The United States confirmed on Monday it had signed off on the transfer of $6 billion in frozen Iranian funds from South Korea, paving the way for five US citizens to leave Tehran.

The archenemies announced last month, after protracted negotiations, a deal in which the US citizens were freed from prison and put under house arrest, with the expectation they will fly out of Iran once the funds are moved to an account in Qatar.

Secretary of State Antony Blinken notified Congress that he had gone ahead on a key part of the agreement, signing a waiver that will shield banks involved in the transfer from US sanctions.

The money transfer is “a critical step in securing the release of these five US citizens,” a State Department spokesperson said.

President Joe Biden’s administration has insisted that Iran will only be allowed to use the money to buy food, medicine and other humanitarian goods, a point contested by Iran’s clerical state, a nemesis of Washington since the 1979 Islamic Revolution overthrew the pro-Western shah.

“We have not lifted any of our sanctions on Iran, and Iran is not receiving any sanctions relief,” the State Department spokesperson said on customary condition of anonymity.

“We continue to counter the Iranian regime’s human rights abuses, destabiliing actions abroad, its support for terrorism and its support for Russia’s war against Ukraine.”

In Tehran, foreign ministry spokesman Nasser Kanani insisted that the money will allow the Islamic republic to “purchase all non-sanctioned goods” which are not limited to food and medicine.

“We hope that this transfer will be completed in the coming days and that Iran will have full access to its assets,” Kanani said.

Kanani voiced optimism that the prisoner exchange “will take place soon.”

The official IRNA news agency had reported that five Iranians will also be released from the United States.

The five Americans had been held for as long as nearly eight years. All are of Iranian descent, with Tehran not recognising dual nationality.

Sources earlier said to expect the five Americans to leave in mid-September.

‘Iran’s funds’ or ‘ransom payment’?

Iran had generated the $6 billion in question by selling its oil to South Korea, a close US ally, which froze the funds after the US under former president Donald Trump reimposed sanctions as he withdrew from a nuclear accord.

“As we have said, no money is going to Iran directly and no taxpayer funds are being used. The funds held in South Korea are Iran’s funds,” the State Department spokesperson said.

Biden took office with hopes of restoring the 2015 nuclear agreement, under which Iran promised to constrain its contested nuclear work in return for sanctions relief.

But months of talks failed to produce a breakthrough, in part over Iranian demands for a full lifting of sanctions that were not directly linked to the nuclear programme.

Biden himself has conceded that the 2015 agreement is “dead,” with prospects sinking further after massive protests broke out in Iran a year ago following the death in custody of Mahsa Amini, who had been arrested for allegedly violating the clerical state’s Islamic dress code.

The release of the funds and prisoners could come almost exactly on the anniversary of her death, and just as Biden and Iran’s hardline president, Ebrahim Raisi, are in New York for the annual UN General Assembly, although they are not expected to meet.

Biden’s Republican rivals have gone on the attack, describing the president as agreeing to a “ransom payment” to a state classified by Washington as a sponsor of terrorism.

The transfer “creates a direct incentive for America’s adversaries to conduct future hostage-taking,” said Representative Mike McCaul, the Republican chair of the House Foreign Affairs Committee.

“The administration is demonstrating weakness that only further endangers Americans and freedom-loving people around the world,” he said.

The Biden administration has acknowledged making difficult choices but said its priority was to free Americans and that the money already belonged to Iran.

The five Americans set for release include Siamak Namazi, a businessman arrested in 2015 and accused of spying on what his family calls laughable evidence such as past affiliations with US think tanks.

The others include wildlife conservationist Morad Tahbaz, venture capitalist Emad Sharqi and two others who wished to remain anonymous.