Iranian compensation demands are being transformed into a massive privately funded investment vehicle

The new $300 billion fund is a private investment instrument rather than a reconstruction or compensation programme, and it will include no government funds or grants.

The framework agreement between the United States and Iran includes a special $300 billion fund designed to stimulate investment, with more than half of this amount already committed, according to a source familiar with the memorandum of understanding between Tehran and Washington. This move is also expected to help Iranian authorities ease domestic tensions amid a deteriorating economic and financial situation.

The source, who requested anonymity because the plan has not yet been publicly announced, said that as Washington and Tehran prepare to sign on Friday, the fund is intended to provide both sides with an economic incentive to reach a final agreement to end the conflict. Previous reports had mentioned the fund’s existence, but it is now being revealed for the first time that more than half of the total amount has already been pledged and that it will consist entirely of private-sector capital.

US and Iranian officials said on Sunday that they had agreed on a framework to end the war, which began after US and Israeli forces attacked Iran on 28 February, and to lift the US blockade on Iran and reopen the Strait of Hormuz, a key supply route for global oil and gas markets.

According to the source, the new fund is a private investment instrument and not a reconstruction or compensation programme, and it will not include any public funds or government grants. Companies based in the United States, Gulf countries, Asia, South America, and Africa have reportedly agreed to participate in the financing.

Committed investments cover the energy, logistics, manufacturing, and transport sectors. A senior Iranian source said that Tehran initially requested $400 billion in war compensation from the United States, but Washington refused. The idea of a fund, later referred to as the Reconstruction and Development Fund, then emerged.

The Iranian source added that the mechanism would include contributions from regional countries through various channels, including loans, credit lines, or direct financing for rebuilding war-damaged sites such as the Mobarakeh Steel Complex, oil refineries, airports, and broader infrastructure affected by the conflict.

Iran, one of the largest economies in the Middle East, has attracted virtually no significant foreign direct investment over the past four decades due to its exclusion from global capital markets following successive rounds of US and international sanctions.

Yet the country holds the world’s second-largest proven natural gas reserves and the fourth-largest oil reserves. It also has a young and educated population of more than 92 million people, a diversified industrial base, and significant untapped potential in sectors ranging from petrochemicals and mining to tourism and agriculture.

The source familiar with the deal said the investment fund is completely separate from parallel negotiations on lifting US sanctions and unfreezing Iranian sovereign assets abroad, describing them as distinct financial mechanisms with different objectives and timelines.

The fund will only be created or activated once a satisfactory final agreement is reached. The memorandum of understanding, once signed, is intended to structure the process over the next sixty days.

“The fund will only be established after the final agreement is signed… and during those sixty days, fund managers will work with Iranian officials and investors to plan and define projects,” the source said.

A White House spokesperson referred to a CBS interview with US Vice President JD Vance, in which he said Iran could receive a $300 billion reconstruction fund backed by Gulf countries if it complies with an agreement with Washington, including dismantling its nuclear programme, eliminating its stockpile of enriched materials, and accepting a strict inspection and enforcement regime.

The source did not specify how the fund would be managed or who would oversee it, noting that key details are still being finalised. However, they said companies from South Korea, Japan, Singapore, Malaysia, and the United States are among those that have made commitments, while declining to provide a complete list.