Obama’s New Iran Sanctions Target Energy, China, Iraq Banks

The U.S. announced new sanctions on Iran’s energy and petrochemical sectors and on banks in China and Iraq that have facilitated transactions on behalf of Iran, steps that President Barack Obama said show the “growing consequences” as Iran avoids its international obligations.

The moves were announced while Obama’s presidential campaign rival, Republican Mitt Romney, wrapped up an overseas trip that included a stop in Israel, where Romney said he supported the country’s use of “any and all measures” to stop Iran’s nuclear arms program and suggested Obama hadn’t done enough.

The sanctions also come as Congress is poised to give final approval to Iran sanctions legislation.

Obama’s order expands sanctions to cover the purchase or acquisition of Iranian petrochemical products; to cover entities that provide material support to the National Iranian Oil Co., Naftiran Intertrade Co., or the Central Bank of Iran; and the acquisition of U.S. bank notes or precious metals by Iran’s government, the White House said in a statement released today.

The Treasury Department also imposed sanctions on Bank of Kunlun in China and Elaf Islamic Bank (BELF) in Iraq. David Cohen, undersecretary for terrorism and financial intelligence at the Treasury Department, said the sanctioning “effectively cuts them off” from the U.S. financial system and will impose a “significant chilling effect” on the banks to operate elsewhere in the world.

‘Desperate’ Regime

“Today’s action makes it clear that we will expose any financial institution, no matter where they are located, that allows the increasingly desperate Iranian regime to retain access to the international financial system,” Obama said in the statement released by the White House.

Mark Dubowitz, executive director of the Foundation for Defense of Democracies in Washington, said while the sanctions are “important measures,” the U.S. approach “still involves a game of Whac-A-Mole because the administration, in particular Treasury, still has to chase down” each new Iranian move to circumvent sanctions.

“I don’t think any of these sanctions so far have created enough fear” to get Iran to stop pursuing a nuclear weapons program, Dubowitz said. An alternative is to “blacklist automatically any interaction with Iran’s energy sector” except for those permitted under U.S. exemptions.

Proactive Stance

“Clearly, there’s a political angle to this,” Dubowitz said. “The administration is trying to demonstrate it can be proactive and not just reactive and blunt some of the criticism from Romney and congressional Republicans.”

Ben Rhodes, Obama’s deputy national security adviser, said the sanctions were being developed prior to Romney’s overseas trip and that the timing of the announcement was coincidental.

U.S. sanctions are part of the international economic pressures on Iran to give up suspected efforts to develop nuclear weapons. Iran denies pursuing nuclear weapons ambitions and says its nuclear program is for peaceful energy and medical purposes.

To contact the reporter on this story: Margaret Talev in Washington at mtalev@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net

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