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The US announced new sanctions on Iran's oil and petrochemical industries and any against companies involved with nuclear procurement and enrichment. While stopping short of leveling sanctions on Iran's central bank, which serves as a clearinghouse for nearly all oil and gas payments in Iran, it sent a strong warning by declaring the country's banking system a center for money laundering, The Christian Science Monitor reports. If sanctions were to be placed on the central bank, it would force Iran's trade partners to choose between doing business with the Islamic Republic or the US.
French President Nicolas Sarkozy recommended to all world leaders that they freeze the assets of Iran's central bank, the Monitor reports. Britain and Canada cut ties completely with Iranian banks.
The sanctions are "only attempts at propaganda and psychological warfare," Iranian Foreign Ministry spokesman Ramin Mehmanparast said Tuesday, according to the Associated Press, adding that the measures would be ineffective. The Russian foreign ministry released a statement condemning their actions as a violation of international law and an obstruction to "constructive dialogue with Tehran," CNN reports.
The latest sanctions come two weeks after the International Atomic Energy Agency (IAEA) released its report on Iran's nuclear program indicating that Iran had continued work on nuclear weapons as recently as 2009.
They follow four previous rounds of global sanctions from the United Nations, as well as independent US and European Union sanctions. No further sanctions at the UN level appear possible, due to opposition from veto-wielding members Russia and China, which maintain significant trade ties with Iran. The US is reticent to sanction Iran's central bank because it is afraid of sending world oil prices soaring and hindering the United States' economic recovery, the Associated Press reports.
The most significant new sanction is the US accusation that Iran's banking system is a "money laundering concern," the Washington Post reports. The label implies to other countries that it is legally risky to do business with Tehran, Treasury Secretary Timothy Geithner said. Barring Iran from the international financial hub of London will significantly increase the cost and hassle of doing global business for Tehran, according to the Guardian.
But while the US and others sought to portray their new moves as a major escalation, it's not clear that the measures will have much of an effect on slowing Iran's nuclear program, The New York Times reports.
“The fact that they don’t have letters of credit, the fact that they don’t have access to state-of-the-art Western technology is great,” said Danielle Pletka, an expert on sanctions at the American Enterprise Institute. “But you have to ask, were we able to impose crippling sanctions that Secretary Clinton once talked about, would we get ahead of them in their development of a nuclear program?
Administration officials vow that with time, the effect will be clear, and they argue that Iran is already suffering from current sanctions. The nuclear program is "short of capital and technology," foreign investors have left the country, and the latest sanctions target the oil and petrochemical industries – the first- and second-largest sources of government revenue.
The Monitor reports that the money-laundering designation is meant to allow foreign governments and companies time to prepare for stricter measures the US intends to pass in the coming weeks, although administration officials indicated that there were still several interim steps before sanctioning the central bank.