By Jon Matonis
Monday, June 17, 2013
directly targeting the already-devalued Iranian rial with penalties for
transacting or holding the currency outside of Iran. This represents
the first time that the U.S. has focused specifically on the Iranian
monetary unit itself and the ninth set of sanctions President Barack
Obama has imposed against Iran.
White House Press Secretary Jay Carney said,
“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.”
The tough sanctions are intended to increase the financial pressure
on the Islamic republic to abandon its nuclear program. However, Iran
maintains that its nuclear energy program is for peaceful purposes only
and has refused to back down arguing that it has this right.
Carney explained how the sanctions also target the
foreign assets of Iran’s leaders, “Further increasing the pressure on
the Iranian government, the Executive Order 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 Government of Iran’s leadership controls
a vast overseas network of 37 private businesses for the purpose of
managing off-the-books investments that are shielded from the view of
This month in exchange for pledges to reduce oil purchases from Iran, the U.S. State Department renewed
six-month waivers on Iran sanctions for nine countries in total,
including China, India, South Korea, Malaysia, Singapore, South Africa,
Sri Lanka, Turkey and Taiwan.
In early 2012, the U.S. and the European Union imposed payment
sanctions on Iran’s oil and financial sectors with the goal of weakening
Iranian oil exports and blockading transactions with the Central Bank
of Iran via Swift. However, a European Union court in February ruled against
the EU banking sanctions imposed on one of Iran’s largest banks, which
extends to the payment sanctions imposed by Swift in March of last year.
The Iranian currency has already been suffering from record inflation losing
more than two-thirds of its value in the past two years, trading at
36,000 per U.S. dollar as of April 30th, compared with 16,000 at the
beginning of 2012.
“The idea is to cause depreciation of the rial and make it unusable in international commerce,” according to David Cohen, the Treasury Department’s undersecretary for terrorism and financial intelligence.
President Obama issued this latest Executive Order on June 3rd and
during an interview Cohen said, “the purpose of the one-month phase-in
period is to give financial institutions currently holding rials the
opportunity to dump them.”