New Sanctions Levied Against Iran

10/25/2007

WASHINGTON (AP) - The Bush administration announced sweeping new sanctions against Iran Thursday - the harshest since the takeover of the U.S. Embassy in 1979 - charging anew that Tehran supports terrorism in the Middle East, exports missiles and is engaging in a nuclear build up.

Secretary of State Condoleezza Rice and Treasury Secretary Henry Paulson, said the moves against Iran's Revolutionary Guard Corps, an element of its defense ministry and three of its largest banks are designed to punish Tehran for weapons proliferation and alleged support of terrorist organizations in Iraq and the Middle East.

"Unfortunately the Iranian government continues to spurn our offer of open negotiations, instead threatening peace and security," through its disputed nuclear program, production and export of ballistic missiles and backing for Shia insurgents in Iraq, the Taliban in Afghanistan, Hezbollah in Lebanon and Hamas movement in Gaza, Rice said.

The United States has long labeled Iran a state supporter of terrorism and has been working for years to gain support for tougher sanctions from the international community aimed at keeping the country from developing nuclear weapons. It has won two U.N. Security Council sanctions resolutions but a third has been hampered by Chinese and Russian opposition.

Rice said the moves were in response to "a comprehensive policy to confront the threatening behavior of the Iranians" but that Washington remains committed to "a diplomatic solution" and open to negotiations with Iran.

Other officials echoed that sentiment, maintaining the announcement is not a prelude to armed conflict with Iran despite concerns from some allies that the administration is building a case for war.

"In no way, shape of form does it anticipate the use of force," said Nicholas Burns, the State Department's No. 3 diplomat.

Instead, officials said they hope the measures will increase pressure on Iran to take a deal offered last year that would give the oil-rich country economic and other incentives in exchange for dropping nuclear activities that could produce a bomb.

Iran has ignored previous, smaller attempts to apply international and financial sanctions, and says the conditions Washington has set for talks are unacceptable. Iran is continuing work on its nuclear program, which it says is peaceful.

The sanctions will cut off more than 20 Iranian entities, including individuals and companies owned or controlled by the Revolutionary Guard, from the American financial system and will likely have ripple effects throughout the international banking community.

State-owned banks Bank Melli, Bank Mellat and Bank Saderat were named supporters of global terrorist groups for their activities in Afghanistan, Iraq and the Middle East. Along with Bank Sepah, which was already under U.S. and U.N. sanctions, the institutions account for more than 50 percent of Iran's banking sector, Treasury officials said.

Iran's Iranian Revolutionary Guard Corps and its Ministry of Defense and Armed Forces Logistics were designated proliferators of weapons of mass destruction and ballistic missile technology.

The Revolutionary Guards, also known as the IRCG, is the largest component of Iran's military and has influence in business and other spheres. The defense ministry entity is the parent organization for Iran's aerospace and ballistic missile operations.

The Quds Force, which was named a supporter of designated terrorist organizations, is a part of the Guard Corps that Washington accuses of providing weapons, including powerful bombs blamed for the deaths of U.S. soldiers in Iraq.

Thursday's actions mean that any assets found in the United States belonging to the designated groups must be frozen. Americans are also forbidden from doing business with the designated organizations.

Importantly, the designations also put companies outside the United States on notice that doing business with the designated groups could put them at risk of U.S. financial penalty.

Paulson called on "responsible banks and companies around the world" to end relationships with the three banks and companies and affiliates of the IRGC.

"As awareness of Iran's deceptive behavior has grown, many banks around the world have decided as a matter of prudence and integrity that Iran's business is simply not worth the risk," Paulson said. "It is plain and simple: Reputable institutions do not want to be the bankers for this dangerous regime."

The sanctions themselves are unilateral, however, and are the first of their type taken by the United States specifically against the armed forces of another government.

Paulson said it is nearly impossible for overseas businesses or banks to "know one's customer" in Iran and avoid unwittingly funding terrorism or other illicit activities.

Because of the Revolutionary Guard's broad reach into business and other spheres, "it is increasingly likely that if you are doing business with Iran you are doing business with the IRGC," Paulson said.

The Revolutionary Guards organization, formed to safeguard Iran's 1979 Islamic revolution, has pushed well beyond its military roots, and now owns car factories and construction firms and operates newspaper groups and oil fields.

Current and former members now hold a growing role across the country's government and economy, sometimes openly and other times in shadows.

The guards have gained a particularly big role in the country's oil and gas industry in recent years, as the national oil company has signed several contracts with a guards-operated construction company. Some have been announced publicly, including a $2 billion deal in 2006 to develop part of the important Pars gas field.

Now numbering about 125,000 members, they report directly to the supreme leader and officially handle internal security. The small Quds Force wing is thought to operate overseas, having helped to create the militant Hezbollah group in 1982 in Lebanon and to arm Bosnian Muslims during the Balkan wars.

The administration accuses the Quds Force of sending fighters and deadly roadside bombs, mortars and rockets to kill American troops in Iraq in recent years - allegations that Iran denies.

The United States pressures U.S. and European banks not to do business with Iranian banks, such as Bank Sedarat that the administration believes help finance guards' business operations. But the United States has been known for some time to also be considering naming the entire group as a foreign terrorist organization, allowing wider financial crackdowns.