Iran sanctions not prelude to war, administration insists

WASHINGTON — The Bush administration says sanctions it is imposing against Iran — the first such U.S. action targeting the armed forces of another country — are part of a diplomatic strategy and not a prelude to war.

The U.S. sanctions on elements of Iran's vast armed forces and its largest bank are the most sweeping since 1979, when the takeover of the U.S. Embassy in Tehran ended diplomatic, business and military ties.

The sanctions are part of the Bush administration's broader approach to its chief adversary in the Mideast: mixing diplomatic overtures with sanctions, bellicose rhetoric and the implicit threat of military action.

Robert Byrd, D-W.Va., chairman of the Senate Appropriations Committee, said the new sanctions smack of the "chest-pounding" that preceded the 2003 U.S.-led invasion of Iraq and raise "the specter of an intensified effort to make the case for an invasion of Iran."

"I am deeply concerned that once again the president is opting for military action as a first resort," said Sen. Christopher Dodd, D-Conn.

But Nicholas Burns, the State Department's No. 3 diplomat, insisted: "In no way, shape or form does it anticipate the use of force."

Instead, officials said they hope the measures will increase pressure on Iran to take a deal offered last year that would give the oil-rich country economic and other incentives in exchange for ending nuclear activities that could produce a bomb.

Last week, Bush said other nations should be interested in blocking Iran from securing the means to make nuclear weapons if they want to prevent the prospect of "World War III." He also said he would prefer an international solution.

Any U.S. military strike against Iran would have dire consequences in petroleum markets, say a variety of oil-industry experts, many of whom believe that the prospect of pandemonium in those markets makes U.S. military action unlikely.

Oil prices jumped to $90.46 a barrel in New York Thursday after the sanctions were announced.

Oil traders said that even if the chances of military conflict with Iran are small, the huge run-up in oil prices that would result encourages some speculators and investment funds to bid up the price of oil now, adding a premium of anywhere from $3 to $15 a barrel.

The United States has long labeled Iran a state supporter of terrorism and has been working for years to gain support for tougher global sanctions aimed at keeping the country from developing nuclear weapons.

The Bush administration has won two rounds of watered-down U.N. Security Council sanctions but has been frustrated by months of delay in seeking a third, tougher set of penalties.

Iran has ignored the U.N. sanctions and an offer from European nations that do extensive business with the country, which is continuing work on its nuclear program. Iran says the program is peaceful.

Thursday's punitive moves directly target Iranian organizations and people the U.S. accuses of supporting terrorism or spreading weapons of mass destruction, but the main effect is likely to fall elsewhere — on European and other overseas banks and firms that do business with Iran.

"As awareness of Iran's deceptive behavior has grown, many banks around the world have decided as a matter of prudence and integrity that Iran's business is simply not worth the risk," Treasury Secretary Henry Paulson said.

There has been grumbling, mainly in Europe, about earlier U.S. financial sanctions on Iran that overseas bankers found heavy-handed, but some of Iran's former financial partners have already distanced themselves from Tehran under hard-line President Mahmoud Ahmadinejad.

Paulson and Secretary of State Condoleezza Rice announced the penalties together.

"Unfortunately, the Iranian government continues to spurn our offer of open negotiations, instead threatening peace and security" through its nuclear program and export of ballistic missiles, Rice said. She also contends Iran is backing militants in Iraq, Afghanistan, Lebanon and the Palestinian territories.

The administration did not lay out any new evidence for the allegations.

The latest sanctions will cut off from the American financial system more than 20 Iranian entities, including individuals and companies owned or controlled by the powerful Revolutionary Guard Corps.

State-owned Bank Melli, Bank Mellat and Bank Saderat were named supporters of global terrorist groups for their activities in Afghanistan and the Middle East.

Any assets found in the United States belonging to the designated groups must be frozen. Americans also are prohibited from doing business with those designated organizations.

Bank Melli is Iran's largest. The U.S. says it provides services to Iran's nuclear and ballistic missile programs. Bank Mellat serves the state Atomic Energy Organization, and Bank Saderat routes money to terrorist or militant groups, the administration said.

The designations put companies outside the United States on notice that doing business with the designated groups could put them at risk of U.S. financial penalty.

The United States has the world's largest economy and the most influential banking system, and much of the world's business is done in dollars.

Paulson said it is nearly impossible for overseas businesses or banks to "know one's customer" in Iran and avoid unwittingly funding terrorism or other illicit activities.

The Iranian Revolutionary Guard Corps and Iran's Ministry of Defense and Armed Forces Logistics were designated proliferators of weapons of mass destruction and ballistic-missile technology.

The Revolutionary Guards is the largest component of Iran's military and has influence in business and other spheres. The defense ministry is the parent organization for Iran's aerospace and ballistic missile operations.

The Quds Force, which was named a supporter of designated terrorist organizations, is a part of the Guard Corps that Washington accuses of providing weapons, including powerful explosives blamed for the deaths of U.S. soldiers in Iraq.

The administration stopped short of declaring the Revolutionary Guard a terrorist organization, a step that officials had discussed over the summer.

Peter Crail, a nonproliferation analyst with the Arms Control Association, said sanctions would do little to alter Iranian behavior. He added that in the past the Revolutionary Guard has created new front companies to play a "cat and mouse game" with sanctioning governments.

"It's increasing the pressure," Crail said. "But it's another minor, targeted step."

Additional information from The Washington Post, Reuters and USA Today