US, Britain, Canada team up on new Iran sanctions

AP News
Posted: Nov 21, 2011 6:19 PM
US, Britain, Canada team up on new Iran sanctions

Thwarted internationally, the Obama administration cobbled together a new set of best-available sanctions against Iran on Monday that underlined its limited capacity to force Tehran to halt its suspected nuclear weapons program.

The U.S. action was coordinated with Britain and Canada, but not with countries such as Russia and China that have far greater economic investments in the Islamic republic.

The American sanctions target Iran's oil and petrochemicals industry and Iranian companies involved in nuclear procurement or enrichment activity. The U.S. also declared Iran's banking system a center for money laundering _ designed as a stern warning to financial institutions around the world to think twice before doing business with Tehran.

President Barack Obama said Iran had a choice: come clean on its nuclear program and reap the benefits of closer economic cooperation with the world, or face even more pressure.

"Iran has chosen the path of international isolation," Obama said in a statement. "As long as Iran continues down this dangerous path, the United States will continue to find ways, both in concert with our partners and through our own actions to isolate and increase the pressure upon the Iranian regime."

The new restrictions essentially amount to a piecemeal addition to dozens of American measures already in place to isolate Iran's economy, partly reflecting the need for a quick response to a U.N. nuclear agency report suggesting Iranian work toward the development of atomic weapons. Release of the report two weeks ago sparked frenzied international diplomacy over how to halt the Iranian threat, including speculation in the U.S., Europe and Israel on the merits of a military intervention.

The larger American dilemma is twofold: After three decades of economic estrangement and escalating pressure on Tehran for its dismal human rights record and alleged support for terrorism, the United States has few tools left to coerce or penalize the Iranian regime. And Washington is unlikely to authorize a military strike anytime soon, conscious that an attack may delay but not stop Iran from developing the bomb and fearful of the political fallout at a time when the U.S. is flailing in debt and trying to transition from conflicts in Iraq and Afghanistan.

For the Obama administration, even the sanctions route is constrained. The United Nations has passed four rounds of global sanctions against Iran since 2006, but veto-wielding nations Russia and China stand in the way of any further action. And even unilaterally, American officials have held back from blanketing all of Iran's fuel-related exports and its central bank with sanctions, for fear of spiking world oil prices and hampering the American economic recovery.

A little more than a week ago, President Barack Obama pressed Russian President Dmitry Medvedev and Chinese President Hu Jintao to join the U.S. and its partners in taking action _ to no avail.

Secretary of State Hillary Rodham Clinton and Treasury Secretary Timothy Geithner announced the new American sanctions, which tighten restrictions on individuals and companies doing business in the Iranian oil and gas industries, and update an already lengthy list of blacklisted Iranian firms. Geithner stressed the value of the coordinated action by the U.S. and its two close allies, and urged more countries to cut off Iran from their financial sectors.

"If you are a financial institution and you engage in any transaction involving Iran's central bank or any other Iranian bank operating inside or outside Iran, you are at risk of supporting Iran's illicit activities: its pursuit of nuclear weapons, its support for terrorism and its efforts to deceive responsible financial institutions and evade sanctions," Geithner said.

Britain's new restrictions included an order that its financial institutions cease doing business with all Iranian banks, including the central bank and extending to all branches and subsidiaries. It amounted to what was termed an unprecedented British attempt to cut off an entire country's banking industry off from the U.K. financial sector.

The sanctions are aimed at "preventing the Iranian regime from acquiring nuclear weapons," British Treasury chief George Osborne said. Canada took similar actions as the U.S., while France urged fellow European countries and Japan to stop buying Iranian oil and to freeze any assets belonging to Iran's central bank.

Russia, China, India and other nations maintain larger-scale trade with Iran, whose energy exports have helped it shrug off serious harm from the U.N. sanctions and other penalties applied by individual countries or the European Union.

The recent report by the International Atomic Energy Agency alleges Iran has been seeking to acquire equipment and weapons design information, testing high explosives and detonators and developing computer models of a warhead's core. It is the strongest evidence yet that the Iranian program ranges far beyond enriching uranium for use in energy and medical research, as Iran's government insists.

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The Obama administration has sought to use the evidence as leverage in making its case to other countries that sanctions against Iran should be expanded and tightened. It has argued that further isolating Iran's economy is the best strategy to prevent Iran from acquiring nuclear weapons, while insisting that the option of using force will not be taken off the table.

The president's strategy is being carried out amid partisan clamor for tougher action against Iran. Leading Republican presidential candidates present themselves as hawkish alternatives to Obama ready to attack Iran's nuclear facilities. They've also tried to strip away Obama's support among Jewish and some evangelical voters by pledging stronger solidarity with Israel, which sees Iran and its nuclear program as a mortal threat.

Mitt Romney spoke openly at the GOP's Nov. 12 foreign policy debate about working with insurgents to try to overthrow Iran's government, while rival Newt Gingrich demanded increased covert action to foil its uranium enrichment activity. The program has been hindered in recent years by the assassination of Iranian nuclear scientists, a computer virus and other possible interference _ which may or may not have been the result of covert American or Israeli activity.

The new penalties were announced one day ahead of another GOP debate focused on foreign policy.

In Congress, Senate Republican leader Mitch McConnell proposed an amendment last week to the U.S. defense budget to go after Iran's central bank beyond existing U.S. sanctions. That might be difficult because it would also penalize European, Asian and other companies conducting business with the bank and operating as well in the United States. Some fear the approach could drive up oil prices and cause havoc to world markets.