize a deal.”
John Hannah, a senior fellow at the Jewish Institute for National Security of America and a former national security adviser to Vice President Dick Cheney, cautioned that any economic benefits resulting from the agreement could potentially bolster the IRGC. “It’s almost certain that the IRGC will utilize any economic windfall from this memorandum to rapidly rebuild its conventional military capabilities, particularly its extensive missile and drone arsenal,” Hannah warned.
As discussions continue, the implications of the proposed investment fund and its alignment with U.S. sanctions law remain a critical focal point in U.S.-Iran relations, with potential ramifications for both domestic and international stakeholders.
According to Fox News, the complexities surrounding the investment fund underscore the challenges of navigating legal frameworks while attempting to foster economic development in Iran.