On June 3, the United States imposed sanctions for the first time on Iran’s currency, the rial. Foreign financial institutions may now face penalties if they “knowingly conduct or facilitate significant transactions” involving the rial― which has already lost half its value since January 2012. The executive order’s objective is to render the currency unusable outside of Iran, a senior administration official said during a conference call. Iran conducts very little trade in the rial. So the measure may also be aimed at further depreciating its value and making Iranians feel more uneasy about holding their own currency. The executive order also authorizes new penalties on Iran’s automotive industry. And it allows the sanctioning of any individuals who help Iranians and others previously blacklisted by the Treasury.
The Obama administration has now implemented nine sets of sanctions on Iran. An official said that the timing of the latest measure was not tied to the June 14 presidential election. So the timing may have more to do with pressuring Iran ahead of nuclear negotiations expected to resume after the election hiatus. The following is the complete text of the White House press statement, including links to the executive order and the president’s message to Congress. Today the President approved a new Executive Order (E.O.) to further tighten U.S. sanctions on Iran and isolate the Iranian government for its continued failure to meet its international obligations.
This new action targets Iran’s currency, the rial, by authorizing the imposition of sanctions on foreign financial institutions that knowingly conduct or facilitate significant transactions for the purchase or sale of the Iranian rial, or that maintain significant accounts outside Iran denominated in the Iranian rial. While the rial has lost half of its value since the beginning of 2012 as a result of our comprehensive sanctions, this is the first time that trade in the rial has been targeted directly for sanctions.
Taking aim at a major revenue generator for Iran, the E.O. authorizes the imposition of new sanctions against those who knowingly engage in significant financial or other transactions for the sale, supply, or transfer to Iran of significant goods or services used in connection with Iran’s automotive sector, building on the sectoral sanctions in the Iran Freedom and Counter-Proliferation Act of 2012 (IFCA) that target Iran’s shipping, shipbuilding, and energy sectors.
Further increasing the pressure on the Iranian government, the E.O. authorizes the imposition of additional sanctions on persons who provide material support to Iranian persons and certain other persons designated pursuant to Iran sanctions authorities that are included on the list of Specially Designated Nationals and Blocked Persons (SDN List) maintained by the Department of the Treasury.
The E.O. also implements and builds upon certain sanctions set forth in the IFCA, signed into law by the President on January 2, 2013, as a part of the National Defense Authorization Act for Fiscal Year 2013.
Pursuant to today’s action, the following activities will be subject to sanctions:
The Iranian Rial: The significant transactions for the purchase, sale of, or holding of significant funds or accounts outside Iran denominated in the Iranian rial.
Iran’s Automotive Sector: The sale, supply, or transfer to Iran of significant goods or services used in connection with the manufacturing or assembling in Iran of light and heavy vehicles including passenger cars, trucks, buses, minibuses, pick-up trucks, and motorcycles, as well as original equipment manufacturing and after-market parts manufacturing relating to such vehicles.
Material Support to the Government of Iran: Providing material support to Iranian persons and certain other persons designated pursuant to Iran sanctions authorities that are included on the SDN List (in each case other than certain Iranian depository institutions). This provision includes an exception for certain Iranian depository institutions and certain activities relating to the pipeline project to supply natural gas from the Shah Deniz gas field in Azerbaijan to Europe and Turkey.
The steps taken today are part of President Obama’s commitment to prevent Iran from acquiring a nuclear weapon, by raising the cost of Iran’s defiance of the international community. Even as we intensify our pressure on the Iranian government, we hold the door open to a diplomatic solution that allows Iran to rejoin the community of nations if they meet their obligations. However, Iran must understand that time is not unlimited. If the Iranian government continues down its current path, there should be no doubt that the United States and our partners will continue to impose increasing consequences.