US imposes new Iran sanctions aimed at financial system

The United States on Thursday slapped fresh sanctions on Iran’s financial sector, targeting 18 banks in an effort to further choke off Iranian revenues as Washington ramps up pressure on Tehran weeks ahead of the US election.

The move freezes any US assets of those blacklisted and generally bars Americans from dealing with them, while extending secondary sanctions to those who do business with them. This means foreign banks risk losing access to the US market and financial system.

The Treasury Department said in a statement the prohibitions did not apply to transactions to sell agricultural commodities, food, medicine or medical devices to Iran, saying it understood the need for humanitarian goods.

However, Iranian Foreign Minister Mohammad Javad Zarif accused the United States of targeting Iran’s ability to pay for basic necessities during the COVID-19 pandemic.

“US regime wants to blow up our remaining channels to pay for food & medicine,” Zarif said on Twitter. “Conspiring to starve a population is a crime against humanity.”

Iranian Central Bank governor Abdolnaser Hemmati dismissed the sanctions as “US domestic propaganda” and played down their practical impact.

Analysts said the secondary sanctions may further deter European and other foreign banks from working with Iran, even for permitted humanitarian transactions. It could also make it difficult for any US administration after the November elections to deal with Iran.

“It’s like a punch in the face to the Europeans, who have gone out of their way to indicate to the Americans that they view it as being extremely threatening to humanitarian assistance or humanitarian trade going to Iran,” said Elizabeth Rosenberg of the Center for a New American Security think tank.

She said the Trump administration seeks to “make it very difficult for any future president to be able to unwind these measures,” alluding to the possibility that Democratic candidate Joe Biden could defeat Republican President Donald Trump in the November 3 US election.

The United States defied concerns from European allies that the sanctions could cause needless suffering and insisted it was making exemptions for humanitarian trade.

“Our sanctions are directed at the regime and its corrupt officials that have used the wealth of the Iranian people to fuel a radical, revolutionary cause that has brought untold suffering across the Middle East and beyond,” US Secretary of State Mike Pompeo said.

He said the Iranian leadership was to blame for devoting funds to the military when it has health needs.

“Our maximum economic pressure campaign will continue until Iran is willing to conclude a comprehensive negotiation that addresses the regime’s malign behavior,” Pompeo said.

The Treasury Department said the sanctions will take effect in 45 days, giving companies time to wind down transactions in Iran.

The timeframe will also give anyone working with Iran a chance to see the November election, with polls showing Trump trailing Biden, who supports a return to diplomacy.

Behnam Ben Taleblu, a senior fellow at the Foundation for the Defense of Democracies, a group close to the Trump administration that advocates hawkish policies on Iran, said the latest sanctions showed that Washington still had more leverage in pressuring Iran.

“These new penalties are all about making maximum pressure stick while further disconnecting Iran from the international financial system,” he said.

Biden, who was vice president when the Obama administration negotiated the nuclear accord, has said he would rejoin the deal if Iran first resumed compliance with it.

Tensions between Washington and Tehran have soared since Trump unilaterally withdrew in 2018 from the 2015 Iran nuclear deal struck by his predecessor and began re-imposing US sanctions that had been eased under the accord.

The sanctions Trump has reinstated target everything from oil sales to shipping and financial activities. While they exempt food, medicine and other humanitarian supplies, many foreign banks are already deterred from doing business with the Islamic Republic, including for humanitarian deals.

Washington’s latest move targeted what the Treasury described as 18 major Iranian banks, which were designated under authorities including US Executive Order 13902, which allows the Treasury Department to target entire sectors of the Iranian economy.

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