U.S. imposes new Iran sanctions that may spook European banks

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The United States on Thursday slapped fresh sanctions on Iran’s financial sector, targeting 18 banks in an effort to further choke off Iranian revenues as Washington ramps up pressure on Tehran weeks ahead of the U.S. election.

The move freezes any U.S. assets of those blacklisted and generally bars Americans from dealing with them, while extending secondary sanctions to those who do business with them. This means foreign banks risk losing access to the U.S. market and financial system.

The Treasury Department said in a statement the prohibitions did not apply to transactions to sell agricultural commodities, food, medicine or medical devices to Iran, saying it understood the need for humanitarian goods.

However, Iranian Foreign Minister Mohammad Javad Zarif accused the United States of targeting Iran’s ability to pay for basic necessities during the COVID-19 pandemic.

“U.S. regime wants to blow up our remaining channels to pay for food & medicine,” Zarif said on Twitter. “Conspiring to starve a population is a crime against humanity.”

Iranian Central Bank governor Abdolnaser Hemmati dismissed the sanctions as political propaganda and played down their practical impact.

“Rather than having any economic effect, the American move is for U.S. domestic propaganda and political purposes, and shows the falsity of the human rights and humanitarian claims of U.S. leaders,” Hemmati said in a statement.

Analysts said the secondary sanctions may further deter European and other foreign banks from working with Iran, even for permitted humanitarian transactions.

“It’s like a punch in the face to the Europeans, who have gone out of their way to indicate to the Americans that they view it as being extremely threatening to humanitarian assistance or humanitarian trade going to Iran,” said Elizabeth Rosenberg of the Center for a New American Security think tank.

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