Iran, U.S. free prisoners as end of international sanctions nears

VIENNA/DUBAI, Jan 16 (Reuters) - - Iran freed five Americans including a Washington Post reporter on Saturday as the two countries staged a series of goodwill gestures ahead of the expected announcement of the lifting of international sanctions against Tehran under a nuclear deal.

U.S. President Barack Obama pardoned three Iranian-Americans charged for sanctions violations, and U.S. officials said four others would be released, in a thaw in relations between the two nations that has shaped the Middle East since Iran's Islamic Revolution of 1979.

The ending of sanctions would bring the Middle Eastern country of 80 million people back to the global economic stage after several years away, and increase Iranian influence in a region torn by sectarian strife.

The International Atomic Energy Agency was expected to announce in Vienna that Tehran had complied with a deal reached last year to curb its nuclear program in return for the lifting of sanctions imposed by the United States, United Nations and European Union.

Ahead of that announcement, Iran is releasing five Americans and the United States is freeing seven Iranians charged with sanctions violations, in what U.S. officials described as a humanitarian gesture.

Among the Americans being freed are Washington Post reporter Jason Rezaian and Christian pastor Saeed Abedini, while Iranian news media said seven Iranians held for violating sanctions would be freed.

Photos of Washington Post bureau chief Jason Rezaian:

Iranian Foreign Minister Javad Zarif and U.S. Secretary of State John Kerry, who developed a close rapport during months of unprecedented talks hammering out last year's deal, met in a Vienna hotel before the expected sanctions announcement.

"Implementation day" of the nuclear is a turning point in the hostility between Tehran and Washington, and is a prize for both Obama and Iranian President Hassan Rouhani.

The two leaders have faced strong opposition from hardliners at home in countries that have called each other "Great Satan" and part of the "axis of evil."

"Today, with the release of the IAEA chief's report, the nuclear deal will be implemented, after which a joint statement will be made to announce the beginning of the deal," Zarif was quoted as saying in Vienna by state news agency IRNA.

"Today is a good day for the Iranian people as sanctions will be lifted today," the ISNA agency quoted him as saying.

The sanctions, mostly imposed in the last five years, have cut Iran off from the global financial system, drastically reduced the major oil producer's exports and imposed severe economic hardship on ordinary Iranians. Most will be lifted immediately.

IRAN ASSETS

Even before the expected announcement that sanctions would be lifted, Iran's Mehr news agency reported on Saturday that executives from two of the world's largest oil companies, Shell and Total, had arrived in Tehran for talks with state firms. Shell denied it.

Under the deal, Iran has agreed to forego nearly all enriched uranium, which world powers feared could be used to make a nuclear weapon. Once sanctions are lifted, Iran plans to swiftly ramp up its exports of oil.

Tens of billions of dollars worth of Iranian assets will be unfrozen and global companies that have been barred from doing business there will be able to exploit a market hungry for everything from automobiles to airplane parts.

Iran's expected return to an already glutted market is one of the main factors contributing to a global rout in oil prices, which fell below $30 a barrel this week for the first time in 12 years. Tehran says it could boost exports by 500,000 barrels per day within weeks.

The nuclear deal is opposed by all of the Republican candidates vying to succeed Obama as president in an election in November.

Nevertheless, Ted Cruz, a conservative senator from Texas and one of the Republican frontrunners, tweeted in support of the release of Christian convert Abedini: "Praise God! Surely bad parts of Obama's latest deal, but prayers of thanksgiving that Pastor Saeed is coming home."

The prisoner deal was nearly derailed in December by looming new U.S. sanctions on Iran for test-firings of a ballistic missile capable of delivering a nuclear warhead.

But the Obama administration officials decided to delay the new sanctions after Zarif warned Kerry that any such censure of the Islamic Republic could endanger the prisoner swap.

The warming in relations between Iran and the United States is viewed with deep suspicion by U.S. allies in the Middle East including Israel and Saudi Arabia. It is supported by Washington's European allies, who joined Obama earlier in his presidency in making sanctions far tighter as part of a joint strategy to force Tehran to negotiate.

The Obama administration says the deal reached last July offered the best possible prospect of ensuring Iran would not develop a nuclear weapon, and could never have been achieved without the support of allies, which was always contingent on a pledge to lift sanctions once Iran complied.

For Iran, it marks a crowning achievement for Rouhani, a pragmatic cleric elected in 2013 in a landslide on a promise to reduce Iran's international isolation. He was granted the authority to negotiate the deal by Supreme Leader Ayatollah Ali Khamenei, an arch-conservative in power since 1989.

The prospect of Iran's emergence from isolation could overturn the geopolitical balance of the Middle East. Iran is the pre-eminent Shi'ite Muslim power and its allies are fighting proxy wars in Iraq, Syria and Yemen against allies of its main Sunni Muslim regional rival, Saudi Arabia.

In Iraq, Tehran has found itself on the same side as the United States, supporting a Shi'ite-led government against the Sunni militants of Islamic State, also known as ISIS or ISIL.

"There are some people who see peace as a threat, who were always against (the nuclear deal) and will continue to oppose it," Foreign Minister Zarif, a U.S.-educated fluent English speaker, was quoted as saying by ISNA.

He has argued, including in a New York Times op-ed column last week, that Iran wants to help the global fight against Sunni Muslim militants spurred on, Iran says, by Saudi Arabia.

"It's now time for all - especially Muslim nations - to join hands and rid the world of violent extremism. Iran is ready," Zarif tweeted on Saturday.

But U.S.-Iranian hostility still remains deeply entrenched. Apart from the nuclear issue, Washington maintains separate, far less comprehensive sanctions on Iran over its missile program.

Iran has tested missiles since the nuclear agreement, drawing threats from Washington to tighten those sanctions. A week ago Iran detained 10 U.S. sailors on two boats in the Gulf, although they were released the next day after Tehran said it had concluded they had entered its waters by mistake. (Writing by Peter Graff and Alistair Bell; Editing by Ralph Boulton)