Obama Freezes Iranian Government, Bank Assets in U.S.
February 10, 2012
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(Updates with comments from analysts starting in fourth paragraph)
Feb. 6 (Bloomberg) -- President Barack Obama ordered a freeze on
all Iranian government and financial institutions’ assets that are under
U.S. jurisdiction, the White House said today.
The president cited “deceptive practices” of the Iranian central bank
in hiding transactions of sanctioned parties and its failure to prevent
money laundering, concluding that Iran activities pose an “unacceptable
risk” to the international financial system.
Obama’s executive order follows comments by U.S. officials, such as
Defense Secretary Leon Panetta, who have expressed concern that Israel
may attack if international sanctions fail to stop Iran’s suspected
pursuit of nuclear-weapons capability.
“The
practical impact is less important than the message it sends to Iran,”
Nigel Kushner, chief executive officer of Whale Rock Legal, a
London-based law firm whose clients include Europeans involved in legal
trade with Iran, said in a telephone interview today. “It’s a
declaration of economic warfare, to the extent that it’s not already
been declared,”
The order blocks all property
and interests in property belonging to the Iranian government, its
central bank, and all Iranian financial institutions, even those that
haven’t been designated for sanctions by the U.S. Treasury Department.
Lawyers such as Kushner who specialize in Iran sanctions said the
blanket freeze on Iranian government assets, including those belonging
to entities not proven to be involved in illegal activities, underscores
the mounting pressure on Iran.
‘Severe Reaction’ Predicted
Kushner predicted a “severe reaction by Iran” that might include
further naval exercises or threats related to the Strait of Hormuz, the
Persian Gulf sea passage through which one-fifth of the world’s globally
traded oil transits.
Iran’s Foreign Ministry
spokesman Ramin Mehmanparast couldn’t be reached to comment on the asset
freeze when called at his office in Tehran after work hours.
Previously, only assets of sanctioned Iranian entities or
individuals determined by the U.S. to be involved in weapons
proliferation or other illicit activities were frozen.
Mark Dubowitz, executive director of the Foundation for Defense of
Democracies, a Washington policy group that has advised the
administration and Congress on sanctions, called Obama’s executive order
the logical next step in the “administration’s economic war on the
Iranian regime.”
Dubowitz, an attorney and
sanctions specialist, said that freezing assets of Iran’s central bank
and its government institutions, including the National Iranian Oil
Company, makes them “subject to much tougher enforcement by the U.S.
government and the global financial sector.”
Obama ‘Crystal Clear’
NIOC is owned by the government of Iran and is the world’s
second-largest oil company by volume produced, after the Saudi Arabian
Oil Co.
David A. Harris, president of the
National Jewish Democratic Council, which promotes Jewish support for
Democrats, said the action today demonstrated Obama’s record of building
economic and diplomatic pressure to halt any illicit nuclear activities
by Iran.
This “should end any doubt about the
president’s singular commitment to ensuring Iran does not obtain a
nuclear weapon,” Harris said in a statement. “Obama’s record is crystal
clear; he has done more than any president in history to isolate Iran
and encourage Iran’s leaders to change course.”
Long-standing U.S. regulations already prohibited American citizens or
entities from virtually all direct and indirect transactions involving
Iran or its government, aside from those exempted under general licenses
for transactions involving food, medicine, remittances and humanitarian
relief.
‘Deceptive Practices’
The new measure was mandated as part of Iran sanctions legislation
that was passed by Congress and signed by the president Dec. 31.
“I have determined that additional sanctions are warranted,
particularly in light of the deceptive practices of the Central Bank of
Iran and other Iranian banks to conceal transactions of sanctioned
parties, the deficiencies in Iran’s anti-money laundering regime and the
weaknesses in its implementation, and the continuing and unacceptable
risk posed to the international financial system by Iran’s activities,”
Obama said in his congressional notification.
Iran, the second-largest oil producer in OPEC after Saudi Arabia, pumped
about 3.545 million barrels of oil a day last month, a Bloomberg survey
showed, and exported an average 2.58 million barrels a day in 2010,
according to OPEC statistics. Crude for March delivery fell 93 cents to
settle at $96.91 a barrel on the New York Mercantile Exchange.
--With assistance from Roger Runningen in Washington and Ladane Nasseri in Dubai. Editors: Terry Atlas, Larry Liebert
To contact the reporter on this story: Indira A.R. Lakshmanan in Washington at ilakshmanan@bloomberg.net
To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net
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