UPDATE 3-U.S. eyes Iran's central bank as sanctions target

Thu Oct 13, 2011 3:21pm EDT

Related Topics

* U.S. asks others to block Quds force activities

* U.S. has sanctioned 10 firms for Iran energy trade

* U.S. sees slowdown in China investment in Iran energy (Recasts with new quotes, 10 companies sanctioned, details)

By Susan Cornwell

WASHINGTON, Oct 13 (Reuters) - The United States is considering more sanctions on Iran's central bank to "ratchet up the pressure" on Tehran after an alleged plot to kill the Saudi ambassador to the United States, a senior Treasury official said on Thursday.

Treasury Undersecretary David Cohen said the Obama administration's efforts to tighten the financial and commercial screws on Iran were paying off, but other approaches were also being considered.

"We are looking very actively at the possibility of designating the central bank of Iran, as well as taking other actions in response to this plot" and Iran's nuclear program, he told a Senate committee.

"We're looking quite intensively at how to ratchet up the pressure," Cohen said.

Cohen and Undersecretary of State Wendy Sherman appeared before the Senate Banking Committee two days after U.S. authorities announced they had uncovered a plot by two men linked to Iran's security agencies to assassinate Saudi Ambassador Adel al-Jubier.

One man, Manssor Arbabsiar, was arrested last month while the other was believed to be in Iran.

Iran denied the charges and expressed outrage at the accusations.

Cohen said the latest allegations were a reminder that the threat from Iran was not limited to its nuclear ambitions.

Iran already faces U.S. and international sanctions over its nuclear program. Iran says its nuclear work is peaceful and aimed at generating electricity.

Sherman said Washington was taking "robust diplomatic action to hold Iran accountable for this plot," by asking countries round the globe to stop any activities by the Quds Force, an arm of Iran's Islamic Revolutionary Guard Corps.

U.S. officials, including Senate Intelligence Committee Chairwoman Dianne Feinstein, have said they believe the Quds Force was involved in the plot against the Saudi ambassador.

U.S. financial institutions are already generally prohibited from doing business with any bank in Iran, including the central bank. Cohen said more U.S. action against the central bank, if it had international support, could further isolate it.

The United States has pressed hard for governments and companies to stop dealing with Iran. Sanctions on the financial and energy sectors, which were broadened last year, have made it harder to trade.

IRAN HAS TROUBLE GETTING OILFIELD INVESTMENT

Some U.S. lawmakers want to pass a bill to refine the sanctions on Iran. Cohen said the administration would welcome this, although he said the existing tools were "enormously" effective.

Iran was increasingly unable to attract foreign investment in its oil fields and could lose $14 billion a year in oil revenues through 2016, Cohen said.

Since September 2010, the State Department has sanctioned 10 foreign companies for doing business with Iran's energy sector, Sherman said.

The U.S. has also persuaded multinational energy firms such as Shell, Statoil, ENI, Total and INPEX "to withdraw from all significant activity in Iran," Sherman said. These companies had "forfeited billions of dollars of investments," she said.

Republican Senator Richard Shelby said the administration could do a better job in enforcing sanctions law.

"One problem is that the White House and the State Department have carefully managed to avoid labeling any major Russian, Chinese, or other U.S. trading partner's companies as violators of U.S.-mandated sanctions," Shelby said.

Cohen replied that Russia was not a "significant problem" in financial dealings with Iran, while Sherman said there was a "slowdown" in Chinese involvement in Iran's energy sector.

"It is our belief from what we know that in fact Chinese companies have not finalized any new upstream investment or refinery construction projects" since new U.S. sanctions became law a year ago, Sherman said.

(Editing by Cynthia Osterman)

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