The United States is preparing to examine whether Iranian assets could be redirected to help finance reconstruction and recovery efforts in Gulf countries affected by Tehran’s recent military attacks, according to a person familiar with the matter. The proposal, if ultimately pursued, would represent one of Washington’s most consequential economic responses since hostilities between the United States and Iran escalated into open conflict earlier this year.
The reported initiative emerged after Iran launched another wave of attacks targeting Bahrain and Kuwait over the weekend, highlighting the fragility of the ceasefire that has struggled to hold despite weeks of diplomatic engagement. The renewed violence has complicated already difficult negotiations aimed at ending a conflict that has reshaped the security landscape across the Middle East.
According to the source, U.S. Treasury Secretary Scott Bessent has instructed officials to evaluate the financial cost of damage inflicted on American allies in the Gulf region during the conflict. The assessment is expected to provide the basis for determining how reconstruction costs could be addressed if Washington decides to pursue legal and financial mechanisms involving Iranian assets.
The source added that Treasury officials are not only reviewing losses already sustained by Gulf partners but are also considering whether Iranian assets could potentially be used to compensate for future damage should additional attacks occur. Such an approach would significantly broaden the scope of any financial strategy beyond immediate reconstruction.
No details were provided regarding the specific category of Iranian assets currently under review. It remains unclear whether the discussion involves only assets already frozen under existing sanctions or extends to other categories of property that could become subject to legal action. The absence of clarification has fueled speculation that Washington may be examining a wider range of financial instruments than previously anticipated.
The reported deliberations surfaced only one day after Mohsen Rezaei, an adviser to Iran’s supreme leader, indicated that any comprehensive peace agreement would depend heavily on access to approximately $24 billion in Iranian assets frozen by the United States. Speaking to CNN, Rezaei suggested that the release of those funds had become a central condition in Tehran’s negotiating position as efforts continued to end the three-month war.
The apparent divergence between Washington’s reported planning and Tehran’s demands illustrates the growing distance separating both sides at the negotiating table. While Iranian officials continue pressing for the unfreezing of financial assets, U.S. policymakers now appear to be exploring options that could instead redirect at least some Iranian wealth toward rebuilding damage suffered by regional allies.
Should such a proposal advance, it could become another major source of disagreement capable of undermining an already delicate ceasefire. Financial disputes have historically complicated diplomatic settlements following armed conflicts, particularly when questions arise regarding reparations, sanctions, and compensation for civilian and military damage.
Diplomatic efforts have nevertheless continued despite mounting obstacles. A Pakistani minister serving as an intermediary traveled to Tehran on Saturday carrying a letter addressed to Iran’s Supreme Leader, Ayatollah Mojtaba Khamenei. The visit reflected continuing attempts by regional actors to prevent another large-scale escalation even as military exchanges resumed.
The latest round of hostilities unfolded after Iran launched seven ballistic missiles toward Bahrain and Kuwait on Saturday. Residents in both countries experienced renewed air raid alerts as defense systems responded to incoming projectiles.
Explosions were reported near Kuwait International Airport while residents across parts of the country observed interceptor activity in the skies. Kuwaiti military authorities later announced that defense forces successfully dealt with seven ballistic missiles that passed over populated areas. Officials said the attacks caused material damage but reported no fatalities.
Authorities in Bahrain likewise activated emergency warning sirens as residents were instructed to seek shelter. Explosions were heard around the capital, Manama, prompting heightened security measures throughout the kingdom. Bahraini officials strongly condemned the attack and reaffirmed their commitment to cooperating with regional security partners.
Iran’s Islamic Revolutionary Guard Corps later claimed responsibility for the operation, describing it as an attack against what it characterized as enemy military facilities. According to statements released by the IRGC, the operation targeted Ali Al Salem Air Base in Kuwait along with facilities associated with the U.S. Navy’s Fifth Fleet headquarters in Bahrain.
Neither Kuwait nor Bahrain confirmed that those facilities sustained direct damage. Military authorities instead emphasized the effectiveness of defensive operations that prevented more significant destruction while continuing to evaluate the full extent of the attacks.
The latest missile launches followed another military confrontation one day earlier. On Friday, U.S. Central Command announced that American forces intercepted four Iranian one-way attack drones heading toward the Strait of Hormuz, one of the world’s most strategically significant maritime chokepoints. The interceptions underscored continuing concerns that commercial shipping routes remain vulnerable despite international efforts to stabilize the region.
The Strait of Hormuz carries a substantial portion of global oil exports, making any military activity in the area a matter of international economic concern. Shipping companies and energy markets have closely monitored developments as insurers, vessel operators, and governments assess potential disruptions to maritime traffic.
The renewed exchange of attacks has further reinforced concerns that neither side has fully committed to de-escalation despite repeated diplomatic statements supporting negotiations. Instead, both Washington and Tehran appear to be balancing military operations with political dialogue, creating an unpredictable environment in which progress toward a lasting settlement remains uncertain.
Against that backdrop, discussions surrounding Iranian assets have assumed greater strategic importance. Frozen sovereign assets have long served as leverage in international negotiations, but proposals to redirect those resources toward reconstruction would introduce additional legal and diplomatic complexities. Questions surrounding sovereign immunity, international financial law, sanctions enforcement, and compensation mechanisms would likely become central to any implementation process.
Legal experts have frequently noted that transferring foreign state assets for compensation purposes requires navigating complicated domestic and international legal frameworks. Such actions often invite court challenges while generating broader diplomatic consequences extending well beyond the immediate conflict.
For Gulf states, however, reconstruction funding has become an increasingly urgent issue as governments assess infrastructure damage and security costs resulting from months of regional instability. Repairing military facilities, transportation infrastructure, public utilities, and other strategic assets could require substantial financial resources depending on the overall scale of destruction.
Washington’s reported review therefore reflects broader discussions about burden-sharing following regional conflicts. Rather than relying exclusively on American financial assistance, policymakers appear to be evaluating whether responsibility for reconstruction can be linked directly to the party deemed responsible for the damage.
At the same time, any move involving Iranian assets could influence ongoing sanctions policy. Existing restrictions have already placed severe constraints on Tehran’s financial system, while negotiations over sanctions relief have repeatedly stalled amid disagreements over security guarantees, nuclear issues, and regional military activity.
Iranian officials have consistently argued that frozen assets belong to the Iranian people and should be released without additional conditions. American officials, meanwhile, have frequently maintained that sanctions and asset restrictions remain essential tools for influencing Iranian behavior and protecting regional security interests.
Those competing positions now intersect with the broader question of reconstruction funding. If Washington ultimately pursues asset redirection, Tehran could interpret the move as a significant escalation in economic pressure even if military hostilities begin to subside.
The coming weeks are therefore expected to test whether diplomatic channels can produce meaningful progress before new financial disputes further complicate negotiations. While mediators continue attempting to bridge differences between Washington and Tehran, renewed missile attacks and discussions over Iranian assets demonstrate that both military and economic dimensions of the conflict remain deeply intertwined.
For Gulf governments, immediate priorities continue to center on restoring security, repairing damaged infrastructure, and reassuring citizens following another weekend of regional instability. Whether reconstruction is ultimately financed through conventional assistance, international partnerships, or any future mechanism involving Iranian assets will depend largely on political decisions still under consideration in Washington and the outcome of broader peace negotiations that remain far from resolution.
