Open

Coming up

Don't miss

Replay


LATEST SHOWS

AFRICA NEWS

Lesotho Coup: Exiled Prime Minister vows to return home after fleeing

Read more

DEBATE

Child Migrants In America: What to do about the wave of unaccompanied minors? (Part Two)

Read more

DEBATE

Child Migrants In America: What to do about the wave of unaccompanied minors?

Read more

THE INTERVIEW

Abbas Araghchi, Iranian deputy foreign minister

Read more

THE OBSERVERS

More of this year's best Observers stories

Read more

FOCUS

When water becomes a weapon of war

Read more

ENCORE!

Eve Ensler: 'In The Body Of The World'

Read more

THE INTERVIEW

Ed Husain, Author of 'The Islamist'

Read more

DEBATE

Pakistan Protests: Democracy put to the test

Read more

  • IS video purports to show beheading of second US journalist

    Read more

  • Could France sell the Mona Lisa to pay off its debts?

    Read more

  • Video: Bodies ‘left behind’ as Ukraine forces flee rebel assault

    Read more

  • Trust and 'bio-disaster units' needed to fight Ebola

    Read more

  • France vows crackdown on unemployment benefit ‘abusers’

    Read more

  • Julie Gayet wins privacy case against French glossy Closer

    Read more

  • Germany blocks popular car pick-up service Uber

    Read more

  • Several UN peacekeepers killed in Mali explosion

    Read more

  • NATO plans new 'spearhead' force to counter Russia

    Read more

  • French clubs left behind as others spend big

    Read more

  • Britain drops arrest warrant for ill boy’s parents

    Read more

  • When water becomes a weapon of war

    Read more

  • Arab media strike back at IS Islamists – with cartoons

    Read more

  • US military targets Somalia's al Shabaab Islamist group

    Read more

  • Eve Ensler: 'In The Body Of The World'

    Read more

  • Boko Haram Islamists seize northeast Nigerian town

    Read more

  • Is Carla Bruni against a political comeback for Sarkozy?

    Read more

  • Monaco’s Falcao leaves Ligue 1 for Man Utd

    Read more

Middle east

US targets foreign banks in latest Iran sanctions

Text by News Wires

Latest update : 2011-12-02

The US Senate on Thursday approved greater sanctions against Iran, voting to target foreign financial institutions that deal with Iran's central bank. Europe has also agreed to look at expanding sanctions.

REUTERS - The U.S. Senate unanimously approved tougher sanctions against Iran on Thursday, voting to penalize foreign financial institutions that do business with Iran’s central bank, the main conduit for its oil revenues.

The Senate acted despite warnings from Obama administration officials who said threatening U.S. allies might not be the best way to get their cooperation in action against Iran.

Administration officials said they were indeed looking to sanction Iran’s central bank, but in a calibrated manner, to avoid roiling oil markets or antagonizing allies.

The United States already bars its own banks from dealing with the Iranian central bank, so U.S. sanctions would operate by dissuading other foreign banks from doing so by threatening to cut them off from the U.S. financial system.

The United States and its Western allies have supported multiple rounds of sanctions on Iran, seeking to persuade it to curtail its nuclear work. Washington suspects Tehran of using its civilian nuclear program to develop an atomic bomb, although Iran says its program is solely to produce electricity.

The Senate voted 100-0 for an amendment sponsored by Senator Robert Menendez, a Democrat, and Senator Mark Kirk, a Republican, that would allow the U.S. president to sanction foreign banks found to have carried out a “significant financial transaction with the Central Bank of Iran.”

“We seek to break the stable financial intermediary in between Iranian oil contracts and the outside world, so that it will just be easier to buy oil from elsewhere,” Kirk said in debate this week.

The sanctions were approved as an amendment to a huge defense bill that passed later on Thursday in the Senate. Similar provisions have passed a House of Representatives committee, increasing the likelihood that some version will be sent to Obama for his signature into law — or possible veto.

On Nov. 21, the United States, Britain and Canada announced new sanctions on Iran’s energy and financial sectors, but the Obama administration stopped short of targeting Iran’s central bank, a step that U.S. officials said could send oil prices skyrocketing and jeopardized global economic recovery.

“The Obama administration strongly supports increasing the pressure on Iran, and that includes properly designed and targeted sanctions against the central bank of Iran, appropriately timed as part of a carefully phased and sustainable policy toward bringing about Iranian compliance with its obligations,” U.S. Undersecretary of State Wendy Sherman told the Senate Foreign Relations Committee earlier on Thursday, several hours before the Senate vote.

World oil markets

The Senate amendment provides a six-month grace period before sanctions would kick in for petroleum transactions with Iran’s Central Bank, a move that appeared designed to give world oil markets time to adjust.

It includes a “waiver” letting the president suspend the sanctions if he deems it vital to U.S. national security.

“Our judgment is that the best course to pursue at this time is not to apply a mechanism that puts at risk the largest financial institutions, the central banks, of our closest allies,” Undersecretary of the Treasury David Cohen told the Senate Foreign Relations Committee.

Sherman and Cohen drew a rebuke from Menendez, who argued he had agreed to make changes in the amendment to suit the Obama administration only to find that it still rejected the legislation.

“I am extremely disappointed,” Menendez said. “At your request, we engaged in an effort to come to a bipartisan agreement that I think is fair and balanced and now you come here and vitiate that very agreement.”

“You should have said we want no amendment, not that you don’t care for that amendment,” he added.

The Obama administration’s chief concerns appear to be that the amendment could be a blunt instrument that might send oil prices higher and undercut support for sanctions among U.S. allies, whose backing has been vital to pass four U.N. Security Council sanctions resolutions against Iran.

While the Obama administration steps carefully, some countries in Europe are seeking to push forward a Europe-wide boycott of Iranian crude imports. EU foreign ministers in Brussels failed on Thursday to move forward with a plan backed by France and Britain to ban shipments, but agreed to examine expanding sanctions.

Tightening financial sanctions have already complicated Iran’s oil trade. Last December, India’s central bank scrapped a clearing house system with Iran, forcing refiners to scramble to arrange other means of payment in order to keep shipments flowing.

It is unclear whether further sanctions on financial dealings would affect shipments to countries like China, Iran’s biggest buyer.

Date created : 2011-12-02

  • DIPLOMACY

    UK to urge tougher EU sanctions for Iran

    Read more

  • DIPLOMACY

    France recalls ambassador to Iran, proposes sanctions

    Read more

COMMENT(S)