WASHINGTON—The Obama administration said for the first time on Thursday that its $ 400 million cash payment to Iran in January was used as "leverage" to gain the release of American prisoners, fueling criticism that the exchange amounted to the U.S. paying ransom.
State Department spokesman John Kirby confirmed that the U.S. refused to allow Iran to take possession of the cash until a plane carrying the freed Americans had taken off from Tehran.
"If you're asking me was there a connection in that regard, at the endgame, I'm not going to deny that," Mr. Kirby said at a State Department news briefing.
"We took advantage of leverage that we felt we could have to make sure that they got out safely and efficiently," he added.
Mr. Kirby was responding to questions about a report in The Wall Street Journal disclosing that an Iranian cargo plane was not permitted by the U.S. to leave Geneva with $ 400 million in euros, Swiss francs and other currencies stacked on shipping pallets until the Americans had left Tehran. The exchange took place on Jan. 17.
Administration officials, including President Barack Obama, have said the cash payment was not ransom because the $ 400 million was money the U.S. already owed Iran to settle a failed arms deal from more than three decades ago.
The handling of the payment and the timing of the Americans' release have drawn criticism from Republicans. U.S. Sen. Ben Sasse (R., Neb.) said Mr. Kirby's statements on Thursday showed the cash transfer to Iran was a ransom payment.
"If it quacks like a duck, it's a duck," Mr. Sasse said. "If a cash payment is contingent on a hostage release, it's a ransom. The truth matters and the president owes the American people an explanation."
Sen. Tom Cotton (R., Ark.), said the latest reports about the cash payment also sent a message to extremists that "the United States will pay cold, hard cash for hostages."
Republican leaders in Congress have said they are planning to hold hearings on the cash transfer in September.
Mr. Kirby said repeatedly that the payment didn't amount to ransom. "We don't pay ransom," he said. Instead, Mr. Kirby portrayed the cash as a useful tool: "It would have been foolish, imprudent, irresponsible for us not to try to maintain maximum leverage."
U.S. officials also have said that the prisoner release and the arms-deal settlement were negotiated through separate diplomatic channels, and denied that the two were linked.
The White House announced in January that the U.S. would pay Iran $ 400 million in the first installment of a $ 1.7 billion settlement the U.S. and Iran reached to resolve a legal dispute over the failed arms deal. Administration officials did not say at the time the $ 400 million already had been paid in cash to Iran and had refused to answer questions about how and when the payment took place.
The administration said the legal dispute could have cost the U.S. some $ 10 billion without January's settlement.
Write to Carol E. Lee at carol.lee@wsj.com and Jay Solomon at jay.solomon@wsj.com
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