By JULIE PACE and SLOBODAN LEKIC, Associated Press
BRUSSELS (AP) — The European Union is preparing regulations that will shut out Iran's banks from a major financial clearinghouse used by virtually every country in the world, a senior official said Thursday.
The official, who spoke on condition of anonymity because of European Union rules, said the regulations are currently being worked on, but should be adopted "rather quickly."
The move is part of an unprecedented escalation of economic pressure by the United States and the EU meant to halt Iran's suspected drive for nuclear weapons.
The Society for Worldwide Interbank Financial Telecommunication, or SWIFT, said last week it would comply with EU instructions to cut off the Iranian banks once it has clarity on what new rules will require.
SWIFT, which handles cross-border payments for more than 10,000 financial institutions and corporations in 210 countries, must comply with EU regulations because it is an European entity.
The Brussels-based group is an essential way station for international transactions, electronically converting currencies and processing payments such as those for Iran's crude oil exports
The EU official said SWIFT had issued the statement, which the Obama administration welcomed, to forestall any possible action against it in the United States.
In Washington, SWIFT's general counsel met on Wednesday with top staffers on Capitol Hill, part of an effort by the organization to persuade U.S. lawmakers to soften pending legislation that could force SWIFT to act against Iran. SWIFT's CEO is also expected to hold meetings in Washington in early March.
The Senate Banking Committee has passed a measure directing the White House to press SWIFT to block Iranian entities. The House of Representatives is pushing a tougher measure, which would compel the administration to sanction SWIFT unless it stopped providing services to Iran.
Jodi Herman, a senior policy aide to Democratic Sen. Robert Menendez, met with SWIFT's general counsel and said it appeared that the organization, in conjunction with the European Union, is moving toward including Iran's powerful Central Bank in its ban. The inclusion of the Central Bank would greatly increase the impact of the ban on Iran.
Herman said Congress would consider alterations to the pending legislation depending on the actions taken by SWIFT and the EU.
In January, EU foreign ministers agreed to ban all oil imports from Iran starting next summer. The 27-nation bloc accounts for about 18 percent of Iran's oil exports. But the details of how to do this and how to cut payments to Tehran have not yet been worked out, the official said.
"There needs to be a legal basis," he said. "The decision has not yet been taken because the definitive legal instruments are still being discussed."
The U.S. and EU believe that Iran is intending to develop a nuclear arsenal, and Tehran's failure to suspend its nuclear activities has already led to several sets of U.N. sanctions. But Iran maintains its nuclear program is exclusively civilian.
EU foreign policy chief Catherine Ashton has urged Iran to return to negotiations with the five permanent U.N. Security Council members plus Germany about its nuclear program. Tehran last month indicated that it was ready for a new round of those talks.
The official said any follow-up talks with Iran would have to be meaningful.
"What I think is very much in Ashton's mind is that if we have a new round of negotiations there should be serious talks about the nuclear program, our concerns about that programmed."
Tehran has complained that in previous talks the EU has refused to discuss its concerns dealing with the issue of Israel's nuclear weapons. The Jewish state is widely believed to have accumulated a sizable arsenal.
Julie Pace reported from Washington. Slobodan Lekic can be reached on Twitter at http://twitter.com/slekich
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.