Hamas’ unprecedented and deadly attack on Israel has once more put the Iranian regime and the Biden administration's Iran policy at the center of attention.

“What's going with Israel right now…,” said former President Donald Trump “I wasn't shocked because two weeks ago we gave them 6 billion dollars.”

He was referring to the $6 billion in Iran’s frozen oil revenues that the Biden administration agreed to release from South Korea as part of a ‘prisoner swap’ deal with the Islamic Republic.

The same line has come from many in Washington who see Biden’s lenient approach to Iran as flawed and counterproductive.

“Since Biden took office Iran’s accessible foreign exchange reserves went from <$6B (same as Haiti!) to $70B,” posted David Greenaway, Director of Centre for National Defense, “anyone arguing this doesn’t support terrorism is either wholly ignorant, lying, or both.”

The Biden administration sensing that the criticism can badly hurt its image, responded immediately, arguing that the money made available to Iran in return for the release of five prisoners “has nothing to do with the horrific attack on Israel.”

“Not a penny has been spent, and when it is, it can only go for humanitarian needs like food and medicine,” said the State Department’s spokesperson, Matthew Miller. A senior Treasury official reiterated that the funds cannot be directed to Iran. “Any suggestion to the contrary is false and misleading,” Brian Nelson said.

However, critics responded that this argument is flawed because money is fungible. When Iran can buy essential food with the funds released, it would be able to use its own money for military and malign activities.

AFP news agency quoted a senior White House official as saying that it was “too early to say” whether Iran was “directly involved” in the large-scale terror attack. However, at the same time, Hamas Spokesman Ghazi Hamad confirmed in an interview with BBC what everybody sensed: that Hamas’ large-scale attack on Israel had the “support of the regime in Iran. “

Ali Khamenei for his part all but officially confirmed his regime’s involvement on X (formerly Twitter).

Reposting a viral clip of Israelis running away from Hamas forces, Khamenei wrote “God willing, the cancer of the usurper Zionist regime will be eradicated at the hands of the Palestinian people and the Resistance forces throughout the region.”

The post was tagged by X, pointing out that it had violated the X Rules, but X had determined that “it may be in the public’s interest for the post to remain accessible.”

At the same time, images emerged from Iran that showed ultra-hardline Basijis celebrating Hamas’ attack on Israel, calling it a ‘Palestinian Victory.’

A spokesperson for the Islamic Republic’s Foreign Ministry Spokesman called the attacks ‘‘a new chapter in the continuing resistance and armed operations” against Israel. The surprise attack showed that “the Palestinian resistance is confidently capable of conducting hybrid and multilateral operations against the occupiers,” Kanaani said.

The attacks took place on the 50th anniversary of the Yom Kippur war which began on October 6, 1973, when Egypt and Syria launched a surprise attack on Israel during the Jewish holy day of Yom Kippur. The war led to diplomatic efforts that eventually resulted in the Camp David Accords in 1978 and the Egypt-Israel Peace Treaty in 1979.

Israel had never suffered like this in an armed conflict since that War.

Reports suggest that more than 200 Israelis have been killed in the attack and dozens might have been taken hostage.

The attack –and the Israeli retaliation, which may involve large-scale ground assault– would likely affect the negotiations between Israel and Saudi Arabia and the chances of a deal to normalize Israel-Saudi ties.

There were reports that Saudi Arabia had asked for a ‘gesture’ towards the Palestinians as a condition of the deal. Any such concession for the Netanyahu administration, if it were ever considered, is almost impossible now. The deal that many in Washington believed was ‘only a matter of time’ seems quite far away now.

It remains to be seen how this episode would impact the newly-normalized relationship between Iran and Saudi Arabia –and even the 2024 elections in the US, as criticism of the Biden administration for its Iran policy grows.