Iran gains access to $300 billion fund

A $300 billion private fund designed to encourage investment in Iran is provided for in a U.S.-Iran framework agreement, and more than half of that amount has already been secured, a source with direct knowledge of the agreement told Reuters.

The fund is designed to give both sides an economic incentive to strike a final deal, said the source, who spoke on condition of anonymity because the plan has not yet been made public, as Washington and Tehran prepare to sign it on Friday.

US and Iranian officials said on Sunday they had agreed on a framework to end the war, which began when US and Israeli forces attacked Iran on February 28, end the US blockade of Iran and reopen the Strait of Hormuz, a key route for supplying the world's oil and gas.

The new fund is a private investment vehicle, not a reconstruction or reparations program, and will not include government money or grants, the source said, adding that companies from the United States, Gulf Arab states, Asia, South America and Africa have agreed to provide financing.

The promised investments include energy, logistics, manufacturing and transportation, the source said.

A senior Iranian source told Reuters that Tehran had initially sought $400 billion in war damages from the United States, but that Washington had said it would not provide it.

Then the idea of ​​a fund emerged, which should be called the Reconstruction and Development Fund.

The envisaged mechanism would see regional countries contribute in various ways, the Iranian source said. This could include providing loans, establishing credit lines or directly financing the reconstruction of war-damaged sites, including facilities such as the Mobarakeh Steel complex, refineries, airports and, more broadly, conflict-affected infrastructure.

Iran, one of the largest economies in the Middle East, has attracted almost no significant foreign direct investment in the past four decades, as it has been cut off from global capital markets by a series of American and international sanctions.

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

The source listed companies from South Korea, Japan, Singapore, Malaysia and the US among the companies that have made commitments, but declined to provide a full list.

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

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

The Fund will not be established or operational until a final and satisfactory agreement has been reached. The Memorandum of Understanding, once signed, should define the process over the next 60 days.

“It will only be formed once the final agreement is signed,” the source said. “During those 60 days, the fund managers will work with the Iranians and investors to plan the projects and determine their scope.”

Iran's Foreign Ministry and Pakistan's Foreign Ministry, which helped broker the investment fund deal, did not immediately respond to requests for comment.

The White House spokeswoman referred to an interview Vice President J.D. Vance gave to CBS on Monday, in which he said Iran could gain access to a $300 billion reconstruction fund backed by Gulf states if it abides by the deal with Washington. That includes dismantling its nuclear program, removing its stockpiles of enriched material and accepting a strict inspection and enforcement regime.

The source declined to say how the fund would be organized or who would manage it, saying key details had yet to be agreed upon.

The source listed companies from South Korea, Japan, Singapore, Malaysia and the US among the companies that have made commitments, but declined to provide a full list.

The sixty-day memorandum represents a framework, not a final agreement, and it is expected that American and Iranian negotiators will work on multiple tracks during that period, including nuclear issues, sanctions, and regional security.