U.S. plan calls for financial noose on Iran's leaders

WASHINGTON — The Bush administration is pressing Europe and Japan to impose sanctions designed to stifle the Iranian leadership financially if diplomatic efforts fail to resolve an impasse over the country's nuclear program, according to government memos and three U.S. officials involved.

Developed by a Treasury Department task force that reports directly to Secretary of State Condoleezza Rice, the economic measures go far beyond the diplomatic pressure exerted by the Bush administration to date, both in scope of action and in objective.

The plan is designed to curtail the financial freedom of every Iranian official, individual and entity the Bush administration considers connected not only to nuclear-enrichment efforts but to terrorism, government corruption, suppression of religious or democratic freedom and violence in Iraq, Lebanon, Israel and the Palestinian territories. It would restrict the Tehran government's access to foreign currency and global markets, shut its overseas accounts and freeze assets held in Europe and Asia.

The United States, which has imposed unilateral sanctions on Iran for nearly three decades, would shoulder few of the costs of its ambitious new proposal. But internal U.S. assessments suggest the sanctions could not hurt Tehran without causing significant economic pain for Washington's friends. That calculation has made it a difficult sell, especially in capitals such as Rome and Tokyo, which import significant quantities of Iranian oil.

"I have been very open with people about the costs that could fall on them," said Stuart Levey, Treasury undersecretary for terrorism and financial intelligence.

U.S. intelligence agencies have spent months trolling through the personal accounts of Iranian leaders in foreign banks, analyzing Iranian financial systems and transactions and assessing how the government does its banking. They have calculated the amount of foreign investment at stake and even which charities have connections to Iran's government.

U.S. officials believe that if other Western allies join in a sanctions pact, it could magnify pressure on Iran in much the same way that some Bush administration officials believe U.N. sanctions helped persuade Libya to end its nuclear-weapons program in 2003.

Under the plan, the major allies involved would freeze Iranian government accounts and financial assets in their countries. Iranian officials who appear on lists being drawn up by U.S. officials would be prevented from opening accounts, trading on foreign markets or obtaining credit.

So far, potential partners have not jumped at the plan. European officials who spoke on the condition of anonymity attributed their reluctance to a reliance on Iranian oil, domestic legal constraints and the fear of being dragged toward another conflict in the Middle East.