Newspaper article International Herald Tribune

U.S. Aims Sanctions at Iranian Currency ; Obama's Executive Order Also Hits at Tehran's Automobile Industry

Newspaper article International Herald Tribune

U.S. Aims Sanctions at Iranian Currency ; Obama's Executive Order Also Hits at Tehran's Automobile Industry

Article excerpt

The actions, contained in an executive order by President Barack Obama, were a response to what a White House statement called Iran's "continued failure to meet its international obligations."

The Obama administration has escalated sanction pressure against Iran for the third time in a week, taking actions that could further weaken the country's already-devalued currency and seriously disrupt its automotive industry, a significant domestic employer and revenue generator for the Iranian government.

The latest actions, contained in an executive order effective July 1, were a response to what a White House statement called Iran's "continued failure to meet its international obligations," a reference to its disputed nuclear energy program, which Iran has called peaceful and Western nations call a guise to achieve the ability to make atomic bombs.

Talks aimed at resolving that protracted dispute have stalled in advance of Iran's presidential elections in less than two weeks, in which the leading candidate, Saeed Jalili, is Iran's top nuclear negotiator. He has said the country will never compromise on the nuclear issue and that the sanctions will have no effect.

Under the executive order, President Barack Obama authorized sanctions on any foreign financial institutions that conduct "significant transactions" in the Iranian rial, the national currency, or maintain rial accounts outside Iran. While the United States and the European Union have taken other steps that severely limit Iran's ability to conduct financial transactions, the administration's action is the first time that the rial itself has been directly singled out for sanctions.

"As of July 1, significant transactions in the rial will expose anyone to sanctions," said an administration official briefing reporters Monday in a telephone conference call. "It should cause banks and exchanges to dump their rial holdings."

The rial has already lost half its value from a year ago, in part because of the cumulative effects of other economic sanctions, which have made it far costlier for Iran to import goods. Inflation has accelerated in Iran, and many people are worried that the rial could weaken further. …

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