The Obama administration announced two new sanctions provisions against the Iranian government on Tuesday in an attempt to further target the regime's oil, petrochemical and banking sectors.
The new sanctions are two-fold. First, a new executive order signed July 30th by President Barack Obama expands upon previous sanctions to "make sanctionable knowingly conducting or facilitating significant transactions with a private or public foreign financial institution or other entity for the purchase or acquisition of Iranian oil."
Secondly, two financial institutions - Bank of Kunlun in China and Elaf Islamic Bank in Iraq - were sanctioned Tuesday under the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA) for knowingly facilitating financial transactions for Iranian banks.
These two institutions "have continued to process significant financial transactions...facilitating the movement of millions of dollars" to Iranian banks, Treasury Department Under Secretary for Terrorism and Financial Intelligence David Cohen told reporters Tuesday.
These sanctions, which effectively cut off these two institutions from the U.S. financial system, "will have a significant chilling effect for Kunlun and Elaf to operate anywhere in the world," Cohen added.
The message of the sanctioning of Kunlun and Elaf is clear, Cohen concluded, "If you provide financial services to designated Iranian banks, if you process significant financial transactions for these banks, you will face us sanctions, no matter where you are located."
State Department Special Advisor for Nonproliferation and Arms Control Robert Einhorn said the additional executive order enacted today would only add to the pressure on Iran's oil and petrochemical sector.
Today's executive order would sanction purchases from any private or public individual or entity - including refiners - of Iranian crude oil and additionally sanction the receipt of any payment acquisition - formal, informal or barter.
Since 2011, Iranian crude oil exports have dropped from 2.5 million barrels per day to below 1.5 million in June of this year. This has resulted in a $9 billion loss of revenue for Iran in every quarter, Einhorn told reporters.
Noting that the sanctions have not even been enacted in full force, Einhorn said the effect on Iran's oil sector by these additional sanctions will only "become more severe in coming weeks and months."
However, many independent analysts question the viability of the current Iranian crude oil sanctions on effecting Iran's economy.
"Sanctions rarely modify the behavior of the nation state that you're trying to influence," energy infrastructure policy expert and former Department of Transportation official Brigham McCown told RTTNews.
Many experts believe U.S. waivers to ally countries allowing them to slow imports of Iranian crude oil over time also impede sanctions efforts on the Islamic nation.
"So long as other countries - such as China, and even some of the Western countries - are exempted or at least have loopholes, Iran is going to continue to trade oil, their oil is going to continue to be bought and the sanctions will continue to be ineffective, McCown said.
He added, "If you come up with a rule and then you start punching holes in it before it even starts, obviously its effectiveness is weakened."
But the Obama administration disagrees with this view, saying the 1 million barrel a day reduction is significant for Iran's economy.
Cohen claimed that the willingness for allies to reduce crude oil imports from Iran is a "reflection of how well these sanctions programs are actually operating."
"I don't think we have been easy at all," Deputy National Security Advisor for Strategic Communications Ben Rhodes added.
"Even as we intensify our pressure on the Iranian government, we hold open the door to diplomacy. Iran can choose to abide by its international obligations, honor its commitments to the International Atomic Energy Agency, and prove that its intentions are peaceful," the White House stated in a fact sheet on the new sanctions.
"The United States remains committed to a diplomatic solution, but the onus is on Iran. If the Iranian government continues it defiance, there should be no doubt that the United States and our partners will continue to hold Iran accountable."
by RTT Staff Writer
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