US Treasury Moves to Tap Frozen Iranian Assets for Gulf Allies' War Damage Repairs

US Treasury Secretary Scott Bessent announced on X that Washington will use frozen Iranian assets to compensate Gulf allies for damage from Iranian attacks, marking a sharp escalation in sanctions enforcement. The policy directs that any infrastructure harm inflicted on partners like Saudi Arabia, UAE, Kuwait, and Bahrain will be offset by funds from Iranian accounts, including potential offsets for tolls on a disputed Persian Gulf Strait Authority system. Reports indicate over 80 oil, gas, and infrastructure sites hit since March, with damage estimates reaching $58 billion in some assessments. An unnamed Treasury source told outlets that the department will 'utilize all tools available' to make assets available for rebuilding, while Bessent has ordered cost assessments for past and future damages. This builds on broader US maximum pressure tactics amid stalled negotiations, where Iran demands release of roughly $24 billion in frozen funds. The approach risks further derailing talks, as Tehran views it as theft and has conditioned deals on asset returns. Multiple outlets, including Al-Monitor and Bloomberg, confirm Bessent's X post explicitly stating: 'The Iranian regime will lose the zero-sum game it is playing. Any damage it inflicts on our allies in the Gulf will be paid for with funds extracted from Iranian Accounts.' Reuters and others reported the prior internal directive assessing Gulf damage costs. This pattern extends sanctions beyond traditional freezes into direct reparations mechanisms, potentially using seized ships or crypto alongside bank accounts, amid ongoing regional clashes tied to US-Israel actions against Iranian targets.