Iran General NewsU.S., Europe plan talks on sanctioning Iran's central bank

U.S., Europe plan talks on sanctioning Iran’s central bank

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Wall Street Journal: U.S. and European officials this week will discuss ways to target Iran’s central bank, a possible response to Iran’s alleged plot to assassinate Saudi Arabia’s ambassador to Washington, senior U.S. officials said.

The Wall Street Journal

By JAY SOLOMON

WASHINGTON—U.S. and European officials this week will discuss ways to target Iran’s central bank, a possible response to Iran’s alleged plot to assassinate Saudi Arabia’s ambassador to Washington, senior U.S. officials said.

Many U.S. officials say they view the targeting of Iran’s central bank, Bank Markazi, as the “nuclear option” in Washington’s financial war against Tehran, with the potential to virtually freeze Iran out of the international financial system.

The Obama administration’s point man on Iran sanctions, Treasury Undersecretary David Cohen, on Sunday headed to Europe to discuss ways to increase financial pressure on Tehran.

“As with any potential target, we are carefully evaluating the possible impact this action could have on the global economy and our international partners,” Mr. Cohen said in an interview before heading to Europe.

U.S. and European officials, however, fear sanctioning Bank Markazi risks sharply driving up global energy prices, as Tehran could find itself unable to execute oil sales. Iran is currently the Organization of Petroleum Exporting Countries’ third-largest oil exporter by volume.

The Obama administration convened a meeting of high-level officials from Treasury, the White House and the State Department last week to discuss Bank Markazi, U.S. officials said.

U.S. and European officials said they are also exploring ways to target Bank Markazi without formally announcing sanctions. A major fear in the U.S. and European Union is that countries like China, India and Russia could end up simply ignoring actions by Washington and Brussels.

The discussions come amid a new dynamic in the U.S.-Iran relationship. President Barack Obama on Friday announced plans to pull U.S. troops out of Iraq at the end of the year, a move critics contend will increase Iran’s influence in the region. Secretary of State Hillary Clinton, speaking Sunday on CNN, warned Tehran “would be badly miscalculating” to interpret the withdrawal of U.S. forces as a sign of diminished military commitment to the region.

Mr. Cohen, who formally took up the Treasury Department’s top counterterrorism job in July, will visit London, Paris, Berlin and Rome this week, U.S. officials said.

The trip had been planned before this month’s announcement by the Obama administration that it had uncovered an alleged Iranian plot to assassinate the ambassador, Adel al-Jubeir, which Tehran has adamantly denied. But U.S. officials said much of Mr. Cohen’s trip will be focused on implementing President Barack Obama’s pledge to increase financial pressure in Tehran as a response to the alleged terror plot.

U.S. officials said the investigation into the plot has provided new insights into how Tehran continues to move cash around the world, despite the expansive American and United Nations sanctions imposed on Iran over the past five years.

According to the Justice Department’s indictment, an operative from Iran’s elite military unit, the Islamic Revolutionary Guard Corps, wired $100,000 to an Iranian-American man earlier this year to help pay for the plot. The payment to the U.S. was made utilizing an unnamed bank based outside Iran, according to the indictment.

“The sending bank had no idea it was being used” for a terrorist plot, said the U.S. official. “This is a really good example of the dangers you face if you deal with any Iranian entities.”

Lawmakers on Capitol Hill have been increasing pressure on the White House to sanction Bank Markazi. In August, 92 U.S. senators sent a letter to Mr. Obama calling for the action. Republicans have threatened to enact legislation forcing the White House to impose the sanctions if it didn’t move independently.

U.S. officials said congressional legislation passed last year to support sanctions against Iran offers ways to target Bank Markazi.

The law calls for the sanctioning of any entities that do business with Iran’s oil-and-gas sector and the Revolutionary Guards. U.S. officials say they believe Bank Markazi has been engaged in fraudulently masking transactions on behalf of sanctioned Iranian entities, in particular, the Revolutionary Guards and companies involved in Tehran’s nuclear program. Iranian officials say the sanctions are illegal.

“There are different ways to achieve the same result,” said a European officials working on Iran sanctions. “This will all be discussed.”

—Nathan Hodge contributed to this article.

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