Tighter Iran Sanctions

[Sapphire Capital]

The US has implemented a new Executive Order for tightening Iran Sanctions which is just a useless piece of paper, restricting Iranian Rial accounts outside Iran. Beside the usual complaint I have of them overstepping their legal power resorting to the normal threats of an international bully, this one is especially stupid. Iranian Rial is almost never an account curency outside Iran. It makes life for the normal people difficult because they have to exchange their travel currency in the deeper black markets, the Iranian officials get their dollars from the US government which supplies them plenty in Afghanistan and Irak.

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[KJ]

WASHINGTON—The State Department on Wednesday exempted several countries, including China and India, from financial sanctions targeting Iranian oil sales because those countries have continued to reduce their purchases of Iranian crude oil.

U.S. officials said U.S. pressure on Iran is steadily bearing fruit, 18 months after the U.S. targeted Iran's oil sales as a way to strangle the regime's finances and forestall the development of a nuclear weapon.

But half a dozen countries, particularly China, continue buying large volumes of Iranian crude, having received repeated exemptions from sanctions. China imported about 375,000 barrels per day of Iranian oil in April, which is less than it imported before the U.S. began targeting Iranian exports but is more than China imported in the early part of last year.

State Department officials said President Barack Obama would raise the issue of Chinese purchases of Iranian oil at this week's summit in California with Chinese President Xi Jinping.

Some lawmakers, such as Sen. Bob Corker (R., Tenn.), have expressed frustration that Iran is still selling much of its oil, and Congress has mulled legislation that would grant countries exemptions from U.S. sanctions only if those countries steadily and significantly cut their reliance on Iranian oil.

Rep. Eliot Engel of New York, the top Democrat on the House Foreign Affairs Committee, said he was disappointed by the exemptions given to China and the other nations. "The grounds for an exception are clearly too loose," he said. "We must strengthen our sanctions on countries that continue to buy Iranian oil."

Obama administration officials and some outside analysts said flexibility in imposing the sanctions is vital to maintaining the support of a wide range of countries, including China and India, for the sanctions regime.

"China's value in resolving the Iranian situation goes well beyond the amount of oil they import," said Trevor Houser, an analyst with the Rhodium Group in New York, who formerly worked on energy issues for the U.S. State Department.

Amplifying the effect of sanctions, some countries including China earlier this year put in place policies that essentially require Iran to be paid in goods rather than hard currency.

"Getting goods rather than cash imposes a pretty hefty discount" on Iranian oil sales, Mr. Houser said.

Under a law passed in late 2011, the U.S. can sanction any firms that buy Iranian crude, but it can also grant exemptions from sanctions to countries which have made a "significant reduction" in imports from Iran. The U.S. hasn't defined what "significant reduction" means.

In March, the U.S. gave exceptions to Japan and 10 European countries, and on Wednesday gave exceptions, good for six months, to nine others that have reduced or eliminated Iranian imports. Those nine are China, India, Malaysia, South Korea, Singapore, South Africa, Sri Lanka, Turkey and Taiwan.

"Today's determination is another example of the international community's strong and steady commitment to convince Iran to meet its international obligations. A total of 20 countries and economies have continued to significantly reduce the volume of their crude oil purchases from Iran or have completely eliminated such purchases," said Secretary of State John Kerry in a statement.

Since the oil sanctions were introduced, Iran's oil exports have fallen by more than one million barrels per day, U.S. officials and oil-market analysts said. That has roughly cut Iran's oil exports in half compared with 2011, when there were no sanctions, costing Tehran between $3 billion and $5 billion per month, U.S. officials say.