WASHINGTON - Under intense pressure from the US Congress and US presidential
election politics, the Barack Obama administration on Monday declared the
Islamic Republic of Iran a "primary money laundering concern" - a designation
that stops short of blacklisting Iran's Central Bank but is intended to
persuade more foreign governments, banks and companies to curtail business with
Iranian financial entities.
Administration officials portrayed the move - coupled with new restrictions on
Iran's petrochemical sector and a ban on financial dealings with Iran by
Britain and Canada - as a response to an alarming recent report by the
International Atomic Energy Agency.
The report provides substantial evidence that Iran carried out
extensive research into how to make a nuclear weapon prior to 2003 but is less
conclusive about a continuing weapons effort. However, one impetus for the new
sanctions is domestic US politics.
Republican candidates for president have singled out the administration's Iran
policy as weak even though the Islamic Republic has never faced such stringent
and widespread economic sanctions.
Last week, Senator Mark Kirk, a leading Iran hawk in the US Congress,
introduced an amendment to the 2012 defense authorization bill that would
effectively bar foreign financial institutions that carry out transactions with
the Central Bank of Iran (CBI) from dealings with any US bank. Dubbed the
"nuclear option", Kirk has said the measure is designed to "collapse the
Iranian economy" by preventing Iran from selling its oil and natural gas for
hard currency. Similar measures are under consideration in the House.
The new US sanctions stop short of blocking all transactions with the CBI, a
step that US officials feared would lead to a sharp increase in oil prices and
fracture a multilateral consensus against Iran's nuclear activities. Previous
US sanctions already blacklist 22 Iranian banks, bar Iran from almost all
transactions in dollars, and forbid foreign companies that invest in Iran's
energy sector from business in the US
"The administration is trying to buy off congress, buy off pressure from Israel
and make sure nothing will further erode the president's chances for
re-election," Suzanne Maloney, an Iran expert at the Brookings Institution in
Washington, told IPS.
A statement from President Obama called the new measures "another step to
further isolate and penalize Iran for its refusal to live up to its
international obligations regarding its nuclear program".
Erich Ferrari, a Washington attorney who specializes in US economic sanctions,
said the new sanctions would make it even harder for Iranian Americans to send
money to relatives but was not as drastic as sanctioning the CBI.
"We call sanctions like this under the Patriot Act 'baby sanctions'," Ferrari
told IPS.
Sanctioning the CBI would have obligated US banks to block any transaction that
went through that bank, he said. Monday's measure will mean "additional
reporting requirements and increase the cost to US financial institutions" of
facilitating transactions for which US citizens must already obtain a license
from the Treasury's Office of Foreign Assets Control, Ferrari said.
Secretary of State Hillary Rodham Clinton and Treasury Secretary Timothy
Geithner announced the new sanctions jointly. In addition to designating Iran
as a "a jurisdiction of primary money laundering concern", the administration
bars the sale or lease of goods and technology to Iran's petrochemical sector
worth more than US$1 million for a single transaction or $5 million for deals
over a 12-month period.
Iran experts said the new US measures would increase hardship for the Iranian
government and people but would be unlikely to convince Iran to curb its
nuclear program.
Countries such as China, which has become Iran's chief trading partner in
recent years, will not go along with the new sanctions. Much of China's $30
billion annual trade with Iran is conducted through barter deals that provide
goods and services in return for Iranian crude.
India, Spain, Italy, Greece, Japan and South Korea are also major buyers of
Iranian oil, while Turkey purchases much of its natural gas from Iran.
Both Clinton and Obama said Iran had a choice - to curtail its nuclear program
or face increasing isolation and economic pressure. Maloney said, however, that
the latest punitive measures would not be sufficient to change Iran's posture,
particularly at a time of fractious internal politics.
"If anything, this will reinforce paranoia in Tehran that this is all about
regime change," she said. She expressed concern that there is "no adult
supervision" of Iran policy in the Obama administration and that "no one is
thinking ahead" about the consequences of further weakening the Iranian
economy.
The measures may also not be sufficient to placate congress. Kirk, while
welcoming the administration's decision "to put the world on notice" about the
CBI, gave no indication that he would withdraw his amendment.
"Now we need to move forward with bipartisan legislation to collapse this
terrorist bank and stop Iran's pursuit of nuclear weapons before it's too
late," a statement from the senator said.
A spokesman for Kirk's office who asked not to be named told IPS that "our plan
is to continue the amendment" when congress returns in the first week of
December from a Thanksgiving recess.
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