The Trump administration is asserting that billions in frozen Iranian assets will not actually reach Iran, countering claims that the White House is set to finance one of its biggest adversaries.
“This money will never impact Iran,” a senior U.S. official stated.
Officials clarify that the funds will be treated like an escrow account; payments will go directly to approved vendors providing humanitarian supplies, rather than to the Iranian government itself.
“We don’t have much cash flow or benefits,” the official added.
As part of ongoing negotiations between the U.S. and Iran, Tehran can request to buy essentials like food and medicine, but won’t receive the money directly.
This setup means payments will go straight to the businesses that supply agricultural products and medical devices.
The humanitarian spending derives from a $6 billion fund held by Qatar, released by former President Joe Biden in connection with a September 2023 prisoner exchange, which aimed to bring home five Iranian-Americans in return for five Iranians in U.S. custody.
This comes after Iranian media claimed this week that it would provide the Iranian government with $12 billion in two phases.
The U.S. argues that this arrangement gives Iran reasons to continue cooperating on nuclear inspections and other treaty details, while keeping control over the extent and timing of the economic relief.
The system is designed to ensure that these funds do not enter Iranian government accounts, and payments could be halted immediately if negotiations falter.
The $6 billion originated from oil that Iran sold to South Korea years ago, and the Biden administration permitted its transfer to Qatar in 2023 for humanitarian use. Although these funds were sent to Doha, payment to Tehran was withheld following the Hamas incident in Israel on October 7, 2023.
This financing is in addition to an estimated $10 billion that Iran could earn through oil sales, thanks to a 60-day sanctions waiver granted by the U.S., which also lifted the blockade on Iranian ports.
Officials have played down the significance of these sanctions waivers, pointing out that Iran was already engaged in oil sales on the black market despite existing sanctions.
Nonetheless, experts argue that this change gives Iran access to a legal banking network, facilitating quicker financial transactions.
“There’s a significant distinction between trying to limit funding to the world’s largest state sponsor of terrorism and essentially looking the other way,” Behnam Ben Taleburu, a senior director at the Foundation for Defense of Democracies, remarked.
This funding does not include $300 billion meant for reconstruction in Iran, which the U.S. has pledged to collect from private firms worldwide if Tehran reaches a final agreement in negotiations.
The official emphasized that the released funds will not include large cash transfers but will rather be small amounts specifically tied to particular humanitarian needs and will not enter Iran’s financial system.
Officials believe this structure meets Iran’s domestic humanitarian needs while preventing the regime from redirecting funds to military purposes or its nuclear ambitions.
The deal is politically sensitive within broader discussions, with critics warning that any form of sanctions relief might ultimately empower Tehran.
Opponents argue that using any funds for Iran could be risky, noting that such money is fungible and could enable other illicit activities.
However, the memorandum specifically bans Iran from sponsoring terrorism, and the administration asserts it can terminate access to frozen funds if such actions occur.
