US Imposes Sanctions on 18 Iranian Banks; Shuts Country Out of Global Financial System

The new sanctions could have unintended consequences, including a detrimental impact on the ability of the Iranians to access humanitarian resources.

The United States imposed a fresh round of sanctions on Iran's financial sector on Thursday, tightening the noose further around the Islamic state's beleaguered economy. The fresh sanction targeting 18 banks is in a bid to shut the country out of the global financial system.

Critics say the new round of sanctions could have unintended consequences, including a detrimental impact on the ability of the Iranian people to access humanitarian resources. Needless to say, the United States is trying to ramp up pressure on Tehran weeks ahead of the Presidential Election.

Trump's Pressure Tactics

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Thursday's tranche of sanctions are the latest in the Trump administration's "maximum pressure" campaign that critics say are aimed at causing Tehran to change its behavior. The fresh round of sanctions blacklists 18 major Iranian banks. Among them 16 have been targeted for "operating in Iran's financial sector" as well as one bank controlled by a sanctioned Iranian bank and one the US Treasury says is affiliated with Iran's military.

The move freezes any US assets of these 18 banks and bars Americans from dealing with them. Besides it extends secondary sanctions to those who do business with them. This means foreign banks risk losing access to the US market and financial system.

However, the sanctions don't apply to selling of agricultural products, medical supplies and food to Iran, as that would stop the country from receiving humanitarian goods. "Today's actions will continue to allow for humanitarian transactions to support the Iranian people," a statement from US Treasury Secretary Steven Mnuchin read.

Iran in Crisis

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The new sanctions will further create pressure on Iran beleaguered economy. Since the United States decided to leave the Iran nuclear deal in May 2018, the re-imposed sanctions have had severe consequences for Iran whose currency touched a new low against the US dollar last month. Supporters of the move say it is consistent with the administration's campaign against Tehran.

However, several critics have long contended that US sanctions have obstructed the flow of vital food, medicines and other humanitarian aid to Iran. Following the announcement of the sanctions, Iran condemned the move. Iranian foreign minister Mohammad Javad Zarif said that the re-imposed sanctions have had substantial impact on the smooth flow of food and medicines and medical supplies.

"Amid Covid19 pandemic, U.S. regime wants to blow up our remaining channels to pay for food & medicine. Iranians WILL survive this latest of cruelties. But conspiring to starve a population is a crime against humanity. Culprits & enablers—who block our money—WILL face justice." Zarif tweeted.

Iran's oil exports sank to a record low in May as the coronavirus pandemic added to the impact of US sanctions already limiting shipments. Iran is also suffering under a severe shortage of supplies to fight the Covid-19 virus with an average 3,000 new coronavirus cases being reported every day. Over 27,000 people have died of Covid-19 in Iran so far.