U.S. mulls Iran sanctions but not on oil, central bank
WASHINGTON (Reuters) - The United States may impose more sanctions on Iran, possibly on commercial banks or front companies, but is unlikely to go after its oil and gas sector or its central bank for now, a U.S. official said on Tuesday.
The official spoke after the International Atomic Energy Agency, the U.N. nuclear watchdog, completed a new report that said Iran has worked on developing an atomic bomb design and may still be conducting relevant research.
Citing what it called "credible" information from member states and elsewhere, the agency listed a series of activities applicable to developing nuclear weapons, such as high explosives testing and development of an atomic bomb trigger.
"I think you will see bilateral sanctions increasing," the official, speaking on condition of anonymity, told Reuters.
However, because of Russian and Chinese opposition, chances for another U.N. Security Council resolution sanctioning Iran for its atomic program are slim, the official said.
"We will be looking to impose additional pressure on the Iranian government if they are unable to answer the questions raised by this report," a second U.S. official told reporters on condition of anonymity. "That could include additional sanctions by the United States. It could also include steps that we take together with other nations."
The United States has long suspected Iran of using its civil nuclear program as a cover for developing a nuclear weapons capability. Iran says its atomic program is peaceful and designed to generate electricity.
Russia and China are likely to oppose a fifth Security Council sanctions resolution against Iran, leaving the United States with few options but to tighten its own extensive sanctions and try to persuade others to follow suit.
"From our side, we are really looking to close loopholes wherever they may exist," the first U.S. official said, adding that U.S. sanctions are so comprehensive that "there is not a whole lot out there other than the oil and gas market -- and you know how sensitive that is. I don't think we are there yet."
Asked where additional U.S. sanctions might come, the official said: "You want to look for other commercial banks, further identify and go after some of these front companies ... we want to try to clamp down on some of that."
MORE U.N. SANCTIONS UNLIKELY NOW
The official also played down the chances of sanctioning Iran's central bank, which is the clearinghouse for much of its petroleum trade, the mainstay of the Iranian economy.
"That is off the table" for now, he said. "That could change, depending on what other players (think). I don't want to rule that out but it is not really currently on the table."
The official said there were limits to how much pressure the United States, acting on its own, could place on Iran without targeting the petroleum industry or the central bank.
"The reality is that without being able to put additional sanctions into these key areas, we are not going to have much more of an impact than we are already having," he said. Existing sanctions are hurting Iran, he said.
The official said he hoped the latest IAEA report, which was obtained by Reuters, would help to persuade Russia and China that Iran's nuclear ambitions were not benign.
"This report, I think will demonstrate to some of the skeptics, and I am talking of Russia and China, that clearly Iran was involved in a nuclear weapons program up to 2003 and probably is still continuing work in that area."
However, he acknowledged it was unlikely Russia and China, which hold Security Council vetoes, would back additional multilateral sanctions and said it may even be hard to persuade them to support a new IAEA board of governors resolution.
"Hopefully, they will move toward supporting a resolution in the (IAEA) board but for them to do so it would have to be very anodyne," he official said. "But the reality is getting further sanctions at the U.N. is probably not doable."
Senator John McCain, the Republican U.S. presidential nominee in 2008, said the United States should be doing more to persuade Russia and China to crack down on Iran.
"This is clearly a rogue nation and for us to sit there and watch the Russians and Chinese veto sanctions which could affect Iranian behavior is in my view not acceptable," McCain told the Reuters Washington Summit.
(Additional reporting by Andrew Quinn and Tabassum Zakaria; editing by Mohammad Zargham)
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