US targets Iran's central bank as world takes aim at Iran's nuclear program

Secretary Clinton calls new US sanctions a 'significant ratcheting up of pressure on Iran.' Britain, France, and Canada also announce steps in wake of UN report citing 'deep concern' over Iran's nuclear program.

Pablo Martinez Monsivais/AP
Secretary of State Hillary Rodham Clinton, speaks as Treasury Secretary Tim Geithner, listens during a news conference about new sanctions the US is taking to increase pressure on Iran, at the State Department in Washington, Monday.

The United States on Monday took steps targeting Iran’s central bank and its energy sector, acting just days after the United Nations’ nuclear watchdog expressed “deep concern” about the military applications it has detected in Iran’s nuclear program.

The Obama administration announced it was naming Iran’s central bank a “primary money laundering concern” amid mounting international pressure against Iran.

Also Monday, Britain announced it was cutting all British ties with Iranian banks, including the central bank, while Canada announced similar action. And French President Nicolas Sarkozy sent a letter to Western leaders, including President Obama, recommending an immediate freeze on the assets of Iran’s central bank.

Mr. Obama said in a statement that Iran was causing its own isolation by pursuing its current path, and he hinted that more pressure is on tap unless Tehran backs off its course.

“Iran has chosen the path of international isolation,” Obama said. “As long as Iran continues down this dangerous path, the US will continue to find ways, both in concert with our partners and through our own actions, to isolate and increase the pressure upon the Iranian regime.”

The US action taken Monday does not formally sanction Iran’s central bank, also called Bank Markazi, but the “money laundering” designation is expected to entail serious impact on its operations.

Similar steps taken in the past against North Korean and Lebanese banks caused other countries and international businesses to sever ties, and US officials are clearly hoping for a similar impact in the case of Iran.

The US also announced sanctions on a list of companies it says are involved in supporting Iran’s nuclear program, and new measures targeting Iran’s production and sales of petrochemicals and oil exports.

Secretary of State Hillary Rodham Clinton called the measures “a significant ratcheting up of pressure on Iran.”

The administration’s action, announced jointly by Secretary Clinton and Treasury Secretary Timothy Geithner, comes as Congress moves forward on its own measures aimed at Iran’s central bank.

US officials said the decision to name Iran’s central bank for money laundering, while stopping short of sanctioning the bank directly, was part of an effort to allow foreign governments and companies still doing business with Iran to prepare now for more draconian measures expected in coming weeks.

Officals say the money laundering designation was justified by the central bank’s involvement in transactions in support of terrorism, and for its continuing work on behalf of other Iranian banks that have been sanctioned by the US and others for financing aspects of Iran’s nuclear program.

Some members of Congress expressed support for the administration’s actions, while characterizing them as only a first step toward sanctioning Iran’s central bank.

“The sanctions announced today reflect a deepening consensus and resolve – among Republicans and Democrats in Washington, and among the US and its allies around the world – that it is time to target the Central Bank of Iran,” Sen. Joe Lieberman (I) of Connecticut said in a statement following the administration’s announcement.

Calling Monday’s action “an important step toward this goal,” Senator Lieberman said it should be “only the first step,” and he added that “much more needs to be done, and quickly.”

Lieberman noted the seriousness of sanctioning Iran’s central bank, but he suggested it might be one of the last steps for avoiding military action against Iran’s nuclear facilities.

“Targeting the Central Bank of Iran is one of the last arrows in the sanctions quiver before military action must be considered,” Lieberman said.  “Today's announcement indicates that the arrow [targeting the central bank] should soon be loosed.”

The administration concurs that Monday’s actions may be a first step down the road to formally sanctioning Iran’s central bank, but officials insist that much remains for the US and its partners to undertake in the way of pressuring Iran before military action is considered.

of stories this month > Get unlimited stories
You've read  of  free articles. Subscribe to continue.

Unlimited digital access $11/month.

Get unlimited Monitor journalism.