Obama Slaps Sanctions on Iran's Currency

Obama signs executive order, authorizing new sanctions targeting Iran's currency and automobile industry.

Elad Benari ,

Iranian Rial
Iranian Rial
AFP photo

The Obama administration on Monday announced new sanctions on Iran, targeting the country's currency and automobile industry, USA Today reports.

An executive order by President Barack Obama authorizes sanctions on foreign financial institutions that make transactions in Iran's currency, the rial, or keep accounts denominated in the rial outside the country.

The new rules, which go into effect July 1, penalize the sale of goods and services to Iran's auto industry, a key part of the country's economy, the report said.

"The steps taken today are part of President Obama's commitment to prevent Iran from acquiring a nuclear weapon, by raising the cost of Iran's defiance of the international community," White House spokesman Jay Carney said in a statement.

"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," he added.

The latest executive order is the ninth Obama has signed on Iran since the start of his presidency and the sixth in the last two years.

It marks the first time the White House has taken aim at Iran's currency. Administration officials aim to effectively make the rial unusable outside of Iran.

The value of the rial has fallen by more than half since the beginning of last year as Iran has endured mounting sanctions from the United States and international community. Several months ago the Iranian currency plummeted to an all-time low. Previous sanctions targeting Iran's oil industry have resulted in the country's exports also falling dramatically.

Iran’s President Mahmoud Ahmadinejad made a rare acknowledgment several months ago of the economic challenges his country is facing.

“This was a very difficult year for our economy,” Ahmadinejad said, accusing the United States of using its vast economic might to exert unfair pressure on the much smaller Iranian economy.

The country’s Finance Minister, Shamseddin Hosseini, recently said that international sanctions against his country had pushed inflation above 30% and were causing "a lot of trouble.”

At the same time he stressed that Iran's nuclear drive would not be halted.

U.S. Secretary of State John Kerry said last week that he is not optimistic that Iran's upcoming presidential election will result in any change in the country's nuclear ambitions.

"I do not have high expectations that the election is going to change the fundamental calculus of Iran," Kerry said. "This is not a portfolio that is in the hands of a new president or the president; it's in the hands of the supreme leader. And the supreme leader ultimately will make that decision, I believe."

Kerry said the U.S. would continue to pursue a peaceful resolution to the impasse but warned that time is running out. Iran's persistent defiance of international demands to come clean about its nuclear program makes the world more dangerous, he said.

"Iran needs to understand that the clock is ticking," warned Kerry.