U.S. Seizes On Iranian Economic Crisis to Push for Further Sanctions

Sari Weintraub — October 5, 2012 – 11:08 am | Foreign Policy | Iran Comments (0) Add a comment

Following the sudden and dramatic drop in the value of Iranian currency this week—which resulted in a domestic unrest in Tehran — the U.S. is now working with Europe on measures “intended to accelerate the recent plunge of Iran’s currency and drain its foreign-exchange reserves.” The Wall Street Journal reported:

The U.S. and EU are also considering imposing a de facto trade embargo early next year by moving to block all export and import transactions through Iran’s banking system—which could further choke off Tehran’s access to foreign currency, U.S. and European officials said.

To that end, U.S. lawmakers are drafting legislation that would require the White House to block all international dealings with Iran’s central bank, while also seeking to enforce a ban on all outside insuring of Iranian companies. There is also a legislative push to block investment in Iran’s energy sector by closing off loopholes in existing sanctions.

... A nearly 40% drop in the Iranian rial’s value against the dollar since Sept. 24 has increased confidence in Washington and Brussels that Western sanctions are starting to significantly erode Tehran’s finances, senior U.S. and European officials said.

... It is unclear if the financial panic will force Tehran to make concessions on its nuclear program—the ultimate aim of the West’s sanctions campaign. But the rial’s plunge is undercutting views held by some in the U.S. and Europe that Tehran’s oil wealth could make it immune from financial pressure, U.S. and European officials working on Iran said.

‘There has been the perception that Iran is unmovable because of its oil resources,’ said a European official. ‘This perception is quickly shifting.’

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