By Indira A.R. Lakshmanan
Jan. 24 (Bloomberg) — The U.S. and European Union took steps to cut off from the international financial system Bank Tejarat, the last institution financing high-volume exports and imports between Iran and Europe.
The coordinated actions yesterday will have consequences for tens of billions of dollars in legitimate and illicit trade.
The U.S. Treasury Department designated Bank Tejarat, Iranâ€™s third-largest bank, for providing financial services to Iranian banks and companies that are under international sanctions for involvement in Iranâ€™s nuclear and missile proliferation. Financial institutions anywhere in the world that do business with the bank risk being cut off themselves from the U.S. financial system.
The action â€œstrikes at one of Iranâ€™s few remaining access points to the international financial system,â€ Treasury Undersecretary for Terrorism and Financial Intelligence, David S. Cohen, said in a statement. The move â€œwill deepen Iranâ€™s financial isolation, make its access to hard currency even more tenuous and further impair Iranâ€™s ability to finance its illicit nuclear program.â€
Also yesterday, the EUâ€™s 27 foreign ministers met in Brussels and agreed to freeze the assets of Bank Tejaratâ€™s European branch in Paris, an action that will be announced tomorrow, according to five European diplomats who spoke on condition of anonymity because the sanctions documentation naming the bank and seven other entities havenâ€™t yet been published.
The targeting of Bank Tejarat is the latest salvo in a stepped-up campaign by the U.S. and EU to persuade Iran to abandon suspected efforts to gain a nuclear weapons capability, and the action may have even more significant consequences than an EU oil embargo approved yesterday.
The EU is Iranâ€™s principal trading partner, according to European Commission figures. The EU exported 11.3 billion euros ($14.6 billion) in goods to Iran in 2010, led by machinery, transportation equipment including European cars, and chemicals. Iran exported 14.5 billion euros ($18.8 billion) in goods to the 27-member EU the same year, with fuel and minerals at the top of the list, according to European Commission data.
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