Official says Iran will not have access to US financial system

Addressing speculation that the Obama administration may relax the prohibition that prevents US dollars from being used in transactions with Iran, Undersecretary of State for Political Affairs Thomas Shannon said the US will not make such a concession.

By: AP

Iran will not be given access to the US financial system as part of the sanctions relief granted under the controversial nuclear deal, according to a senior Obama administration official who disputed reports that Tehran will be able to deal directly with US banks.

Testifying Tuesday before the Senate Foreign Relations Committee, Thomas Shannon, the undersecretary of state for political affairs, addressed speculation that the administration may relax the prohibition that prevents US dollars from being used in transactions with Iran.

Angry lawmakers, who contend the US was taken advantage of in the international nuclear pact reached last year, have countered that Tehran would be getting more than it deserves from the agreement.

“The rumors and news that has appeared in the press that the US (is) preparing to … allow Iran access to the US financial system are not true,” Shannon told the committee.

The Associated Press reported last week that the Treasury Department has prepared a general license that would permit offshore financial institutions to conduct foreign currency trades in dollars in support of legitimate business with Iran.

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No final decision has been made on the license, and several restrictions would apply. The license would not give Iran access to the US financial system, and it would not allow Iran itself to conduct business in US dollars.

But the change could prove significant for Iran’s sanctions-battered economy. It also would be highly contentious in the United States, where Republican and even a few Democratic lawmakers say the administration promised to maintain a strict ban on dollars along with other non-nuclear penalties on Iran after the seven-nation agreement that is designed to prevent Iran from becoming a nuclear power.

The nuclear pact provided Iran with billions of dollars in sanctions relief for curtailing programs that could lead to nuclear weapons. But the Iranians say they haven’t benefited to the extent envisioned under the deal because of other US measures linked to human rights, terrorism and missile development concerns.

Congress Corker

Senate Foreign Relations Committee, led by Chairman Sen. Corker. (AP/Pablo Martinez Monsivais)

Senator Bob Corker, the committee’s chairman, said he’s received conflicting reports over Iran’s potential access. He said he spoke Monday evening with the Treasury Department’s sanctions chief, Adam Szubin, who Corker said was “very reassuring that we are doing nothing to accommodate dollar transactions.”

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But Corker said remarks Tuesday on MSNBC by Secretary of State John Kerry seemed to indicate otherwise.

During his appearance, Kerry said Iran is entitled to the full range of sanctions relief under the nuclear accord. “It’s fair for Iran to get what it deserves because it kept its part of the bargain to date, with respect to the nuclear agreement,” he said.

Shannon said the point Kerry was making is that as Iran attempts to access money being made available through sanctions relief, the US may need to clarify regulations outlining the proper procedures for those assets to be transferred to them.

“We have found that as Iran seeks those funds, there are banks that unclear about the nature of the regulatory structure and what sanctions have been lifted and what have not,” Shannon said. “And the secretary believes that it is in our national interest to ensure that the commitments we made are being followed through on.”

Republicans also remain highly critical of the Obama administration’s efforts to punish Iran for what they have called repeated violations of a UN ballistic missile test ban.

A group of Republican senators last month unveiled legislation that requires the administration to sanction every sector of Iran’s economy that supports the country’s ballistic missile program.

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Iran’s Revolutionary Guard test-fired two ballistic missiles on March 9 and US officials said the launches were in defiance of a UN resolution which calls for Tehran not to launch any ballistic missiles capable of delivering a nuclear weapon.

The administration in January announced sanctions against Tehran for missile firings in late 2015, but Republicans called those measures tepid and weak. In late March, following the most recent launches, the Treasury Department issued new penalties against two Iranian companies involved in Iran’s ballistic missile program and several people and firms from Britain and the United Arab Emirates for helping the US-blacklisted Mahan Air evade sanctions to secure American plane parts and financing.

Shannon said the administration will use all available multilateral and unilateral tools, including sanctions, to impede Iran’s ballistic missile program. But he told the committee to expect more missile launches.

“Iran is intent on pursuing a ballistic missile program,” Shannon said.