Last Updated: Wed Jan 04, 2012 16:51 pm (KSA) 13:51 pm (GMT)

New U.S. sanctions on Iran called severe and effective

The Obama administration is imposing new penalties against Iran, and some analysts say the U.S. should go even further. (File photo)
The Obama administration is imposing new penalties against Iran, and some analysts say the U.S. should go even further. (File photo)

On the first working day in 2012, American officials expressed happiness that the Iranian economy was showing signs of weakness and at the way the Iranian government was beginning to feel the bite of nonstop economic sanctions.

In the White House journalists’ room, White House spokesman Jay Carney argued that Iran’s warnings to U.S. aircraft carrier John C. Stennis not to return to the Gulf again confirm that the pressure to which Iran is being subjected is growing.

“This is simply a measure of the impact that sanctions have been having on Iran and the broad international support for taking … putting pressure on Iran and isolating Iran because of its refusal to live up to its international obligations,” he said.

Carney also linked the devaluation of the Iranian riyal to the new sanctions included in the legislation signed Saturday by U.S. President Barrack Obama that imposes penalties on companies and corporations that deal with the Central Bank of Iran.

The new sanctions are based on the choice factor mentioned a few months ago by U.S. Undersecretary of Treasury David S. Cohen during congressional hearings on Iran. International corporations, according to Cohen, will be required to choose between the U.S. and Iran.

In this manner, the U.S. would not have to enter into direct confrontation with Iran, but would have managed to direct a fatal blow to its economy through isolating its central bank.

Eric Ferrari, an international lawyer, say the U.S. approach is both severe and effective.

“I think the sanctions are very severe and are crafted in a way to truly give foreign banks a choice between dealing either with the U.S. or dealing with Iran and the Central Bank of Iran,” he said.

Ferrari added that he expects the sanctions to be meticulously enforced by President Obama as well as the Department of Treasury.

“This has been a trend in recent years and I have not seen anything to make me believe that will change. Certainly, they are under tremendous pressure from the U.S. Congress to do so.”

According to Ferrari, Iran might still be able to carry out international transactions, especially as far as selling oil and gas are concerned.

“However, their options will be limited,” he said.

Corporations doing business with the Central Bank of Iran will be given a warning followed by a grace period that would range from weeks to months to cease all dealings with the bank.

The legislation gives the American president the right to stop of the sanctions if they prove detrimental to national interest.

The signing of the new legislation was met with relief on the part of conservatives in the U.S. A few weeks ago, conservative writer and Senior Research Fellow for Middle Eastern Affairs at The Heritage Foundation James Philips criticized Obama for his reluctance to impose harsher sanctions on Iran.

He, however, hailed the recent legislation as a positive step towards delivering the desired message.

“I think it was a major step forward when Congress prevailed over President Obama’s objections to impose sanctions on Iran’s central bank in an amendment to the National Defense Authorization bill,” Philips said. “When the President signed the bill on Saturday, it contributed to the growing apprehension in Iran over sanctions that has led to a run on Iranian banks and a sudden decline in the exchange rate for Iran’s currency.”

Philips called for putting more pressure on Iran through talking the EU into taking further action.

“Now the Obama Administration could further increase pressure on Iran by encouraging the EU to press ahead with more sanctions on Iran’s oil exports, and it also should impose new sanctions on foreign firms that invest in Iran’s oil and gas industry.”

Elliot Abrams, who was Deputy National Security Adviser for Global Democracy Strategy in the George W. Bush Administration, wrote on his page on the Council on Foreign Relations’ website that the new legislation is “one of the toughest required U.S. sanctions against Iran’s Central Bank.”

“This is an old story, for the Bush Administration also declined to take that tough step. Largely at the insistence of then-Treasury Secretary Hank Paulson, it was agreed that sanctioning a central bank was going too far and could endanger the U.S. or European economy. Paulson was wrong, the Bush Administration was wrong, and the Obama Administration was wrong. Now we know,” he said.

The neoconservative analyst, who is considered a member of the “hawks” camp, meant to show that the sanctions are not going to bring about those tragedies that were expected before and that their impact would, in fact, be confined to Iran.

It remains a bit early to determine the exact impact of the new sanctions. The previous sanctions limited the freedom of movement of several Iranian officials and stopped European investments in several Iranian sectors, but they did not stop the Iranian nuclear program.

As Ferrari said, Iran’s options are bound to be limited, but it will still be able to engage in some transactions.

The new sanctions against the Central Bank of Iran are both indirect and slow and their impact is not expected to show immediately.

A few steps are left to make the sanctions absolutely destructive, and these include imposing sanctions on the Central Bank of Iran itself and on the Iranian currency. However, the U.S. sees no reason for taking such a drastic step at the moment.

(Translated from Arabic by Sonia Farid)

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