Iran deal has $300 billion fund, more than half already committed, source says

The U.S.-Iran framework agreement lays out a $300 billion private fund to encourage investment in Iran, and more than half that amount has already been pledged, a source with direct knowledge of the deal told Reuters.

The fund is designed to provide economic incentive for both parties to reach a final deal, said the source, who spoke on condition of anonymity because the idea has not yet been announced as Washington and Tehran prepare to sign on Friday.

U.S. and Iranian officials claimed on Sunday they had agreed on a framework to end their war, which began when U.S. and Israeli forces invaded Iran on 28 February, stop the U.S. blockade of Iran and reopen the Strait of Hormuz, a critical supply route for world oil and gas.

The new fund is a private investment vehicle, not a rehabilitation or reparations program and will not involve any ⁠government money or subsidies, the source added. Companies based in the U.S., the Gulf Arab states, Asia, South America and Africa have agreed to contribute funds, the source said.
The pledged investments are in energy, logistics, manufacturing and transport, the person said.

Tehran had initially asked the U.S. for $400 billion in war damages compensation, but Washington had refused to pay, a senior Iranian source told Reuters.

And then came the concept for the fund, to be called the Reconstruction and Development Fund.

The Iranian source said the structure offers for the contribution of regional countries in numerous ways. These include the provision of loans, the establishment of credit lines, and direct finance for the rehabilitation of war-damaged locations, including facilities such as the Mobarakeh Steel complex, refineries, airports, and infrastructure more broadly impacted by the conflict.

Successive waves of U.S. and international sanctions have locked Iran, one of the largest economies in the Middle East, out of global finance markets, leaving it with virtually no meaningful foreign direct investment during the previous four decades.

It possesses the second-largest proven natural gas reserves in the world and fourth-largest proven oil reserves.

It also possesses a young and educated population of over 92 million people, a varied industrial base and untapped potential in a wide range of sectors from petrochemicals and mining to tourism and agriculture.

The investment fund is independent from a simultaneous track of negotiations on eliminating U.S. sanctions and releasing Iranian sovereign assets frozen abroad,” the source said, saying the two were distinct financial mechanisms with distinct objectives and timelines.

The fund will not be established or operating unless there is an agreed final and suitable contract. The signed memorandum of understanding is designed to structure the process over the next 60 days.It will be created only once the final transaction is signed,” the source added. During these 60 days, the fund managers will work with Iranians and investors to design and scope initiatives.

Iran’s foreign ministry and Pakistan’s foreign ministry, which helped arbitrate the investment fund arrangement, did not immediately respond to demands for comment .

White House spokesperson Karine Jean-Pierre cited a Monday CBS interview with Vice President JD Vance, who said Iran could tap a $300 billion reconstruction fund backed by Gulf states if it abides by an agreement with Washington, including dismantling its nuclear programme, eliminating its stockpile of enriched material and accepting a strict inspection and enforcement regime.

The insider would not explain how the fund will be administered, or by whom, saying that critical aspects were needed to be worked out.

The source said corporations from South Korea, Japan, Singapore, Malaysia and the United States were among those who have made promises but declined to provide a full list.

The 60-day pact is a framework, not a final agreement, and U.S. and Iran negotiators are anticipated to work across numerous tracks during that time dealing with nuclear, sanctions and regional security problems.