New US sanctions on Iran aim to head off Israel

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By ANNE GEARAN, Associated Press

WASHINGTON (AP) — Additional U.S. sanctions on Iran are more significant for their timing than their immediate effect on Iran's economy, coming as the United States and its allies are arguing that Israel should hold off on any military strike on Iranian nuclear facilities to allow more time for sanctions to work.

The U.S. ordered tough new penalties Monday to give U.S. banks additional powers to freeze assets linked to the Iranian government and close loopholes that officials say Iran has used to move money despite earlier restrictions imposed by the U.S. and Europe.

Israelis officials have been open about their worry that Iran could be on the brink of a bomb by this summer and that this spring offers the last window of opportunity to destroy bomb-related facilities. Many Israeli officials believe that sanctions only give Iran time to move its nuclear program underground, out of reach of Israeli military strikes.

Nonetheless, the sanctions were endorsed Tuesday by Israel's hawkish foreign minister, Avigdor Lieberman.

"We appreciate the very crucial decision regarding the sanctions," Lieberman told reporters in Washington, in between meetings with U.S. senators. "We are awaiting that the Iranians, they will give up their nuclear ambitions," said Lieberman, who also met with Secretary of State Hillary Rodham Clinton.

Sen. John McCain, R-Ariz., said the sanctions are not doing enough. "We are pleased to see increasing sanctions but so far they have not been deterred from their course," he said of Iranian leaders.

Like previous economic penalties, these are intended to persuade Iran to back off what the West contends is a drive to build a nuclear bomb. Israel increasingly is concerned that sanctions will never be enough to make Iran drop what has become a national priority for a clerical regime that has vowed to wipe Israel off the map.

The faster and more effectively the sanctions can be seen to work, the better the case to shelve any plan by Israel to bomb Iran, a pre-emptory move that could ignite a new Mideast war. Taking this initial step against the Iranian Central Bank, the first time the U.S. has directly gone after that major institution, is one way the Obama administration can show momentum now.

In Tehran, Ramin Mehmanparast, the foreign ministry spokesman, dismissed the sanctions as "propaganda." He said Iran's central bank has no financial transactions with the United States and would not be affected by the measures. "Many of these (U.S.) activities are in the sphere of psychological war and propaganda, and they cannot affect our work," he said.

"Many of these (U.S.) activities are in the sphere of psychological war and propaganda, and they cannot affect our work," he said.

Israel considers Iran to be its most dangerous enemy and has vowed to prevent it from going nuclear. But an Israeli official in Jerusalem on Monday said the country's prime minister has told Cabinet members not to be so outspoken about the possibility of attacking Iran.

The official spoke on condition of anonymity because he was discussing a closed meeting.

Israeli Prime Minister Benjamin Netanyahu himself often has commented about keeping all options on the table in dealing with Iran.

The new, stricter sanctions, authorized in legislation that President Barack Obama signed in December, will be enforced under an order he signed only now.

The U.S. and Europe want to deprive Iran of the oil income it needs to run its government and pay for the nuclear program. But many experts believe Iran will be able to find other buyers outside Europe.

The European Union announced last month it would ban the import of Iranian crude oil starting in July. The U.S. doesn't buy Iranian oil, but last month it placed sanctions on Iran's banks to make it harder for the nation to sell crude. The U.S., however, has delayed implementing those sanctions for at least six months because it is worried about sending oil prices higher at a time when the world economy is struggling. Iran exports about 3 percent of the world's oil.

White House spokesman Jay Carney denied that Monday's unexpected announcement of new banking sanctions was a sign of heightened worry about an Israeli attack.

"There has been a steady increase in our sanctions activity and this is part of that escalation," he said.

Carney said U.S. sanctions on Iran already are squeezing Iran's economy and have exacerbated tensions within the Iranian leadership.

"There is no question that the impact of the isolation on Iran and the economic sanctions on Iran have caused added turmoil within Iran," he said.

Iran is the world's third-largest exporter of crude oil, giving its leaders financial resources and leverage to withstand outside pressure. Last year, Iran generated $100 billion in revenue from oil, up from $20 billion a decade ago, according to IHS CERA, an energy consulting firm.

If Iranian oil is prevented from getting to market, other suppliers could make up the difference. The U.S. has been pressuring other Middle East and African nations to step up production for sale to Europe. Saudi Arabia has said it could increase production to make up for any lost Iranian crude.

Iran's disputed nuclear program became a global concern more than five years ago, when the extent of the country's research and uranium enrichment began to be known. Since then a web of international economic and other sanctions have failed to stop Iran's progress toward a point when it could build one or more nuclear devices.

U.S. intelligence agencies say Iran is indeed close to that ability but has not yet decided to go ahead. Iran says its nuclear program is peaceful and denounces sanctions as aggression.

The White House previously had said it would take months to evaluate the likely effect on the fragile global economy before taking the next large steps, including new penalties on the Central Bank.

Now, U.S. institutions are required to seize any Iranian state assets they come across, rather than rejecting the transaction involved.

The value of Iranian assets affected by the new order was not clear. Iran does almost no direct business with the United States after three decades of enmity, but its money moves through the world financial system and its oil is sold in dollars.

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AP writer Donna Cassata contributed to this report.

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