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June 03, 2013

Obama Signs Order for New Sanctions Targeting Iranian Currency

by Dan Robinson

U.S. President Barack Obama on Monday signed an order imposing additional sanctions on Iran, for the first time directly targeting Iran's currency, the rial.  It's the latest U.S. step to increase pressure on Iran to change course on its nuclear program.  

The executive order further intensifies the second track of the Obama administration's strategy on Iran, which aims to increase the economic costs, and further isolate the Islamic Republic from the global financial system.

It authorizes sanctions on foreign financial institutions that knowingly conduct or facilitate significant transactions for the purchase or sale of the Iranian rial, or that maintain significant accounts outside Iran denominated in the Iranian rial.  

Senior administration officials said no specific dollar amount is specified, although regulations contain some guidance on this.

The idea, said one official, is to make the Iranian currency "essentially unusable outside of Iran," as part of the overall effort to apply "significant financial pressure" on the government of Iran.

The order also targets what is called a major revenue generator, Iran's automotive sector, building on sanctions in legislation President Obama signed this past January.

It sanctions those who knowingly engage in significant financial or other transactions for the sale, supply or transfer to Iran of significant goods or services in connection with the automotive sector.

Senior administration officials said that in way or another, Iran's auto sector supports the government's ability to fund activities, including its "illicit nuclear program."

On the Iranian currency, senior officials said the new sanctions will have the greatest impact outside of Iran, although they acknowledged that the weakening currency is impacting everyone in the Iranian economy.  One official said the "biggest loser" would be the Iranian Revolutionary Guard Corps.

The new order also sanctions anyone providing material support to Iranians who have been blacklisted by the U.S. government, with some exceptions.

One exception involves Iranian depository institutions and certain activities relating to a natural gas pipeline project from the Shah Deniz gas field in Azerbaijan to Europe and Turkey.

The United States and key partners say Iran is trying to develop nuclear weapons.  Iran denies this, saying its nuclear program is for peaceful civilian purposes.

Asked what additional sanctions pressure can be imposed on Iran, one senior administration official said "there is more to come" if Iran continues to refuse to engage in a serious and meaningful way with the international community on its nuclear program.