By Patricia Zengerle, Arshad Mohammed and Yeganeh Torbati
WASHINGTON (Reuters) - U.S. Republican lawmakers voiced deep concern on Thursday about reports that the Obama administration might allow Iran to use the dollar in some business transactions, although no such plans have been announced.
U.S. government officials said the issue is being discussed in the Treasury Department, but any policy change would not involve widespread access for Iran to the U.S. financial system, disputing media reports suggesting otherwise.
The Obama administration is considering easing some sanctions to permit non-U.S. companies to have some access to the U.S. financial system for U.S. dollar transactions involving Iran, said a U.S. official who spoke on condition of anonymity.
The official said the matter was being studied, no decisions had been taken and that, to the official's knowledge, none were imminent.
The underlying reason for weighing the step is that non-U.S. companies now able to do business with Iran because of last year's nuclear deal find it is difficult to do so without at some point touching the U.S. financial system.
The official said such companies are getting conflicting messages from their own governments, which encourage trade with Iran, and from Washington, which emphasizes that it will enforce sanctions rigorously.
Republicans remain dead set against any effort to ease restrictions against Tehran, especially in light of Iran's recent missile tests.
"As Iran continues to undermine the spirit of its nuclear agreement with illicit ballistic missile tests, the Obama administration is going out of its way to help Tehran reopen for business. The president should abandon this idea," said Paul Ryan, the Republican Speaker of the House of Representatives.
The controversy could complicate Senate confirmation of Adam Szubin to head Treasury's sanctions enforcement arm, Senate aides said. President Barack Obama nominated Szubin in April 2015, but he was not approved in committee until this month.
Senate leaders tried to bring Szubin up for a vote in the full Senate a few days later, but at least one senator objected, the aides said.
Republicans, who control Congress, tried to kill the international deal in which Iran agreed to curtail its nuclear program in exchange for sanctions relief. Some Republicans said they opposed Szubin because of his support for the agreement, and aides said talk of easing dollar restrictions could fuel their opposition.
Deal opponents have seized on comments by U.S. Treasury Secretary Jack Lew as a sign that the administration would end a ban on Iran's use of the dollar for trade.
Republican Representative Ed Royce said in a letter to Obama that Lew appeared in House testimony last week to leave the door open to the administration allowing such transactions. Lew said the department was looking at how to "make sure Iran gets relief" under the nuclear deal, rather than denying the idea was under consideration.
Current U.S. policy bars foreign banks from clearing dollar-based transactions with Iran through U.S. banks.
Sanctions experts said Treasury could issue a license allowing U.S. banks to send dollars to an offshore facility, from which foreign, non-Iranian banks could withdraw dollars to facilitate legal trade with Iran. Any allowance would likely bar trade involving blacklisted Iranian citizens or organizations.
The Associated Press reported that the Obama administration
might soon tell foreign governments and banks they could start
using the dollar in some instances to facilitate business with
Iran, citing officials familiar with the discussions.
Sources in the administration and Congress told Reuters such a concession was just one of a wide array of options that might be considered.
State Department spokesman John Kirby commented that Washington would continue to analyze the lifting of sanctions under the nuclear agreement, known as the JCPOA, while keeping pressure on Iran on other areas of concern.
"As long as Iran continues to meet its nuclear commitments, we will continue to meet our JCPOA commitments for sanctions lifting," he said.
(Additional reporting by Lesley Wroughton; editing by Cynthia Osterman)