(Bloomberg) – The Trump administration is considering new sanctions to separate the Iranian economy from the outside world, except in limited circumstances, by targeting more than a dozen banks and labeling the entire financial sector as banned, have said three people familiar with the matter.
The move would effectively leave Iran – which has seen its economy crushed by the loss of its oil sales and most other trade thanks to existing U.S. restrictions – isolated from the global financial system, severing the few remaining legal ties including it has and making it more dependent on informal or illicit trade.
The proposed sanctions would have two purposes, according to the people, who have asked not to be identified in internal talks: to close one of the few remaining financial loopholes for the Iranian government to generate revenue and to thwart Democrat Joe Biden’s promise to return in 2015. nuclear deal if it wins the presidency in November.
The proposal is still under review and has not been sent to President Donald Trump.
As part of the plan, the administration would designate Iran’s financial sector under Executive Order 13902, which Trump signed in January to clamp down on mining, construction, and other industries. This would not only affect banks, but also remittance processors, money changers and the informal transfer system frequently used in the Muslim world known as hawala.
Next, the administration would blacklist around 14 banks in Iran that have so far escaped certain US restrictions, under authorities designed to punish entities associated with terrorism, ballistic missile development and violations. human rights.
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The proposed sanctions were initially greeted with a cold reception from several Trump officials for fear of complicating the delivery of international humanitarian aid to Iran, which has been hit hard by the Covid-19 outbreak and the sanctions existing Americans. But they have since gained more support thanks to a broad push by extremists inside and outside the administration and the belief that humanitarian costs could be mitigated, mainly through self-help. saying comfort letters from the Treasury Department, people said.
A Treasury Department spokesperson declined to comment, as did press officials from the National Security Council and the State Department.
Mark Dubowitz, chairman of the Foundation for the Defense of Democracies, who has closely advised the Trump administration on Iranian policy, pitched the idea in an Aug. 25 editorial in the Wall Street Journal, saying protections already exist for humanitarian aid. Republican Senators Ted Cruz and Tom Cotton, who helped push Trump to take some of the toughest action to date against Iran, are also in favor.
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“This has a major deterrent effect on all financial entities that are considering doing business with Iran,” Dubowitz said in an interview. “This action would make Iran’s financial sector radioactive.”
The move has an additional goal: to incorporate sanctions against Iran now so that if Biden wins the election, he will have a much harder time getting back into the Joint Comprehensive Plan of Action, or JCPOA. The JCPOA in 2015 granted sanctions relief to Iran in exchange for limits on its nuclear program. Trump left the pact in 2018 and reimposed a series of sanctions, but Biden has said he would seek to enter into some sort of deal if he wins.
In a September 13 CNN editorial, Biden said he would return to the deal on condition that Iran also returned to compliance. He called the Trump administration’s “maximum pressure” campaign against Iran a failure and said the nation was closer to a nuclear weapon now than it was when Trump came to power – despite a series of sanctions that have stifled its oil exports and other sectors, as well as with individuals.
Supporters of the new sanctions argue the measures would be difficult to reverse because a Biden administration would need to show that Iran is no longer doing work related to missile proliferation or terrorism. The sanctions would also add to the reluctance of companies seeking to weigh the risks of doing business with Iran against any potential gain.
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Critics of the radical approach say Iran is already sanctioned so heavily that another set of restrictions won’t make much of a difference. Indeed, the administration is introducing new sanctions against Iran almost daily, including Thursday, when the Treasury Department appointed two Iranian judges under the Countering America’s Adversaries Through Sanctions Act.
Despite all these measures, the Iranian regime has so far remained provocative and refused to meet with Trump officials. The United States has also become increasingly isolated in the United Nations Security Council, where 13 of the other 14 countries on the panel – including several American allies – have rejected their offers to reimpose or reinstate restrictions on the nuclear program. Iranian.
“I’m very skeptical that they might be doing anything at this point that would change perceptions,” said Jarrett Blanc, senior researcher at the Carnegie Endowment for International Peace and former State Department coordinator for the implementation. implementation of Iranian nuclear power under President Barack Obama. “If Joe Biden thinks it is in the national interest of the United States to revert to the JCPOA and the sanctions posture that entails, he will.”
Blanc said that the remaining Iranian banks are still important for humanitarian operations and that the volume of unauthorized trade is too small to make a big difference in the Iranian economy.
The new proposal has also been echoed by Republican lawmakers who believe the best way to get them passed is to appeal directly to Trump. In a September 17 letter, Cruz, Cotton, and four other senators urged Trump to impose the sanctions and cut the banks off the SWIFT financial messaging system. A group of 57 members of Congress followed with an almost identical letter on Thursday.
“Iran’s desperate economic situation offers the United States a critical opportunity to force the regime to abandon its malicious activities and return to the negotiating table on your terms,” the two letters said.
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