Oil Payments Targeted
President Barack Obama today signed legislation imposing sanctions on financial institutions dealing with the Central Bank of Iran (CBI). The new law, approved by Congress last week, is intended to reduce Iran’s oil revenues by curtailing the ability of Iran’s oil customers to make payments for imports that must go through the CBI, the main conduit for Iran oil transactions. The legislation, however, gives the president the authority to waive sanctions on case-by-case basis.
Reuters reported that senior US officials were engaging with allies to ensure the sanctions can work without harming global energy markets. The US is also expected to continue its strategy of engaging with Iran despite the new sanctions.
Last week, the Iranian officials had threatened to close the Strait of Hormuz, stopping the flow of oil from the Persian Gulf, if the new legislation would curtail Iran’s ability to export its oil.
UPDATE: The sanctions against the private and state banks—including CBI—would take hold after a two- to six-month warning period, depending on the transactions, a senior administration official has told Reuters.
Under the law, the president can move to exempt institutions in a country that has significantly reduced its dealings with Iran and in situations where a waiver is in the US national security interest or otherwise necessary for energy market stability. He would need to notify Congress and waivers would be temporary, but could be extended.
“Our intent is to implement this law in a timed and phased approach so that we avoid repercussions to the oil market and ensure that this damages Iran and not the rest of the world," the senior US official told Reuters [Reuters, 31 December].
27 comments:
We don't need cash because we are independent.Let China give us noodles in return for our oil.
We can then sell the noodles to our people at ten times the price hence we don't need the world because we are independent and a "mighty Islamic republic."
It will be interesting to see how voa and BBC present this brazen act against innocent Iranian civilians.
The irony is that five years ago ahmadinejad called the dollar a worthless piece of paper and he said America's economy would fall soon. now America has turned his world upside down by merely telling people that they have to choose between Iran's economy and the American economy.
Farsi has such beautifully simple expressions for situations like this, like goh khord.
WHAT ARE THE IRANIANS IN THE WEST AND IRANIANS IN IRAN TRANSACTING WITH THE WEST GOING TO DO? THERE IS ACTUALLY A LOT OF MONEY MOVING IN AND OUT!!!! EVEN IRANIANS WHO HATE THE REGIME OFTEN HAVE SOME DEALINGS.
The innocent Iranian civilians would like to see the back of the Islamic dictatorship once and for all.
Anon 4:46 PM nice one about the noodles !
8:38, The point of a democracy is that one person doesn't speak for an entire group. Iranians are strongly in favor of the nuclear program - conservative, reform, whatever by a 3:1 margin.
Why do you give yourself authority to tell us what they think?
Does this apply for Iraq's and Turkey's and China's and Russia's banks as well? Oh, and Dubai's?
I think the person who "goh khord" here might be the US. I don't see how this will work practically. Either the US won't be able to enforce the rules, or they will enforce them and cause havoc. Or, it will be a joke, with each bank setting up its "Iran affiliate" bank that deals with Iran but not the US to circumvent the sanctions.
The next two months will be interesting.
Anon 8:57 PM
What democracy are you referring too? Because there is no such thing as democracy in Iran under this cut throat regime.
Maybe the Iranians are in favor of the nuclear program but they are not in favor of the Islamic regime which has stifled Iran's cultural and economic development into the 21st century.
Anyway where did you get the 3:1 ratio from?
And I could also apply the same to you regarding who speaks on behalf of the Iranian people. Do you?
This goes beyond reform now because the regime is not reformable in any shape form or color.
Time for major change in Iran's sociopolitical economic and cultural why of thought because that could only save Iran from this disaster and stagnation.
This is essentially a huge stimulus to tiny foreign banks with connections to Iran and no connections to the US financial system. Now money going to Iran's central bank will have to go through them.
Pure idiocy!
I would say Anon 8:11 PM is right regarding the Iranian expression "goh khord" which is most certainly applicable to the Islamic regime.
'Spying'
'imposing sanction'
and
'BARKING'
What else?
3 to 1 Amadinejad invites the IAEA back again and then throws them out... again.
Silly move.
943 you are doing it again. In a democracy you do not have the right to tell Iranians what they favor. They decide for themselves.
Wow Khamenei and Ahmadinejad just came out and said that Iran's economy would still continue to grow.
If Iran manages to have a growing economy with these sanctions then that will be amazing.
I think it will all come down to how hard the US enforces them. For example, if the bank of china is allowed to use a tiny affiliate bank for all of its dealings with Iran, and that tiny bank does not deal with the US, then technically the rules are complied with. But this makes the US looks like idiots.
On the other hand, if the US seeks to ban these arrangements as well, then that is going to cause serious turmoil.
All the anti-Iran comments here make me laugh. Let cut to the chase and let me just ask one question.
What country is on the way up and what country is on the way down.?
No matter what these people who leave comments here under Iranian names but are really Israelis, think, when it is all over Iran will stand tall. Period.
This is one of the stupidest things America has ever done.
Let me tell you what is happening in Iran right now. Right now people are rushing to open money courier businesses because now they will be profitable. These businesses operate by using family connections in other countries to transport money from Iran to anywhere in the world. It works like this. Iran bank -> 2nd country bank (usually a small bank) -> 3rd country bank (usually a large global bank) -> anywhere in the world.
Of course, these people charge a fee for this service. Due to the recent hysteria these fees have caused this black market exchange rate to rise to an astonishing 1600 toman / dollar rate! This is like those people who sell water for $10/gallon during a hurricane.
The consequence of such price gouging is that new people will enter this very primitive and easy business. All it requires is a trustworthy contact (e.g. family) in another country. Once these new entrants come in, the black market exchange rate will fall from its current 1600 toman /1dollar rate.
The bottom line is that all this does is boost the money transfer businesss of Iran and cause pain for innocent Iranians. You will never see any transfers by the Iranian government impeded by such rules.
What's sad is that what I've described above is not deep or sophisticated anlaysis in any way. It is extremely primitive and anyone with a 1st grade education would understand it. It's also why Tim Geithner and the undersecretary for terrorism harshly criticized these new sactions.
But the AIPAC dominated US congress is apparently too stupid to get it.
Very sad.
Anon 7:00 AM
Here you go again.
Who gave you authority to tell me what the people think?
There is no democracy in Iran.
Only Islamic dictatorship.
Anon 7:00 AM.....I suppose it's OK that Khamenei tells all the Iranians what he favors and then imposes his will upon the nation?
According to 7 AM Iran is a bastion of democracy and the Iranian people in the ratio of 3:1 favor uranium over economic well being because the democratically elected Khamenei said so.I've heard a lot of things before but this certainly takes the biscuit prize.
Village idiots are running the economy.Village idiots are running the country.So why not open a village idiot branch and show how the village idiots have progressed.
No doubt be hearing from the village idiots in support of the village idiots.
Extension of sanctions to the central bank of Iran is self defeating, as such a move sooner or later will cause the Asian financial markets to break away from their western counterparts.
Adhesion between eastern and western part of the international monetary system is anyway already very weak, as it is relying completely on the US dollar as its reserve currency.
My guess is that due to those sanctions there soon will emerge an exclusively Asian payment settlement system, set up by the most influential Asian participants, e.g. China, Japan, South Korea, Hong Kong, Singapore, Macao and perhaps India.
Mansoor~~~~" No matter what these people who leave comments here under Iranian names but are really Israelis..."~~~~~
what sort of person says that people who disagree with the Iranian regime are, somehow, Israelis? What is the basis of that?
Steve~~~~ this "sooner or later" thing sure isn't going to happen sooner. not any sooner than the iranian economy crashes.
These sanctions are the best thing that has ever happened to us in Iran.
I am not sure why we are calling the sanctions an act of war?
Can anyone help me understand that?
Anon 2:39 PM
Because they are regime agents and cannot challenge you when you speak the truth therefore they pathetically call you "Israeli"that shows their naive level of IQ and their subservience to their scummy masters the Islamic theocracy of tyranny.
Anon 3:34 PM
Your logic defines the typical IRI supporter a clueless person indeed.
I presume a all out nuclear war against Iran is the best thing that could possibly happen?
How very thoughtful of you.
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