Iran: US sanctions Iranian Central Bank

Updated On: Feb 07, 2012

 The United States has imposed new sanctions on Iran in the hopes that the increasing pressure on Tehran will make it change its mind about its controversial nuclear programme. The move is also expected to prevent any aggressive moves against Iran on the part of the Israeli government. The new sanctions have been branded as the next step in the escalation of sanctions, and will also put pressure on outsiders doing business with Iran.

The new sanction will clamp fown on the activity of the country’s Central Bank and those who do business with it, in response to the “deceptive practices” of Iranian banks and the Central Bank, who concealed the transactions of parties under sanction. President Obama has also ordered the freezing of Iranian government assets in the US. The sanctions also appear to tie in with measures by other countries, like Britain’s move to cut off Iran’s banking system from London’s financial sector. The EU has also imposed more sanctions on Iran’s oil industry in recent weeks.

Israel impatient with US measures
As they are now, US regulations prohibit American entities and citizens from any transactions with Iran or the Iranian government, except those exempted, such as to do with humanitarian relief.

The sanctions that are currently in place have already squeezed the Iranian economy and exacerbated tensions in the Iranian leadership. The White House is hopeful that the sanctions will have an impact, but Obama has come under fire for what some believe is too soft an approach to the problem.  His administration has been shying away from direct action, since rash decisions could force the cost of petroleum up and harm the US economy.

The timing of the sanction has greater significance than the actual measures: right now the US and its allies are pushing that tough sanctions will be enough to get Iran off of the perceived efforts to build a nuclear bomb.

As they ramp up pressure on Tehran, the US is also trying to persuade Israel to hold back from striking against Iranian nuclear facilities, which could set off a Middle Eastern conflict. Obama has not pushed the military option off the table, but is intent on solving the issue diplomatically by convincing Iran that “it’s not in their interest” to obtain a nuclear weapon.

A former US military commander commented that talk of military action is shortsighted, and would not achieve anything. The perspective in Tel Aviv is that the US is not taking the situation as seriously and with the same sense of urgency as Israel would like. Israeli Prime Minister Netanyahu supposedly expressed his impatience, telling his cabinet to halt the “chitchat” about Iran, days after it was expressed in the Capitol that Israel may attack Iran soon.

Publicly, Obama has stated that Israel and the US are going to be moving in “lockstep” to handle the problem together.

The Iranian response
Iran has responded to continued sanctions against it by saying the US would pay 10 times what Iran did if anyone carried out a military strike against them. President Obama is refraining from military action because military activity in the Gulf would be disruptive and could push oil prices up, and has dismissed questions about the possibility that Iran may attack the US in America, saying that there was no proof that the Iranians had such a capacity.

Despite concerns regarding the impact of the issue on oil prices, even if Iranian oil is prevented from getting to market, other suppliers could still make up the difference. Saudi Arabia, for example, could increase production to make up any lost Iranian crude.

Report: New sanctions on Iran intended to ratchet up pressure, but could they ease Israeli stress?
[FOX News, 6 February 2012]

Report: United States orders new Iran sanctions [CNN, 6 February 2012]

Report: Ready with all options against Iran: Obama [Business Standard India, 7 February 2012]

Report: Deeper Iran sanctions; US targets its central bank [Associated Press, 7 January 2012]

Report: Obama orders Iranian Central Bank freeze in new wave of sanctions [The Guardian, 6 February 2012]

Report: US extends sanctions to Iran’s central bank [The Jerusalem Post, 7 February 2012]

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