US backs away from sanctions on Iran's central bank

US diplomats confirm that economic sanctions targeting CBI face steep resistance from other countries, 'LA Times' reports.

currency exchange dealer, Iran_311 (photo credit: Reuters)
currency exchange dealer, Iran_311
(photo credit: Reuters)
The Obama administration has backpedaled from its tough talk about sanctioning the Central Bank of Iran, the country’s main financial institution for energy transactions.
The Los Angeles Times reported Friday that diplomats and American officials confirmed that robust economic sanctions targeting the CBI faced steep resistance from other countries.
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David D. Cohen, the US Treasury Department's under secretary for terrorism and financial intelligence, visited Paris, London, Berlin and Rome last month in an effort to convince Europe to consider targeting CBI.
Cohen said: “We are going to continue to look at those financial institutions that are involved with proliferation activity for Iran, and continue to try to isolate them from the international financial sector.”
Iran sanctions experts, who favor stopping Tehran’s drive to obtain nuclear weapons, believe that turning the financial screws on Iran’s CBI could potentially bring the Islamic Republic’s economic system to a grinding halt.
According to the Los Angeles Times report, Rep. Adam Smith, (D-Washington) a member of the House Armed Services Committee, disagrees with Obama’s posture toward the CBI. He urged clamping down on the CBI.
“All these steps entail huge risks,” he said, but “our best approach is to continue to ramp up economic pressures.”
While the Los Angeles Times did list the foreign countries opposed to sanctioning the CBI, the European Union’s 25 billion-euro plus trade volume with Tehran involves the CBI. Foreign governments expressed concern that cracking down on the CBI would jolt fragile world markets, particularly the price of crude oil. Germany, Italy and Greece, to name just a few EU countries, import large volumes of Iranian crude oil. Russia and China are vehemently opposed to CBI sanctions.
The Obama administration is shifting its sanctions strategy away from the CBI to more aggressive enforcement of existing Iran sanctions, and seeking to persuade some of Tehran’s key trading partners — including the Persian Gulf states, South Korea and Japan — to join the US in enforcement.