The United States is weighing the possibility of reallocating Iranian assets—including frozen funds and previously seized ships—to help its Gulf allies rebuild and compensate for damage caused by Iranian attacks, according to reports from Reuters and Fox Business. US Treasury Secretary Scott Bessent has tasked a specialized team with estimating the full cost of the damage sustained by Washington's partners in the region since the escalation began on 28 February, and with identifying options for using Iranian assets to cover those losses, as well as potential future damage.
A source cited by Fox Business indicated that Bessent instructed Treasury officials to compile comprehensive damage estimates linked to attacks that have occurred since the start of the conflict with Iran. The source added that the Treasury intends to employ all available tools to make these assets accessible to affected Gulf states, ensuring funding for reconstruction and repair efforts—whether for past or future damage. This step, the source noted, could deal a fresh blow to the fragile truce between the US and Iran.
An informed ABC News source corroborated that the US administration is in contact with its Gulf allies and has requested a precise assessment of the scale of the damage. The assets under consideration include frozen funds and ships previously seized by the United States. No official statement has yet confirmed that the Treasury intends to use Iranian assets for this purpose.
Iran's Frozen Assets: A Sticking Point in Negotiations
Since the Islamic Revolution in 1979, Iran has been under strict US sanctions that include frozen assets abroad—a persistent obstacle in negotiations between Washington and Tehran. The Iranian Supreme Leader's military adviser, Mohsen Rezaei, told CNN that any potential agreement with the United States remains contingent on the release of Iran's frozen assets, describing this as a test of Washington's seriousness. Rezaei stated: "If Trump wants to reach an agreement with Iran, the sum of 24 billion dollars is a test of trust that the United States must pass; once it does, the path will be opened for it." He stressed that "this is our money, not the money of the United States."
Tehran is demanding the immediate release of $12 billion in frozen funds upon signing an interim agreement, with a further $12 billion to follow later. US officials fear that unfreezing these funds now would deprive Washington of a key point of leverage in the negotiating process. Negotiations have stalled despite ongoing regional and international mediation efforts. Iran's semi-official ISNA news agency reported that a Pakistani minister arrived in Tehran on Saturday carrying a special message from Pakistan's army chief and prime minister to the Iranian leadership.
The military confrontation erupted on 28 February, following coordinated air strikes by Israel and the United States on Iran that killed the Supreme Leader and several senior commanders. The conflict has heightened tensions across the region, with implications for European security and energy markets. European leaders have been closely monitoring the situation, as instability in the Gulf could disrupt oil supplies and exacerbate migration pressures. The potential use of Iranian assets to fund reconstruction in Gulf states also raises questions about the legality and precedent of such a move under international law.
For European observers, the development underscores the fragility of US-Iran relations and the broader geopolitical risks. The European Union has maintained its own sanctions regime against Iran and has sought to preserve the Joint Comprehensive Plan of Action (JCPOA), though the deal has been in limbo since the US withdrawal in 2018. Any unilateral US action to seize Iranian assets could further complicate European efforts to engage diplomatically with Tehran.
As the situation evolves, European Pulse will continue to track the implications for European foreign policy and security. For related coverage, see our report on US Forces Down Two Iranian Drones Near Strait of Hormuz Amid Rising Tensions and the broader context of NATO's defence posture.
