Looking to heap economic pressure on Iran over its suspect nuclear program, US senators introduced legislation aimed at collapsing the country’s central bank with tough new sanctions. “This, in my judgment, is one of the few remaining actions short of an embargo of Iranian shipping and military intervention to slow or end the Iranian nuclear program,” said Republican Senate Minority Leader Mitch McConnell. The measure, crafted by Republican Senator Mark Kirk, would empower President Barack Obama to cut off any foreign financial institution that does business with Iran’s central bank from the US economy and to freeze its US assets. The amendment includes a six-month grace period for oil-related transactions “to ease the burden on US allies and send a calming signal to the oil markets,” Kirk’s office said.
It would exempt firms that engage in transactions with the central bank in connection with sales of food, medicine, or medical devices to Iran, which denies Western charges that it seeks nuclear weapons under the guise of a civilian energy program. And it would give Obama limited ability to waive application of the sanctions if he certifies doing so is in the US national security interest. The measure’s prospects of becoming law seemed solid: 92 senators signed a letter earlier this year embracing the proposal, and Democratic Representative Howard Berman has introduced a companion piece in the House of Representatives.
Meanwhile, Pentagon chief Leon Panetta said he would convey US concerns about the risks of military action against Iran when he meets with Israeli Defense Minister Ehud Barak on Friday. Panetta, on a visit to Canada for a security forum that will include talks with his Israeli counterpart, renewed his warning of “unintended consequences” if Israel launched bombing raids on Iran’s nuclear sites. President Barack Obama’s administration favored a diplomatic approach designed to isolate Iran over its refusal to halt uranium enrichment work, he told reporters in Halifax. “That is the most effective way to try to confront them at this point. Obviously to go beyond that, raises our concerns about the unintended consequences that could result,” Panetta said. A strike on Iran would at best only delay the nuclear program by about two years, endanger US forces in the region and possibly damage both the American and global economy, he said.
“I have to tell you …there are going to be economic consequences to that, that could impact not just on our economy but the world economy,” he said. “So those things all need to be considered.” He did not elaborate on the possible economic effect of war against Tehran, but Western governments have long calculated that oil-rich Iran could throw world oil markets into turmoil by disrupting shipping lanes in the Gulf.
