US Not Backing Off As Iran Sanctions Bite

WASHINGTON: The Obama administration’s man in charge of squeezing Tehran over its nuclear program is unapologetic for the difficulties faced by banks in their dealings with Iran since the US tightened sanctions against the country.
Companies that trade with Iran are struggling to get paid and the biggest Asian countries are scrambling to work around US sanctions that aim to deprive Tehran of revenue needed to develop its nuclear programme. “I don’t feel apologetic about it because that is the consequence of these banks in Iran willingly facilitating transactions for Iran’s nuclear programs,” said David Cohen, undersecretary for terrorism and financial intelligence at the US treasury department.
“If they are going to do that, they shouldn’t be accessible to the international financial system. They shouldn’t be financial institutions that any reputable bank wants to deal with,” Cohen said.
The pressure has forced Iran to listen to US demands, he said. “Do we think we have the attention of the leadership on their end? We have it like never before,” he added.
Cohen’s comments were a strong display of administration confidence in the measures against Iran, even as their effects have rippled through the marketplace faster than many had expected.
JP Morgan warned on Thursday of an acceleration of Iranian oil cutbacks, predicting Iranian supplies could be slashed by one million barrels a day in the first of the year. Since January, the price of oil has shot up nearly 15%.
The White House has not yet stated its position on proposed new bipartisan Iran sanctions legislation in the US that would target Iran’s main oil and tanker companies, as well as tighten up other loopholes. Mindful of the potential to cause more uncertainty over supply and push world oil prices higher, some senators are seeking amendments to the new sanctions package to assure insurers of allowed oil shipments that they will not be stung by sanctions. But Senate Majority leader Harry Reid so far has said he does not want to allow the package to be amended.
US entities have been prohibited from working with Iran for years. But what Washington and its allies see as signs that Iran is closer to getting atomic weapons and unleashing a nuclear arms race in the West Asia have triggered Washington to increase the heat on the country.
Over the past three months, Cohen and other top Obama administration officials convinced Europe to impose similar sanctions on Iran’s main recipient of oil payments, the Central Bank of Iran. The administration has been twisting arms trying to get Iran’s biggest oil buyers, China, India, Japan and South Korea, to stop relying on Iranian crude. The current US sanctions allow President Barack Obama to block foreign financial firms from US markets if they continue to deal with Iran’s central bank. However, if countries manage to reduce their Iranian oil imports, they can win exemptions from the law so that their banks are not barred from the US financial system.
Despite the looming sanction deadlines, countries and companies have managed to do some business with Iran— a provision that the Obama administration defends.
Insurers of oil shipments need assurance that they will not be stung by sanctions. Already, it is clear that some contracted shipments of Iranian crude are faltering because of the concerns over insurance. An EU embargo on Iranian crude begins on July 1.