The Obama administration announced tough new targeted sanctions Monday against the Central Bank of Iran, ratcheting up economic pain on Tehran in a move intended to drive it into new international negotiations over its nuclear program, but one that could prove a trigger point for conflict.

The sanctions, part of a years-long effort to force Iran to comply with global nuclear-weapons rules, were issued in a White House executive order. They comply with amendments to a sweeping defense bill that Congress passed late last year.

The sanctions require any U.S. person or corporation to freeze property or interests that belong to the government of Iran, its Central Bank or any other Iranian financial institution. Most of these sanctions already had been in place on all major Iranian banks, but targeting Iran's Central Bank is unusual.

The action attempts to disrupt operations in which a third-country bank is acting on behalf of Iran's Central Bank or other Iranian banks. This is happening in Afghanistan and possibly other Iranian neighbors.

In a letter to lawmakers, President Barack Obama said additional sanctions were necessary "in light of the deceptive practices of the Central Bank of Iran and other Iranian banks to conceal transactions of sanctioned parties, the deficiencies in Iran's anti-money laundering regime and the weaknesses in its implementation, and the continuing and unacceptable risk posed to the international financial system "

To reinforce the measures, the Treasury Department announced that Daniel Glaser, the assistant secretary for terrorist financing, was being dispatched to Oman, Qatar and Russia this week for high-level meetings on Iran.

This happens amid mounting concerns that Israel soon might launch a pre-emptive attack on presumed Iranian nuclear weapons-development sites. That would inflame tensions across the Middle East, a region in turmoil over the past year that analysts view as a tinderbox.

Tehran has shown some interest in international talks, but it's also signaled that it considers new sanctions a provocation. It's threatened to disrupt oil shipments in the Persian Gulf by blocking the narrow Strait of Hormuz, through which some 20 percent of global oil trade passes. On Friday, Iran's supreme cleric, Ayatollah Ali Khamenei, issued thinly veiled threats of retaliation.

"Of course, the Americans and others should, and do, know that we have our own threats to confront the military threats and oil sanctions and when necessary, we will make use of them at the right time," Khamenei said.

Analysts fear that conflict in the Strait of Hormuz could send oil prices soaring and set back the U.S. economic recovery. Oil prices surpassed $100 a barrel late last year and remained in the $97 range Monday, in part because of concern over Iran.

"I think they are elevating oil prices. Based on what we've seen on the supply and demand side, oil prices should be $5 (a barrel) lower or more," said Phil Flynn, a veteran commodities trader for PFGBest in Chicago, adding that U.S. inventories are solid and demand weak. "Why is oil staying higher?"

The European Union agreed late last month that its members would block oil imports from Iran, the second largest oil exporter in OPEC, by July 1. Together the United States and the EU are choking the oil-dependent Iranian economy.

"Iran is not that big a lucrative market. Do you want to endanger yourself with the Americans and Europeans?" asked Patrick Clawson, an Iran expert at the Washington Institute for Near East Policy, a pro-Israel security research center.

Global news reports suggest that Iran is beginning to feel the sting of isolation, Clawson said, pointing to disruptions in grain shipments from Russia and Ukraine and difficulty in getting insured oil tankers into Iran.

"All of this suggests we're having more and more effect on Iran," he said, acknowledging that Iran is running out of options to combat the tightening sanctions. "That's putting it mildly."

The mounting global sanctions are creating turmoil within Iran, White House spokesman Jay Carney said.

"That has had an impact at a variety of levels, most demonstrably on the economy and on the currency. The unity that Iran enjoyed, if you will, with regards to this issue three years ago has gone. And by contrast, the international community has united behind the position that the president has taken, with our allies and partners, to pressure Iran, to try to force Iran to change its behavior," Carney said.


 

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