Trump Will Use Iran’s $24B in Frozen Assets to Pay for Iran’s Damage to Gulf Allies

President Donald Trump appears to have found a powerful new way to push back against Iran’s demands in ongoing peace negotiations. Rather than releasing billions of dollars in frozen Iranian assets as Tehran has demanded, the administration is exploring a plan that would use those same funds to compensate America’s Gulf allies for damage caused by Iranian attacks.

The proposal turns one of Iran’s most important negotiating demands into a potential financial penalty. Instead of receiving billions from Washington, Tehran could end up watching that money flow to countries it attacked during the war.

Iran Wants Its Money Back

At the center of the dispute is approximately $24 billion in Iranian assets frozen by the United States.

Iranian officials have made clear that access to those funds is a major condition for any peace agreement. Mohsen Rezaei, an adviser to Iran’s supreme leader, told CNN that negotiations have effectively reached a deadlock and that progress depends on the United States releasing the frozen assets.

The demand comes as Iran is also seeking access to billions in oil revenues, relief from sanctions on crude exports, an end to restrictions affecting its ports, and leverage over the Strait of Hormuz.

From Tehran’s perspective, these are reasonable conditions for ending the conflict. From Washington’s perspective, however, Iran is asking for financial concessions after months of attacks against American forces and U.S. allies throughout the Gulf region.

That is where Trump’s new strategy comes into play.

Bessent’s Plan Changes the Conversation

Treasury Secretary Scott Bessent has directed Treasury officials to begin assessing damage suffered by Gulf allies during the conflict.

According to sources familiar with the effort, the Treasury Department is examining whether Iranian assets can be used to fund rebuilding and repairs in countries damaged by Iranian attacks.

One source described the administration’s thinking bluntly.

“Treasury will utilize all tools available to allow Iranian assets to be made available to our Gulf allies to support rebuilding and repairs for any future damage caused by Iran.”

The source added that Bessent has instructed his team to obtain comprehensive estimates of damage already inflicted by Iran and to determine whether Iranian assets could also be used to pay for those costs.

In practical terms, the administration is exploring a simple principle: if Iran caused the damage, Iran should pay for the repairs.

That represents a dramatic shift from the negotiating framework Iran has been seeking.

The Countries Seeking Compensation

The list of countries that could potentially benefit from such a program is substantial.

Kuwait and Bahrain were both targeted by Iranian missile attacks in recent days after American strikes hit Iranian military facilities near the Strait of Hormuz.

Kuwait reported ballistic missiles passing over residential areas and causing material damage. Bahrain activated air raid sirens and directed residents to seek shelter as missiles approached.

Earlier attacks reportedly damaged Kuwait International Airport, killing one person and injuring more than sixty others.

The conflict has not been limited to those two nations.

According to reports, Saudi Arabia, the United Arab Emirates, Qatar, Jordan, Bahrain, and Kuwait have all suffered damage from Iranian strikes during the war. Military installations, transportation infrastructure, energy facilities, and commercial assets have been affected.

Particularly concerning was damage to critical energy infrastructure, including facilities connected to Qatar’s liquefied natural gas industry. The broader conflict has also disrupted regional commerce and contributed to higher energy prices worldwide.

The total rebuilding bill could reach into the billions of dollars.

That makes the administration’s interest in Iran’s frozen assets understandable. Rather than asking American taxpayers or Gulf governments to absorb the costs, officials are examining whether the money can come directly from Iran.

A Direct Response to Iranian Demands

What makes the proposal especially significant is its timing.

Iran is demanding the release of frozen assets at precisely the moment the Trump administration is considering redirecting those assets to Iran’s victims.

The contrast could hardly be sharper.

Tehran is essentially asking Washington for billions of dollars while simultaneously insisting on sanctions relief and other concessions. The Trump administration’s response appears to be that Iran should first compensate the countries that suffered from its attacks.

The proposal sends a clear message that the administration is unwilling to reward military aggression.

Instead of treating frozen assets as a diplomatic giveaway designed to secure a deal, the White House appears increasingly interested in treating those funds as a source of compensation for countries that were harmed.

That changes the leverage equation considerably.

Pressure on Negotiations

The policy could also have major implications for future negotiations.

Iran has viewed the frozen assets as a valuable bargaining chip and a critical source of financial relief. Losing access to those funds would represent a significant setback for Tehran.

The threat becomes even more powerful if portions of the assets are legally redirected to Gulf allies before a final agreement is reached.

That possibility creates additional pressure on Iranian negotiators. Every delay in reaching a settlement could increase the likelihood that more of the frozen assets become tied to reconstruction efforts and damage claims.

At the same time, the proposal strengthens Trump’s position with Gulf partners who have faced missile attacks, infrastructure damage, and economic disruption during the conflict.

Rather than simply promising support, the administration is looking for a way to make Iran itself bear the financial consequences.

Trump’s Warning to Tehran

The emerging strategy reflects a broader principle that has often defined Trump’s approach to foreign policy: adversaries should pay a price for actions that harm American interests and allies.

Iran entered negotiations seeking access to $24 billion in frozen assets. It now faces the possibility that those same funds could be used to rebuild airports, military facilities, energy infrastructure, and other assets damaged by Iranian missiles and drones.

Whether the plan is ultimately implemented remains to be seen. Legal and diplomatic hurdles still exist, and negotiations remain fragile.

But the political message is already clear.

Iran wants its money back.

Trump’s response is that the countries Iran attacked may have a stronger claim to it.