Canada, U.S, tighten sanctions on Iran

John Baird

With new measures tightening sanctions on Iran, both Canada and the United States moved one step further toward effectively cutting off the Islamic Republic’s economy from the West.

U.S. President Barack Obama issued the measures on Nov. 21, in the form of an executive order and on Nov. 22, Ottawa followed suit with its own updated sanctions.

Foreign Minister John Baird said Canada was “deeply disturbed” by the International Atomic Energy Agency’s recent report on the state of Iran’s nuclear program.

That report determined there is “credible” evidence that Iran is pursuing a nuclear weapons capability.

“It is yet more proof that the current regime in Tehran poses the most significant threats to global peace and security today. We are compelled to take further action as a result,” he said in a statement.

As a result, the government used the Special Economic Measures Act (SEMA) to impose more stringent sanctions on Iran.

The new Canadian measures include:  prohibiting financial transactions with Iran, subject to certain exceptions; expanding the list of prohibited goods to include all goods used in the petrochemical, oil and gas industry in Iran; amending the list of prohibited goods to include additional items that could be used in Iran’s nuclear program.

“We are taking aggressive action to cover the known leadership of the Iranian Revolutionary Guard and block virtually all transactions with Iran, including those with the Central Bank, while providing an exemption allowing Iranian-Canadians to send some money to loved ones back in their home country,” Baird said.

“Iran’s current leaders blatantly ignore their international obligations. They obfuscate Iran’s nuclear activities, and they block any international attempt to verify the country’s claims. They do so while continuing to violate the human rights of their own citizens, all while undermining regional security.”

At a news conference, U.S. Secretary of State Hillary Rodham Clinton and Treasury Secretary Timothy Geithner said that the U.S. government would treat Iran’s banks as a “threat to government institutions.” The step, Geithner said, means that any financial institution has effectively been warned: “You are at risk of supporting Iran’s nuclear activities” as well as its backing for terrorists.

Without explicit penalties for dealings with Iran’s banks, the Obama administration’s action is just shy of actually sanctioning all the banks, including the Central Bank, which is what Congress and pro-Israel groups have been demanding.

Such sanctions would effectively force any entity dealing with Iran to choose between continuing such dealings or being cut off from the United States and other western economies. The likely effect would be Iran’s near-total isolation from the economies of the developed world.

A letter sent to Obama, authored by Rep. Howard Berman (D-Calif.) and signed by leaders of both parties in the House, urged the president to sanction the Central Bank of Iran (CBI), also known as Bank Markazi.

“If a review of the facts confirms that CBI is involved in illicit activities linked to Iran’s nuclear program and terrorist activities, we urge you to quickly designate CBI as a facilitator of Iran’s weapons of mass destruction proliferation and terrorist activities for the purpose of imposing sanctions on persons that do business with CBI,” the letter said.

Meanwhile, France called for outright European Union sanctions on those dealing with the Central Bank and a suspension of all oil purchases from Iran – steps that would go beyond the Obama administration’s warning that dealing with Iran places an individual or an entity “at risk.”

“The idea of freezing the CBI is a huge step and we are aware of that, but we believe it is the appropriate response to such a game change,” a French diplomat told JTA, speaking under his country’s customary rules of anonymity.

European foreign ministers are set to convene soon and likely will consider the French call.

The executive order described by Clinton and Geithner also bans dealings with Iran’s energy sector, tightening rules that had only banned investments.

Sources with pro-Israel groups said that the tighter sanctions announced by Clinton and Geithner were unlikely to stop Congress from moving ahead with legislative efforts to sanction the Central Bank, but were likely to head off for now a battle between Congress and the White House over such legislation.

The principal hesitation in cutting off Iran outright is that doing so would drive up the world’s oil prices. That may soon change, insiders said, with Libya’s pending re-entry into oil markets. Libya’s anticipated 1.5 million barrels a day would go some way to compensate for the anticipated 2.5 million barrels a day that Iran’s exit would cost the world supply.

In an interview that aired Nov. 20 on CNN, Israeli Defence Minister Ehud Barak said the “time has come” to deal with the Iranian nuclear program.

With files from Andy Levy-Ajzenkopf