Q&A: What's with the war talk surrounding Iran?

Tensions over Iran’s nuclear program have escalated in recent weeks as the US and Europe ramp up sanctions against the Islamic Republic.

3. How do sanctions on the Central Bank work?

Office of the Supreme Leader/AP/File
Iranian army cadets seen during a graduation ceremony in a military university, in Tehran, Iran, Nov. 10, 2011. Iran continues to threaten to cut off access to the Strait of Hormuz, and just this weekend claimed they have begun enriching uranium. As tensions with the West increase, what is to be made of talk of war?

The sanctions on Iran’s Central Bank that President Obama signed into law on Dec. 31 theoretically allow for banning any financial institution from doing business in the US if it does business with the Central Bank of Iran

In practice, the US is almost certainly going to be selective in its application. For instance, it’s inconceivable that Mr. Obama would seek to ban the Bank of China, a major buyer of US debt, because it also helped settle a Chinese oil purchase from Iran. 

But the sanctions are going to reduce the number of commercial banks willing to deal with Iran, making it harder for the country to bring home oil receipts, which account for 80 percent of Iran’s exports. 

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