The Obama administration imposed new sanctions on Monday on Iran and its nuclear programme, targeting the country’s currency and auto industry and seeking to render Iranian money useless outside the country.
The executive order from U.S. President Barack Obama broadens a sanctions campaign aimed at crippling Iran’s economy, forcing it to comply with international demands that it prove its nuclear program is peaceful. The U.S. believes Iran is working to develop nuclear weapons, a charge that Iran denies.
“Even as we intensify our pressure on the Iranian government, we hold the door open to a diplomatic solution that allows Iran to rejoin the community of nations if they meet their obligations. However, Iran must understand that time is not unlimited,” said White House press secretary Jay Carney, adding that more sanctions would come if the regime doesn’t change course.
The effect of U.S. sanctions has been a major issue in Iran ahead of the June 14 election to choose a replacement for term-limited President Mahmoud Ahmadinejad. Senior administration officials said the timing of the sanctions was not related to the upcoming elections.
The new sanctions marked the first time Iran’s currency, the rial, has been targeted directly with sanctions, the White House said. The sanctions apply to foreign financial institutions that buy or sell significant amounts of the rial, as well as to those who hold significant amounts of the currency in accounts outside Iran.
The hope is that banks and businesses holding Iranian currency will dump the funds, making the rial weaker. Its value has dropped by half since the start of 2012, the White House said.
Another set of sanctions ban the sale or transfer of goods or services to be used in Iran’s auto manufacturing sector. Officials said the auto sector is a key source of revenue for the regime. Many of the auto parts and components from subsidiaries are dual-use and can be used in centrifuges or missiles.
Also subject to penalties will be anyone who provides material support to Iranians and others who have been blacklisted under previous U.S. sanctions. An exception will be made for some activities related to a pipeline project to move natural gas from Azerbaijan to Europe and Turkey.
The U.S. has already targeted other major sectors, most prominently Iranian oil exports, and last week targeted Iranian petrochemicals the largest source of funding for Iran’s nuclear programme after oil.