* Sanctions mulled for more Iran central bank transactions
* Aimed at pressuring Iran to abandon nuclear program
* Looking at ways to freeze reserves held outside Iran
* Senator Menendez will seek action after Nov. 6 election
By Roberta Rampton
WASHINGTON, Oct 5 U.S. lawmakers are considering
expanding American economic sanctions on Iran - measures that
already have helped push that country's currency into free fall
but have not yet convinced Tehran to abandon its nuclear
Democratic Senator Robert Menendez, a member of the Senate
Banking and Foreign Relations Committees, said he plans to push
for new penalties on foreign banks that handle any significant
transactions with the central bank of Iran. Only oil-related
transactions are now covered by sanctions.
A senior House of Representatives Democrat, Howard Berman,
is working on additional possible sanctions on Iran.
Menendez said he is also looking at ways to freeze an
estimated 30 percent of Iran's foreign currency reserves held in
banks outside the country.
"It seems to me we have to completely exhaust all the tools
in our sanctions arsenal, and do so quickly, before Iran finds a
way to navigate out of its current crisis," Menendez said in an
Iran's economy has been badly hit by U.S. and European
sanctions imposed to try to pressure the Iranian leadership to
stop pursuing nuclear weapons. The Iranian rial currency has
lost a third of its value against the dollar in the past 10 days
and as much as 80 percent since the beginning of the year.
Iran says its nuclear program is for peaceful purposes.
The U.S. Congress is out of session until after the Nov. 6
presidential election, meaning any action on fresh sanctions
will have to wait until then.
Menendez said he hopes the additional sanctions will become
part of an annual defense policy bill that the Senate and House
must finalize after the election.
An aide to Berman said the congressman - the top Democrat on
the House Committee on Foreign Affairs - is working on measures
similar to the Menendez proposal. The Senate is controlled by
Democrats and the House by Republicans.
In Britain on Friday, U.S. Treasury Department official
David Cohen said Iran has the ability to "relieve the pressure
its people are feeling" by resolving concerns over its nuclear
work. He blamed the rial's plunge on Iran's own economic
mismanagement as well as sanctions.
The White House had no immediate comment on possible new
'SANCTIONS ARE WORKING'
The rial's plunge and signs of civil unrest in Tehran have
given Western policymakers hope that economic sanctions may be
Time is running short to do more, Menendez said. "Sanctions
are working, but we aren't sure they will work quickly enough to
force Iran to put its nuclear program on the table," he said.
The stakes are high. Israeli Prime Minister Benjamin
Netanyahu last week suggested Israel might use military force
against Iran if its uranium enrichment program passes what he
termed a "red line."
The European Union is discussing its own possible broad
trade embargo against Iran that would include sweeping measures
against the central bank and energy industry.
Striking a more cautious tone, U.N. chief Ban Ki-moon said
on Friday international sanctions are hurting Iran's people and
may harm humanitarian operations in the country.
Western powers must make sure diplomacy is a central part of
the process for resolving the nuclear issues rather than simply
turning up the sanctions pressure, said George Lopez, a
professor of peace studies at Notre Dame University in Indiana.
"There's no guarantee that a government that's finding
itself in collapse wants to negotiate a nuclear treaty, those
can be the worst conditions," Lopez said.
Menendez said in the interview on Friday that lawmakers have
held only "some preliminary conversations" with the Obama
administration on the proposals.
"I would think that the administration would welcome these
as a way in which we get to our common goal, which is to ensure
that Iran doesn't acquire nuclear weapons," he said.
Some lawmakers want the extended sanctions to cover all
transactions except for those involving food and medicine, said
a senior congressional aide, speaking on condition of anonymity.
"You really move to a total embargo scenario," the aide
said. "The Iranian economy would collapse pretty quickly."
The United States has long barred U.S. firms from doing
business with Iran, and last December adopted measures to force
international buyers of Iranian oil to cut their purchases.
The United States has given major buyers of Iranian oil
six-month waivers of the rules as long as they are making
"significant" cuts. As those waivers come up for renewal, the
U.S. government needs to ensure it asks for even bigger cuts in
Iranian oil purchases, Menendez said.
"We must make it clear - this is a big must - that absent
some extraordinary circumstance, that we will not grant waivers
to any nation that doesn't make our reduction benchmarks," he