LONDON/WASHINGTON, Nov 21, (Agencies): Britain ordered its financial institutions on Monday to halt all business with Iranian counterparts, including the central bank, and the United States is also expected to tighten sanctions over Tehran’s nuclear programme.
The British move however will not target trade in Iranian oil, a source familiar with the sanctions said. It also appeared unlikely that the US Treasury would try to cut off the Iranian banking system entirely, a move that could disrupt global energy markets and harm the US economic recovery.
Britain said the sanctions were in response to the International Atomic Energy Agency’s (IAEA) latest report on Iran, which highlighted fresh concerns about
possible military dimensions of Tehran’s nuclear programme.
“We believe that the Iranian regime’s actions pose a significant threat to the UK’s national security and the international community. Today’s announcement is a further step to preventing the Iranian regime from acquiring nuclear weapons,” said British finance minister George Osborne.
In Washington, a US official said the Treasury Department planned to designate Iran as an area of “primary money laundering concern” on Monday, a move allowing it to take steps to isolate the Iranian financial sector further.
Henry Smith, Middle East analyst at the Control Risks consultancy in London, said the British move may not significantly affect Iran’s major oil customers.
“It essentially delegitimises the country’s financial system but in reality it may not make that much practical difference. The Chinese, Indians and others will continue to engage, while many Western multinationals have already pulled out,” he said.
Smith said tighter sanctions had appeared more likely than any Western attack to knock out Iran’s nuclear facilities. “We wouldn’t regard Israel or indeed the US as having the wherewithal to pursue the kind of military action required to destroy Iranian nuclear facilities,” he said.
“It’s going to affect trade finance which has a derivative effect on oil trade. That seems clear,” said John Solomon, director of threat finance research at World-Check, a risk intelligence firm owned by Thomson Reuters.
Tightened
“The proverbial noose has been tightened and the new sanctions will definitely have an unprecedented chilling effect on Iran’s economic dealings globally, not just in Europe, not just in the UK, but even in the Middle East,” he said.
US sanctions have already made it extremely difficult for many global oil companies and traders to obtain bank financing to trade Iranian crude, of which less than a third goes to Europe with the rest flowing to China and India.
The Wall Street Journal reported earlier that the US Treasury would not formally sanction Iran’s central bank, in part to avoid causing a sudden shock to oil prices.
It was unclear what exact steps the US Treasury planned. However, the decision, which the official said was to be announced by Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner, appeared designed as a warning about the risks of dealing with Iran’s financial institutions.
It follows a Nov. 8 report by the UN nuclear watchdog that presented intelligence suggesting that Iran had worked on designing an atomic bomb and may still be secretly carrying out related research.
The US administration suspects Iran is pursuing a nuclear weapons capability under cover of its civilian atomic energy programme. Tehran denies this, saying it has no interest in nuclear arms and its atomic programme is purely peaceful.
In Tehran, trade minister Mehdi Ghazanfari said sanctions were hitting the Iranian economy but warned Western countries they were harming their own interests.
“Sanctions are a lose-lose game in which both sides make a loss. If they don’t invest in our oil projects, they will lose an appealing market,” Ghazanfari told a news conference before the British announcement.
The comments from Ghazanfari, who is Minister of Industry, Mine and Commerce, marked a change of tone from Tehran’s usual line that sanctions have not damaged the economy.
The United States is also expected to unveil sanctions against Iran’s petrochemical sector on Monday, sources familiar with the matter said on Friday.
President Mahmoud Ahmadinejad has often said sanctions have little effect on the economy and in some cases make it stronger by making Iran find domestic solutions to economic challenges.
Activity
Meanwhile, satellite surveillance has shown an increase in activity at an Iranian site suspected of links to alleged secret work on nuclear weapons, officials tell The Associated Press.
One of the officials cited intelligence from his home country, saying it appeared Tehran is trying to cover its tracks by sanitizing the site and removing any evidence of nuclear research and development. Counterparts from two other countries confirmed sightings of increased activity but said they did not have reasons to believe it was linked to such efforts.
Their focus is on a structure believed to be housing a large metal chamber at a military site that a Nov 8 International Atomic Energy Agency report described as being used for nuclear-related explosives testing.
Officials from the three IAEA member countries say that recent satellite imagery of the site, at Parchin, southwest of Tehran, shows increased activity, including an unusual number of vehicles arriving and leaving. One of the officials described the movements, recorded Nov 4-5, as unusual and said his country views it as evidence that Iran is trying to “clean” the area of traces of weapons-related work
“Freight trucks, special haulage vehicles and cranes were seen entering and leaving... (and) some equipment and dangerous materials were removed from the site,” said a summary he provided to the AP.
His counterparts agreed there had been more activity than usual at the site around that date but could not conclude that pointed to an attempted cover-up by the Iranians.
The IAEA was alerted to the suspicions late last week and a senior diplomat familiar with the issue said the agency was closely monitoring all suspect sites mentioned in the agency’s report. He, like the officials, asked for anonymity because his information was confidential.
The IAEA said it would have no comment. Ali Asghar Soltanieh, Iran’s chief delegate to the IAEA, dismissed the reports as “childish stories.” He told the AP he had not heard of any such activity, describing the claims as “ridiculous.”
Forum
Meanwhile, Iran angrily stayed away Monday from a UN atomic agency forum on creating a Middle East free of nuclear weapons that saw Israel under fire from Arab nations for its alleged possession of the bomb.
Iran’s ambassador to IAEA Soltanieh, said Tehran’s decision was its “first reaction” to the body’s “inappropriate” recent report on its nuclear programme.
That assessment saw the IAEA come the closest yet to accusing Iran outright of seeking to develop nuclear weapons. Iran, hit by four rounds of UN sanctions, says its activities are exclusively for peaceful purposes.
On Friday, the IAEA’s board of governors passed a resolution of “deep and increasing concern” submitted by the five permanent members of the UN Security Council, Germany and 12 others in light of the report.
Soltanieh said another reason for not attending the two-day IAEA forum, aimed at learning from the experiences of other so-called nuclear-weapon-free zones (NWFZ), was Israel’s unofficial atomic arsenal.
“As long as the Zionist regime does not belong to the NPT (nuclear non-proliferation treaty) ... this kind of conference is useless and cannot succeed,” Soltanieh told Iranian television channel Al-Alam.
Israel is widely believed to possess nuclear weapons but has never confirmed it. Unlike Iran it is not a signatory to the NPT and therefore not subject to IAEA inspections.
Syria, reported by the IAEA to the Security Council over a suspected covert reactor allegedly bombed by Israel in 2007, was however present at the forum, along with Israel, 17 other Middle East states and Palestinian representatives.Iran angrily stayed away Monday from a UN atomic agency forum on creating a Middle East free of nuclear weapons that saw Israel under fire from Arab nations for its alleged possession of the bomb.
Iran’s ambassador to the Vienna-based International Atomic Energy Agency, Ali Asghar Soltanieh, said Tehran’s decision was its “first reaction” to the body’s “inappropriate” recent report on its nuclear programme.
That assessment saw the IAEA come the closest yet to accusing Iran outright of seeking to develop nuclear weapons. Iran, hit by four rounds of UN sanctions, says its activities are exclusively for peaceful purposes.
On Friday, the IAEA’s board of governors passed a resolution of “deep and increasing concern” submitted by the five permanent members of the UN Security Council, Germany and 12 others in light of the report.
Soltanieh said another reason for not attending the two-day IAEA forum, aimed at learning from the experiences of other so-called nuclear-weapon-free zones (NWFZ), was Israel’s unofficial atomic arsenal.
“As long as the Zionist regime does not belong to the NPT (nuclear non-proliferation treaty) ... this kind of conference is useless and cannot succeed,” Soltanieh told Iranian television channel Al-Alam.
Israel is widely believed to possess nuclear weapons but has never confirmed it. Unlike Iran it is not a signatory to the NPT and therefore not subject to IAEA inspections.
Syria, reported by the IAEA to the Security Council over a suspected covert reactor allegedly bombed by Israel in 2007, was however present at the forum, along with Israel, 17 other Middle East states and Palestinian representatives.