Iran Deal Includes $300 Billion Fund, More Than Half Of Which Already Committed: Report

DUBAI, June 16 (Reuters) – The U.S.-Iran framework agreement outlines a $300 billion special fund designed to stimulate investment in Iran, with more than half of that sum already committed, a source with direct knowledge of the deal told Reuters.

The source, who spoke on condition of anonymity, said the fund was designed to provide an economic incentive for both sides to reach a final agreement as the plan had not yet been announced as Washington and Tehran prepared to sign it on Friday.

U.S. and Iranian officials said Sunday they agreed on a framework to end their war, which began when U.S. and Israeli forces attacked Iran on Feb. 28, lifting the U.S. blockade of Iran and reopening the Strait of Hormuz, a key supply route for global oil and natural gas.

The new fund is a private investment vehicle, is not a reconstruction or compensation program and will not include any government money or grants, the source said, adding that companies based in the US, Gulf Arab countries, Asia, South America and Africa have agreed to commit to financing.

The source said that the committed investments include energy, logistics, production and transportation.

A senior Iranian source told Reuters that Tehran initially asked the United States for $400 billion in compensation for war damages but Washington said it would not provide it.

That’s when the idea for the fund to be renamed the Reconstruction and Development Fund emerged.

The Iranian source said that the mechanism envisages regional countries contributing in various ways. These include securing loans, establishing credit lines or directly financing the reconstruction of war-damaged areas, including facilities such as the Mobarakeh Steel complex, refineries, airports and broader conflict-affected infrastructure.

Iran, one of the largest economies in the Middle East, has attracted virtually no significant foreign direct investment over the past four decades; has been locked out of global capital markets due to successive waves of US and international sanctions.

The country has the world’s second largest proven natural gas reserves and fourth largest proven oil reserves.

It also has a young, educated population of more than 92 million, a diversified industrial base and significant untapped potential in a variety of sectors, from petrochemicals and mining to tourism and agriculture.

The investment fund is completely separate from the parallel path of negotiations on the lifting of US sanctions and the release of Iranian state assets frozen abroad, the source said, describing the two as different financial mechanisms with different objectives and timelines.

The Fund will not be established or become operational until a final and satisfactory agreement is reached. After the memorandum of understanding is signed, it is aimed to structure the process over the next 60 days.

“This will be created only after the final agreement is signed,” the source said. “During these 60 days, fund managers will work with Iranians and investors to plan and scope projects.”

Iran’s foreign ministry and Pakistan’s foreign ministry, which brokered the investment fund deal, did not immediately respond to requests for comment.

Iran could gain access to a $300 billion reconstruction fund backed by Gulf states if it abides by an agreement with Washington that includes dismantling its nuclear program, eliminating its stockpile of enriched materials and agreeing to a strict inspection and enforcement regime, a White House spokesman said Monday, noting a CBS interview with Vice President J.D. Vance.

While the source did not say how or by whom the fund would be managed, he noted that important details still need to be worked out.

Companies from South Korea, Japan, Singapore, Malaysia and the United States were among the companies that made commitments but declined to provide a comprehensive list, the source said.

The 60-day agreement is a framework, not a final agreement, and US and Iranian negotiators are expected to work across multiple channels during this period, covering nuclear, sanctions and regional security issues.

(Reporting by Andrew Mills, Maha El Dahan and Parisa Hafezi; Additional reporting by Gram Slattery in Washington and Saad Sayeed in Karachi; Editing by Jon Boyle and Alexander Smith)