Iran sanctions 370.
(photo credit: REUTERS/Raheb Homavandi)
WASHINGTON -- The White House on Monday announced a new sanctions package
against Iran targeting rial exchange and its domestic auto-sector, marking the
third time in three weeks President Barack Obama has used executive power to
tighten screws on the Islamic Republic.
In a press release, the Obama
administration said it is the first time the rial has been directly targeted by
The move, effective July 1, comes just days after the White
House announced new actions to constrict Iran's petrochemical industry, shortly
after efforts to further isolate Iranian banks and within weeks of the
assumption of a new sanctions regimen against Iran's shipping industry and its
ability to import precious metals.
Now, in addition to these new
measures, the US will impose sanctions on foreign financial institutions that
conduct or facilitate significant transactions in the Iranian rial, meant to
further weaken a currency that has already lost two-thirds of its dollar value
since late 2011 as a result of Western sanctions.
A senior administration
official said the low level of the rial was a key vulnerability for the Iranian
"The objective is to take aim at the rial and to make it as
unusable a currency as possible, which is all part and parcel of our efforts to
apply significant financial pressure on the government of Iran," the official,
who spoke on condition of anonymity, said on a call with reporters.
president also approved sanctions against people who do business with Iran's
auto sector, which the White House said is a major source of hard cash revenue
While auto manufacturers in Iran will be hit hard, major
foreign auto companies are still doing business in Iran, including Mercedes and
Volkswagen of Germany, Renault of France and Volvo of Sweden.
Malcolm Hoenlein, the executive vice-chairman of the Conference of Presidents of Major American Jewish Organizations said that Mercedes, Volkswagon and Renault had "cut back significantly, and they've compensated with domestic consumption. They're conscious of what they're doing."
Hoeinlein contended that the passage of new sanctions "just further extends the impact on the use of the rial. But its devaluation has been a steady progression all along."
He said that sanctions on additional sectors could be passed to increase pressure on Iran. "We've pressed for a long time for them to address the central bankers, and for the most part they have."
Hoeinlein added: "The sanctions are good. It's the implementation that's the hard part. And the exemptions, as well."
It was the Obama's ninth executive order against the Iranian regime.
comes down to whether this works or fails, executive orders are going to be more
effective than politicized legislation," Anthony Cordesman, an expert at the
Center for Strategic and International Studies, told The Jerusalem Post.
"There's a tendency to assume you can flip a switch, and that's not the case.
They want this to be a matter of cumulative pressure." Cordesman notes that,
with South Africa, the country's government never dramatically changed course,
but ultimately altered its behavior over time as sanctions slowly
Michael Rubin, a former Pentagon official and current scholar
at the American Enterprise Institute, questions the likelihood that sanctions
will force the Iranian regime to bend. He notes that one of the few times Iran
backed down from its ideological goals was when Ayatollah Khomeini agreed to a
ceasefire in the Iran-Iraq War.
"On the radio, [Khomeini] likened his
decision to 'drinking a chalice of poison,' but said he had no choice if the
Islamic Revolution was to continue," said Rubin. "The question each and every
Western diplomat should ask is whether the sanctions package they propose comes
anywhere close to forcing the Supreme Leader to drink again from that chalice."
"If the answer is no, then the diplomacy remains little more than a parlor
game." Sanctions imposed by the United States and European Union halved Iran's
oil exports last year, depriving the government of billions of dollars in
revenue, increasing already high inflation and hitting the rial's
The sanctions have hurt Iran's economy, but there is little
evidence they have slowed the nuclear program ahead of a presidential election
in Iran next week.
Restrictions on the auto industry, which traditionally
employs the most people after the oil and gas sector, also raise fears it is
ordinary Iranians that will be most harmed, analysts told Reuters.
sanctions on Iran have so far included an exception for natural gas exports,
which flow to several close US allies, including Turkey.Reuters
contributed to this report.