New Iran sanctions: why President Obama is tightening the screws

The White House announces new sanctions against Iran, targeting its oil sector and related banks, in what appears to be an election-year bid to show that President Obama is still tough on Tehran.  

Appearing anything but brutally tough with Iran over its nuclear program is one of the last things President Obama wants going into the politically critical month of August in an election year.

That helps explain why the president announced two new measures Tuesday aimed at tightening the screws once again on Iran’s ability to sell its oil abroad and operate in the world financial system.

The White House is also bolstering its tough-on-Iran credentials by speaking anew of long-standing international demands that Iran suspend all uranium enrichment – a position it had silenced in recent months as it pursued a diplomatic resolution of Iran’s nuclear challenge. 

The new actions include additional sanctions on Iran’s huge petroleum sector, and target two banks, one Chinese and one Iraqi, that have been facilitating millions of dollars in Iranian financial transactions. They come just two days after Israeli Prime Minister Benjamin Netanyahu told presumptive Republican presidential candidate Mitt Romney that “sanctions and diplomacy so far have not set back the Iranian [nuclear] program by one iota.”

In reviewing the new measures with reporters Tuesday, administration officials were careful not to say they disagreed with Mr. Netanyahu – even as they disputed the criticism that sanctions are having no impact.

“We do see the sanctions having an effect in terms of sharpening the choice for the Iranian government,” said Ben Rhodes, deputy national security adviser for strategic communications. According to Mr. Rhodes, the US and international sanctions are significantly reducing the Iranian government’s revenues, while the sanctions are “making it much more difficult for Iran to procure the technology it needs” to advance its nuclear program. 

International sanctions are reducing Iran’s oil revenues by more than $9 billion a quarter, according to Robert Einhorn, special adviser for nonproliferation and arms control at the State Department. Oil sales provide the bulk of the government's revenues. 

The cumulative effect of the sanctions, he said, is that they are slowing Iran’s progress. That, he added, is providing more “time and space to pursue a diplomatic resolution.”

Where the White House agrees with Netanyahu, Rhodes added, is that “we have not yet seen Iran make a decision to come in line with [its] international obligations” by suspending uranium enrichment and curtailing its nuclear program.

One of Obama’s orders Tuesday was for the Treasury Department to impose sanctions against the Bank of Kunlun in China and Elaf Islamic Bank in Iraq for facilitating financial services with Iranian banks already under international sanctions for their connection to Iran’s international proliferation or terrorism activities.

The other order also seeks to crack down on Iran’s use of alternative forms of payment, include barter, to get around international sanctions that are making it harder for Iran to collect for the oil and petroleum products it is selling.

The new executive orders also come as Congress finishes up work on yet another set of sanctions and other measures against Iran. The new legislation, which congressional leaders say they expect to pass before Congress goes on August recess Friday, calls on Obama to officially designate supreme leader Ali Khamenei and President Mahmoud Ahmadinejad as human rights abusers, and would make it the policy of the US to offer political asylum to jailed Iranian dissidents and to call for their release by name.

Rhodes said there was “absolutely not” an effort by the White House to forestall the latest congressional efforts in light of continuing international diplomatic efforts to reach an agreement with Iran.

One area of potential disagreement is that the proposed legislation speaks of preventing Iran from acquiring a “nuclear capability,” which is different from current Obama’s stance – which is that Iran must be prevented “from acquiring a nuclear weapon,” as Rhodes said. Acquiring nuclear capability might potentially set a lower bar for triggering action.

But Rhodes also hinted at a toughening in the Obama White House approach to Iran, when he repeatedly cited existing United Nations Security Council resolutions that demand Iran’s “full suspension of enrichment activities.”

Earlier this year some White House officials had suggested that the US might be prepared to accept some low level of uranium enrichment for power-generation purposes, in exchange for a verifiable suspension of the higher-grade enrichment Iran is now pursuing. That puts it closer to obtaining the fuel it would need for a nuclear weapon.

Tuesday’s references to “suspending all enrichment” – a position that Israel’s Netanyahu has insisted on – suggests that perhaps the White House is publicly toughening its stance on Iran as the presidential campaign swings into full gear.