Senators seek to block Iran from billion-dollar reserves

WASHINGTON Wed May 8, 2013 4:15pm EDT

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WASHINGTON (Reuters) - Legislation introduced by a bipartisan group of U.S. senators on Wednesday would block Iran's access to billions of dollars worth of foreign currency reserves in the latest congressional effort to slow development of the Islamic Republic's disputed nuclear program.

Lawmakers in Washington say the government in Tehran taps the reserves held in banks around the world, mostly in euros, to get around U.S. and EU sanctions on oil sales that have damaged Iran's economy.

Iran converts the reserves it built up from decades of selling oil, estimated to be worth $60 billion to $100 billion, into local currencies in order to finance imports and stabilize its budget, the lawmakers say.

The United States and the European Union believe that Iran is enriching uranium to levels that could be used in nuclear weapons. Tehran says the program is intended for producing power and medical supplies.

If passed, the bill introduced by Senators Mark Kirk, an Illinois Republican, Joe Manchin, a West Virginia Democrat, and three others, would block such currency conversions of the reserves and be retroactive to May 9.

Financial institutions around the world are "on notice" to halt all foreign currency transactions on behalf of blacklisted Iranian banks and sectors "or risk being cut off from the U.S. financial market," the lawmakers said in a statement.

The bill seeks to limit the ability of the Central Bank of Iran and National Iranian Oil Company to conduct transactions in foreign currencies. It authorizes President Barack Obama to impose sanctions on foreign banks that conduct such transactions.

Mark Dubowitz, head of the Foundation for Defense of Democracies and a proponent of tough sanctions on Iran, said the bill could push European regulators to take their own actions to cut Iran's access to euros.

"Congress is encouraging the European Union to adopt a made-in-EU solution that prevents Iran from really exploiting a European loophole," he said.

Kirk and Manchin's legislation builds on a sanctions law that took effect on February 6, and prohibits Iran from repatriating earnings it gets from its oil exports.

The earnings are kept in special accounts in countries that buy Iranian oil. The system aims to force Iran to spend the earnings on goods from those countries, keeping the money from benefiting its nuclear program.

The bill is expected to be attached later this month to Iran sanctions legislation in the House of Representatives that was introduced in February by Ed Royce, the chairman of that chamber's foreign affairs committee.

(Reporting by Timothy Gardner and Rachelle Younglai; Editing by Maureen Bavdek and Gunna Dickson)

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Comments (10)
Logical123 wrote:
American congressmen are utter idiots and morons. They are getting more desperate every day. None of their stupid actions is going to succeed in bending Iran which is the only country in the Middle East to stand up to the biggest bullies in the world, the U.S. and Israel.

May 08, 2013 1:39pm EDT  --  Report as abuse
AlkalineState wrote:
If you really want to make Iran mad, it’s simple. Tell them the only money they get, they have to borrow from us Jews.

May 08, 2013 3:37pm EDT  --  Report as abuse
Socius wrote:
This is bad….I’m not sure what they’ve been teaching in history classes the last few decades but this has an eerie similarly to France putting and Germany during the world war. Though that was due to the war reparations act, the increasing toll it took on the German economy forced them to react. And bam. You had over 100 million dead.

You can expect people/states to act rationally only to a certain point. But there’s a certain line that once crossed, makes everything an unknown. I’m not a conspiracy theorist but I’m having a hard time understanding why anyone other than those who would want to bring about world war 3 would be pushing for some of these actions.

Scary times. May The Lord have mercy on us all.

May 08, 2013 6:39pm EDT  --  Report as abuse
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