Obama Authorizes New Iran Sanctions Targeting Currency

Bloomberg – by Hans Nichols
President Barack Obama is targeting Iran’s currency for the first time under sanctions authorized yesterday as the U.S. increases economic pressure on the Islamic Republic to halt its nuclear program.
Obama signed an executive order that would impose penalties on “foreign financial institutions that knowingly conduct or facilitate significant transactions for the purchase or sale of the Iranian rial,” according to a statement yesterday from White House press secretary Jay Carney. It was the ninth executive order that Obama has signed sanctioning Iran, which will hold presidential elections June 14.  
“While the rial has lost half of its value since the beginning of 2012 as a result of our comprehensive sanctions, this is the first time that trade in the rial has been targeted directly for sanctions,” Carney said.
Iran has been hit by financial and trade sanctions as the U.S. and the European Union accuse its government of seeking to build a nuclear weapon. Iran, with the world’s No. 4 proven oil reserves, contends its nuclear program is for peaceful purposes and has refused to back down from what it calls its right to pursue the technology.
Iran’s economy has suffered under the international sanctions. The currency has plunged and inflation has surged to 32.3 percent in the past year while oil output is the lowest since the 1980s. Iran exported 1.1 million barrels a day in March, about 50 percent less than a year earlier, according to International Energy Agency estimates. Iran’s oil revenues fell 27 percent last year, the U.S. Energy Department said April 26.

Iran Election

The timing of the U.S. move was not specifically related to next week’s election, according to an Obama administration official, who asked not to be identified to discuss the move. The administration’s dual-track strategy on Iran seeks to impose sanctions while offering the Iranian government an opportunity to restart talks on its nuclear programs, according to the official.
Yesterday’s sanctions, which take effect July 1, also target Iran’s automotive sector, penalizing companies that sell goods or services to Iran for vehicle manufacturing.
The latest round of sanctions were announced the same day that officials of the International Atomic Energy Agency said Iran’s lack of cooperation has hindered an investigation into the country’s nuclear work. The Iranian government has denied IAEA inspectors access to places and to people, and it has altered the terrain around a military site suspected of housing nuclear weapons work.

Petrochemical Industry

Last week, the Obama administration imposed sanctions intended to restrict Iran’s petrochemical industry, and the State Department in an annual report on terrorism said Iran’s sponsorship of terrorism and terrorist activity by Hezbollah, which Iran backs, “have reached a tempo unseen since the 1990s, with attacks plotted in Southeast Asia, Europe, and Africa.”
At the same time, the administration has eased some measures against Iran. Last week, the U.S. lifted sanctions that bar the sale of consumer communications equipment, in order to make it easier for Iranians communicate through social media and text messaging.