US imposes new Iran sanctions that may spook foreign banks

WASHINGTON • The United States has slapped fresh sanctions on Iran's financial sector, targeting 18 banks in an effort to further choke off Iranian revenues as Washington ramps up pressure on Teheran weeks ahead of the US election.

The move yesterday freezes any US assets of those blacklisted and generally bars Americans from dealing with them, while extending secondary sanctions to those who do business with them. This means foreign banks risk losing access to the US market and financial system.

The Treasury Department said in a statement the prohibitions did not apply to transactions to sell agricultural commodities, food, medicine or medical devices to Iran, saying it understood the need for humanitarian goods.

However, Iranian Foreign Minister Mohammad Javad Zarif accused the US of targeting Iran's ability to pay for basic necessities during the Covid-19 pandemic.

"US regime wants to blow up our remaining channels to pay for food & medicine," Mr Zarif said on Twitter. "Conspiring to starve a population is a crime against humanity."

Iranian Central Bank governor Abdolnaser Hemmati dismissed the sanctions as political propaganda and played down their practical impact. "Rather than having any economic effect, the American move is for US domestic propaganda and political purposes, and shows the falsity of the human rights and humanitarian claims of US leaders," Mr Hemmati said.

Analysts said the secondary sanctions may further deter European and other foreign banks from working with Iran, even for permitted humanitarian transactions.

"It's like a punch in the face to the Europeans, who have gone out of their way to indicate to the Americans that they view it as being extremely threatening to humanitarian assistance or humanitarian trade going to Iran," said Ms Elizabeth Rosenberg of the Centre for a New American Security think-tank.

"They also want... to make it very difficult for any future president to be able to unwind these measures and engage in nuclear diplomacy," Ms Rosenberg added.

Democratic presidential candidate Joe Biden, who was vice-president when the Obama administration negotiated the Iran nuclear accord, has said he would rejoin the deal if Teheran first resumed compliance with it.

Tensions between Washington and Teheran have soared since President Donald Trump unilaterally withdrew in 2018 from the 2015 Iran nuclear deal struck by his predecessor and began re-imposing US sanctions that had been eased under the accord.

The sanctions Mr Trump has reinstated target everything from oil sales to shipping and financial activities. While they exempt food, medicine and other humanitarian supplies, many foreign banks are already deterred from doing business with the Islamic Republic - including for humanitarian deals.

REUTERS