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LONDON: The United States escalated its financial pressure on Iran by slapping sanctions on the head of its central bank and barring anyone around the world from doing business with him, underscoring President Donald Trump’s hard line after his withdrawal from the Iranian nuclear accord upset European allies.
Valiollah Seif, the governor of the Iranian central bank, was named a “specially designated global terrorist” along with another senior official, Ali Tarzali, who works in the central bank’s international division. The Treasury Department accused the men of secretly funneling millions of dollars through an Iraqi bank to help Hezbollah, the militant network that the US considers a terrorist group.
The exact ramifications of the sanctions for Iran’s economy were not immediately clear. The US said that the sanctions on Seif — who is the equivalent of the Federal Reserve chairman in the US — did not extend to Iran’s central bank itself. Still, the US said it was imposing “secondary sanctions” on the Iranian bank officials, which could significantly increase Iran’s isolation from the global financial system.
Typically, when the US punishes individuals with sanctions, it prohibits Americans or US companies from doing business with them. Secondary sanctions also apply to non-Americans and non-US companies. That means that anyone, in any country, who does business with Seif or Tarzali could themselves be punished with sanctions, cutting them off from the US financial system.
The moves come as Trump’s administration, after deeming the 2015 nuclear deal insufficiently tough on Iran, seeks to construct a global coalition to place enough pressure on Tehran that it comes back to the negotiating table to strike a “better deal.” The sanctions targeting Iran’s central bank executives are some of the first actions by Trump’s administration since pulling out of the deal to start ramping up that economic pressure.
“The United States will not permit Iran’s increasingly brazen abuse of the international financial system,” Treasury Secretary Steven Mnuchin said. “The global community must remain vigilant against Iran’s deceptive efforts to provide financial support to its terrorist proxies.”
There was no immediate comment Tuesday night from Iranian officials. Iranian media initially reported the decision based on reports in the foreign media.
The US sanctions came as Iranian Foreign Minister Mohammad Javad Zarif was meeting in Brussels with the top French, British and German diplomats as the Europeans seek to keep Iran from bailing on the nuclear deal. The European members of the deal are trying to keep it alive without the US Yet it’s unclear that will be workable, because Trump has vowed to punish European companies that continue doing business with Iran despite re-imposed US sanctions.
Seif, a career banker, became the head of Iran’s Central Bank in 2013 under President Hassan Rouhani, who shepherded the nuclear deal. Seif frequently visits Washington to attend meetings of the International Monetary Fund.
He has helped guide Iran’s economy through the web of previous sanctions placed on that country. In the aftermath of the 2015 international nuclear accord, in which nuclear sanctions on Iran were lifted, Seid was a prominent voice complaining that Iran was still being kept out of the global financial system and not receiving the economic benefits it was promised in exchange for curtailing its nuclear program.
In a 2016 meeting of the Council on Foreign Relation in Washington, Seif said Iran achieved “almost nothing” from the deal.
The Treasury said that Seif undermined the central bank’s credibility by routing millions of dollars from the Quds Force, the expeditionary unit of Iran’s hard-line Revolutionary Guards, to Al-Bilad Islamic Bank, which is based in Iraq. Those funds were then used to “enrich and support the violent and radical agenda of Hezbollah,” Treasury said.
Al-Bilad Islamic Bank and its CEO and chairman, Aras Habib, were also hit with US sanctions, as was Muhammad Qasir, who the Treasury said is a Hezbollah official who has been a “critical conduit” for transferring funds to Hezbollah from the Revolutionary Guards.
Lebanon’s Hezbollah, the powerful Shiite guerrilla force that is also a prominent political player in Lebanon, has long helped carry out Iran’s foreign policy objectives in the Arabic-speaking world. Most recently, the US has been concerned about the role that Hezbollah fighters are playing in Syria to help prop up President Bashar Assad. Hezbollah fought a war with Israel in 2006, and Israeli officials have been deeply concerned about the prospect of another confrontation.