Republicans offer bill to block potential Iran dollar use

WASHINGTON (Reuters) - Two Republican U.S. senators who oppose the nuclear agreement with Iran introduced a bill on Wednesday that would keep Iran from gaining even indirect access to the U.S. financial system or using U.S. dollars in business transactions.

A staff member removes the Iranian flag from the stage after a group picture with foreign ministers and representatives of Unites States, Iran, China, Russia, Britain, Germany, France and the European Union during the Iran nuclear talks at the Vienna International Center in Vienna, Austria July 14, 2015. REUTERS/Carlos Barria

The measure introduced by Senators Mark Kirk and Marco Rubio came amid media reports that U.S. officials were moving toward allowing such transactions. President Barack Obama has denied having such plans.

The legislation would prohibit the president from issuing any license for conducting an offshore U.S. dollar clearing system for Iranian transactions or providing any such system with U.S. dollars.

It also would impose secondary sanctions on any financial institution found to be participating in any offshore dollar clearing system with Iran.

State Department spokesman Mark Toner acknowledged the United States was advising banks and other businesses about how to conduct business with Tehran without running afoul of U.S. authorities, but that does not involve converting money to dollars.

“These banks don’t want to violate existing sanctions,” he said, “but they are allowed to under certain condition to do business with Iran, so we do consider it as an obligation on how to counsel them.”

Along with some of Obama’s fellow Democrats, congressional Republicans unanimously opposed the deal announced in July in which Iran agreed to scale back its nuclear program in exchange for sanctions relief.

Several lawmakers have been working on legislation since to keep tight controls on Iran, especially over its repeated ballistic missile tests since late last year.

U.S. Representative Ed Royce, the Republican chairman of the House Foreign Affairs Committee, published a column in the Washington Post on Wednesday saying Obama was so eager to preserve a signature foreign policy agreement that he would consider measures that would let Iran “launder dollars while the administration looked the other way.”

The issue is particularly potent in this U.S. election year, when Americans will pick a new president, and every member of the House and one-third of senators are up for re-election. The three remaining Republican presidential candidates have all vowed to tear up or back away from the nuclear deal, which Obama administration officials say would be calamitous.

Rubio suspended his 2016 presidential campaign last month, and Kirk’s Senate re-election race is seen as one of this year’s most competitive.

Reporting by Patricia Zengerle and Lesley Wroughton; Editing by Jonathan Oatis