x Abu Dhabi, UAETuesday 25 July 2017

Aggressive new US sanctions go after Iran's currency and automobile sector

US has unveiled its latest sanctions against Iran, directly targeting the rial currency for the first time and also the auto sector, a key source of jobs and revenue.

Iran's President Mahmoud Ahmadinejad, turning the screw on Iran and its nuclear program, the Obama administration has imposed new sanctions. AP Photo/Fernando Llano
Iran's President Mahmoud Ahmadinejad, turning the screw on Iran and its nuclear program, the Obama administration has imposed new sanctions. AP Photo/Fernando Llano

WASHINGTON // The United States unveiled aggressive new sanctions against Iran Monday, directly targeting the rial currency for the first time and also the auto sector, a key source of jobs and revenue.

The measures, which could wreak more economic deprivation inside Iran, came days before a presidential election in the country and followed Tehran's refusal to cede ground in stalled world power talks on its nuclear program.

They were accompanied by new US warnings of a "painful" and "powerful" escalation of the sanctions regime, as President Barack Obama seeks to convince the Islamic Republic the price of uranium enrichment is too high.

"The steps taken today are part of President Obama's commitment to prevent Iran from acquiring a nuclear weapon, by raising the cost of Iran's defiance of the international community," White House spokesman Jay Carney said.

Obama signed an executive order authorizing sanctions on foreign banks and financial institutions that make transactions in the rial or keep accounts denominated in the currency outside the country.

The ninth set of sanctions signed by Obama against Iran will also penalize anyone involved in the significant sale of goods and services to Iran's auto industry -- a move that could hit foreign car giants in Europe and Asia.

Another official said the strategy represented a significant escalation of the sanctions as, for the first time, Washington was attacking the rial, which has lost two-thirds of its value over the last two years.

"This promises to make Iran's weak currency even weaker and more volatile," the official said. "The idea here is to make the rial essentially unusable outside of Iran."

Analysts said the new move by Obama was a sign that the administration was wedded to a strategy of ever increasing economic pressure on Iran as the showdown over its nuclear program hits a critical point.

"It's a serious escalation of sanctions because the administration is blacklisting the auto sector which is the second largest employer in Iran after the energy sector," said Mark Dubowitz, of the Foundation for Defense of Democracies.

Mr Dubowitz also said that the move against the auto sector was a sign the administration was concerned it could be used to procure "dual use" technologies that could be used in centrifuges enriching uranium.

The announcement of new sanctions came as the campaign gathers pace ahead of June 14 elections to succeed President Mahmoud Ahmadinejad.

While the campaign has featured debate on the economic pain exerted by US and international sanctions, the poll is unlikely to alter Iranian nuclear policy, which is controlled by Supreme Leader Ayatollah Ali Khamenei.

All presidential hopefuls -- including Iran's top nuclear negotiator Saeed Jalili -- have insisted that the nuclear project will proceed whoever wins.