Iran, So Far Away, Part 9

The US continues to ratchet up the tension on Iran's economy by singling out Iran's largest banks and saying that anyone who does business with them will not be able to do business with the US.

The United States on Monday sought to tighten the financial screws on Iran by imposing sanctions on the country's third-largest bank for allegedly helping Tehran develop its nuclear program.

Now any foreign firm that deals with Iranian state-owned Bank Tejarat and its affiliate, Belarus-based Trade Capital Bank, will no longer be able to access the U.S. financial system.

The sanctions "will deepen Iran's financial isolation, make its access to hard currency even more tenuous, and further impair Iran's ability to finance its illicit nuclear program," Treasury Undersecretary David Cohen said in a statement.

The United States and Europe are pressuring Iran to talk to the international community about its nuclear activities, which the West says are aimed at developing a weapons program but which Tehran says are peaceful.

The European Union on Monday banned imports of oil from Iran and followed the United States in imposing sanctions on its central bank, which acts as the clearinghouse for the country's oil revenue.

And yes, yesterday's EU decision to go along with oil sanctions has Iran in a real bind now.   They are screaming for revenge.

Iran accused Europeans on Monday of waging "psychological warfare" after the EU banned imports of Iranian oil, and President Barack Obama said Washington would impose more sanctions to address the "serious threat presented by Iran's nuclear program."

The Islamic Republic, which denies trying to build a nuclear bomb, scoffed at efforts to choke its oil exports, as Asia lines up to buy what Europe scorns.

Some Iranians also renewed threats to stop Arab oil from leaving the Gulf and warned they might strike U.S. targets worldwide if Washington used force to break any Iranian blockade of a strategically vital shipping route.

Yet in three decades of confrontation between Tehran and the West, bellicose rhetoric and the undependable armory of sanctions have become so familiar that the benchmark Brent crude oil price edged only 0.8 percent higher, and some of that was due to unrelated currency factors.

In other words, the market has already priced in the sanctions, meaning that Iran has less leverage than ever.  We'll see how this goes, but the combined EU and US sanctions are going to have an effect on Iran's political situation, and soon.