WASHINGTON - US lawmakers are considering expanding American economic sanctions on Iran - measures that already have helped push that country's currency into free fall but have not yet convinced Tehran to abandon its nuclear program.
Democratic Senator Robert Menendez, a member of the Senate Banking and Foreign Relations Committees, said he plans to push for new penalties on foreign banks that handle any significant transactions with the central bank of Iran. Only oil-related transactions are now covered by sanctions.
A senior House of Representatives Democrat, Howard Berman, is working on additional possible sanctions on Iran.
Menendez said he is also looking at ways to freeze an estimated 30 percent of Iran's foreign currency reserves held in banks outside the country.
"It seems to me we have to completely exhaust all the tools in our sanctions arsenal, and do so quickly, before Iran finds a way to navigate out of its current crisis," Menendez said in an interview.
Iran's economy has been badly hit by US and European sanctions imposed to try to pressure the Iranian leadership to stop pursuing nuclear weapons. The Iranian rial currency has lost a third of its value against the dollar in the past 10 days and as much as 80 percent since the beginning of the year.
The US Congress is out of session until after the Nov. 6 presidential election, meaning any action on fresh sanctions will have to wait until then.
Menendez said he hopes the additional sanctions will become part of an annual defense policy bill that the Senate and House must finalize after the election.
The White House had no immediate comment on possible new sanctions.
Sanctions beginning to bite
The rial's plunge and signs of civil unrest in Tehran have given Western policymakers hope that economic sanctions may be biting deeper.
Time is running short to do more, Menendez said. "Sanctions are working, but we aren't sure they will work quickly enough to force Iran to put its nuclear program on the table," he said.
The stakes are high. Israeli Prime Minister Binyamin Netanyahu last week suggested Israel might use military force against Iran if its uranium enrichment program passes what he termed a "red line."
The European Union is discussing its own possible broad trade embargo against Iran that would include sweeping measures against the central bank and energy industry.
Striking a more cautious tone, UN chief Ban Ki-moon said on Friday international sanctions are hurting Iran's people and may harm humanitarian operations in the country.
Menendez said in the interview on Friday that lawmakers have held only "some preliminary conversations" with the Obama administration on the proposals.
Some lawmakers want the extended sanctions to cover all transactions except for those involving food and medicine, said a senior congressional aide, speaking on condition of anonymity.
"You really move to a total embargo scenario," the aide said. "The Iranian economy would collapse pretty quickly."