How Trump's $300B Gift to Iran Could Help Transform Their Economy
Is the United States about to pay Iran $300 billion to help it rebuild after the damage inflicted by American and Israeli bombs?
The answer, so far, is no-Trump administration officials insist there will be no American dollars going to Iran for reparations. “Not a cent” of U.S. taxpayer money will flow into Tehran, Vice President JD Vance told reporters.
But there has been confusion, because baked into the deal President Donald Trump inked is at least $300 billion in a so-called Reconstruction and Development Fund for Iran, which the country can use to pick up the aftermath of the joint bombardment and the pieces of its war-strained economy.
Number 6 of the 14-point “memorandum of understanding” refers to a “definitive, mutually agreed plan” to be drawn up within 60 days while the U.S. negotiates with Iran over its nuclear program.
And with planned talks in Switzerland canceled, it’s not clear when more details will emerge - including exactly how it would work and who would invest in Iranian projects.
U.S. Won’t Cough Up the Cash
U.S. officials have stressed the money won’t come from American taxpayers, which would be deeply politically unpopular in the U.S. just before the crucial November midterms.
Instead, it will be funded by private investment, and the U.S. will have the final say on all waivers and permissions needed for deals that would, for the moment, be off the table because of sanctions against Tehran.
U.S. officials have indicated Gulf Arab states will make up the lion’s share of the investment, and the wording of the deal refers to “regional partners.”
Companies based in the U.S., the Middle East, Asia, Africa and South America have reportedly agreed to finance the initiative, and more than half of the money has already been pledged, Reuters reported, citing unnamed sources.
But Vance told The New York Times that potential economic benefits for Iran, “paid for by investment from other countries,” would only be delivered if authorities “fundamentally transform their country.”
What Could This Investment Look Like?
Vance has offered one hypothetical. He suggested the U.S. could lift sanctions and allow the United Arab Emirates to invest in a power plant inside Iran.
The U.S. administration likely chose this example because it could be seen as a way to help Iran’s population rather than the regime, said H. A. Hellyer, a senior associate fellow at the Royal United Services Institute (RUSI) think tank in London.
The U.S. would need to lift some of the measures it has in place to punish Iran economically to make this happen, or Emirati companies could find themselves falling foul of American sanctions, Hellyer told Newsweek.
But the United Arab Emirates does have the finances and the know-how to take on a massive project like this, if an agreement is finalized, said Fawaz Gerges, a professor of international relations at the London School of Economics.
Yet beyond this example, it’s still very difficult to work out how this fund is shaping up, although many of the Arab Gulf states will be looking for lucrative opportunities to stabilize the region and recover economically from the bill incurred by the war.
In one scenario, private companies based in the Gulf and elsewhere could invest in mending Iran’s power grid. The country’s energy infrastructure has been hit hard by the war, as have Iran’s hospitals and civilian areas close to where U.S. and Israeli strikes rained down, experts say.
In the short term, too, stabilizing Iran economically, including by fully reconnecting Tehran to the SWIFT banking system, widely used worldwide for financial messaging, is perhaps even more urgent than physically rebuilding the country, Hellyer said. Many Iranian banks have been periodically cut off from SWIFT access, depending on the sanctions in place at the time.
But experts are skeptical about whether the $300 billion fund will even make it into the final deal.
While the White House is likely to be able to repeal some sanctions relatively easily, the ones passed by Congress over the years could be much harder for Trump to roll back.
Sanctions approved by U.S. lawmakers over the decades include penalizing companies investing in Iran’s energy sector and making it risky for foreign banks to engage in Iranian transactions, as they could be cut off from U.S. systems as punishment.
“It’s really early days,” said Hellyer. “The mechanics of unfolding the sanctions, because they're not just all subject to an executive order from Trump, are very problematic.”
Frozen Assets and Waivers
Frozen Iranian assets that Tehran sorely needs for major rebuilding projects, and Trump himself has indicated a willingness to return to Iran what he called “their money” down the line.
"At a certain point in time, I guess we're going to have to give it back," he said. “If we didn't give it back, nobody would ever invest in the dollar again.”
The deal says the U.S. will try to make frozen or limited Iranian funds “fully available.”
Iranian officials say at least $100 billion is frozen abroad, but other estimates put this number far lower. Some have been seized for decades since the clerical regime came to power in Tehran nearly 50 years ago. Several billion is thought to be held in China, with smaller amounts frozen in other jurisdictions such as Iraq, India and Qatar.
Iranian sources have said releasing the first $12 billion is at the top of Tehran’s agenda.
A U.S. official told reporters some Iranian assets could be released as talks take place, if Iran is complying with other parts of the initial deal.
The U.S. will also issue waivers on Iranian oil, which critics say could allow Iran to quickly recover economically even before agreeing to a final deal on the sharpest points of contention, like its nuclear program.
Iran’s economy relies heavily on oil exports and the revenue they generate. This is why the U.S. instituted its blockade of Iranian ports, making sure Iran’s oil couldn’t make it out of the country via the Strait of Hormuz waterway.
How Much Difference Would $300 Billion Make?
The U.S. doesn’t generally provide reparations payments to states it has fought militarily, but does sometimes help with reconstruction efforts or offer compensation to countries affected by a conflict.
Germany was required to pay reparations after World War I, and the defeated Axis Powers had to agree to various deals after World War II that included financial payments.
The U.S. didn’t pay reparations after this war, but did fund broad reconstruction programs. In other scenarios, like in the years after the Gulf War in the early 1990s, Iraq paid compensation to a United Nations-organized fund as reparations for its 1990 invasion of Kuwait, and only finished paying off this debt more than 30 years later.
Iran has demanded reparations of $270 billion for the damage caused by Israeli and American attacks. But the private investment fund could be a palatable way for the U.S. to acknowledge Iran’s stance and encourage Tehran to make concessions in nuclear negotiations, said Gerges.
Ultimately, the idea of $300 billion in investment, however it takes shape, could help Iran stave off its economy unraveling in the short term, if not fully heal the damage wrought on the Iranian economy by the war, said Hellyer.
“It’s not a silver bullet figure,” he added.
2026 NEWSWEEK DIGITAL LLC.
This story was originally published June 20, 2026 at 3:00 AM.