Key Obama aide on Iran sanctions steps down

Mon Jan 24, 2011 2:16pm EST

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* Levey was holdover from Bush administration

* U.S. viewed efforts to put squeeze on Iran as success

* Levey's deputy Cohen to replace him

By Glenn Somerville and Caren Bohan

WASHINGTON, Jan 24 (Reuters) - President Barack Obama's point person on cracking down on financial flows to Iran resigned on Monday, marking the loss of a key player in the U.S. effort to pressure Tehran over its nuclear program.

The departure of Stuart Levey from his role as the Treasury Department's under secretary for terrorism and financial intelligence could leave a hole in the U.S. effort to discourage foreign companies and governments from doing business with Tehran.

As a holdover in the job from President George W. Bush's administration, Levey had built up personal relationships with officials in foreign capitals, and the Obama administration had viewed his efforts as highly successful.

Levey will be replaced by a deputy, David Cohen. U.S. officials emphasized they did not think the staff change would stem the momentum for the drive to put the financial squeeze on Iran or for the separate task of trying to choke off access by militant groups to international sources of money.

"It will have no effect on policy, or on our ability to execute the President's policy," U.S. Treasury Secretary Timothy Geithner said. "David came to Treasury with well-established outside expertise and has worked at Stuart's side for the last two years."

In an interview with Reuters earlier this month, Levey said he felt there was growing awareness among U.S. allies on the need to pinch Iran's oil revenues to slow its bid to acquire nuclear weapons. He also said that cooperation in instituting sanctions was growing.

Some analysts, however, view it as unlikely that U.S.-led sanctions would force a political shift that could lead Tehran to freeze its nuclear enrichment program.

Iran insists the enrichment program is aimed at purely peaceful purposes of generating electric power. The United States and its Western allies accuse it of seeking to acquire nuclear weapons. (Reporting by Glenn Somerville, editing by Anthony Boadle)

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