U.S. Treasury proposes using frozen Iranian assets for compensation

The U.S. Treasury Department is considering using frozen Iranian assets to compensate Washington’s Gulf allies for damage allegedly caused by Tehran, according to people familiar with the matter.

Treasury Secretary Scott Bessent has reportedly ordered an assessment of the costs and is examining whether Iranian funds could be used to finance both future reconstruction efforts and repairs for past damage.

Iran has rejected the proposal. Deputy Foreign Minister Kazem Gharibabadi said Iranian assets were not “war spoils” and could not legally be diverted to compensate other countries.

The issue comes amid broader U.S.-Iran negotiations over sanctions and access to billions of dollars in Iranian assets frozen abroad.