President Donald Trump has imposed new sanctions on Iran’s central bank in response to an attack on Saudi Arabian oil facilities that Washington has blamed on Tehran.
Speaking in the Oval Office on Friday, Mr Trump said the sanctions would go “right to the top”. The US president also hinted that he was wary of taking military action against Iran, despite criticism from some Republicans that his approach was making Tehran more brazen.
“Going into Iran would be a very easy decision . . . most people thought I would go in within two seconds, but plenty of time,” Mr Trump said later at a joint news conference with Scott Morrison, Australian prime minister. “I’m showing great restraint.”
Mr Trump has been ambiguous about whether he will take military action. He has suggested that he wants to avoid war while also saying that a lethal military strike would be an appropriate response. Earlier this week, he said he had many options including the “ultimate” option — which experts interpreted as a military response.
Some foreign policy experts have suggested that Iran has become more emboldened since Mr Trump abruptly reversed his decision to strike the country in June in response to the shooting down of a US drone. But Mr Trump this week rejected those criticisms, saying that his decision not to pull the trigger was a sign of strength.
Mr Morrison said he wanted to “commend” Mr Trump for demonstrating restraint and added that the US had not made any requests about future actions against Tehran.
The Treasury said the sanctions would target the Central Bank of Iran and the National Development Fund of Iran, the country’s sovereign wealth fund, which the US says has been a big source of funding for the Iranian Revolutionary Guard Corps’ Quds Force.
The new measures come days after US secretary of state Mike Pompeo accused Iran of committing an “act of war” with the attacks. Tehran has denied any responsibility and said it would respond with all-out war if the US launched military action against it.
“Attacking other nations and disrupting the global economy has a price,” Mr Pompeo said on Friday.
Steven Mnuchin, Treasury secretary, said the US had “now cut off all sources of funds to Iran”. Sigal Mandelker, the Treasury official in charge of sanctions policy, said the move would put other government on notice that they were “risking the integrity of their financial systems” by continuing to work with the Iranian central bank.
While the US cast the sanctions as significant, some experts said they would have limited impact. Daniel Tannebaum, a sanctions expert and partner at Oliver Wyman, said the Iranian central bank and its governor had already been designated by the US.
“This is optics, and in reality it doesn’t necessarily apply more pressure to the Iranian government,” said Mr Tannebaum. “With that said though, it is another shot across the bow to any countries that continue to trade with Iran as a reminder, given that through secondary sanctions the US could impose penalties.”
Iran’s banking system is already unable to conduct transactions in the global banking system. Iranian businessmen mostly rely on their western and eastern neighbours, Iraq and Afghanistan, to bring in hard currency while they use the hawala system — an informal money arrangement system — in Turkey and, to some extent, in UAE.
While the sanctions were responding to the attack in Saudi Arabia, they have intensified the “maximum pressure” campaign that the US has pushed since Mr Trump last year withdrew from the nuclear deal that the US and other powers signed with Iran in 2015.
Mr Trump will meet many of his counterparts next week in New York when he attends the UN General Assembly. His team is debating whether to disclose the evidence on which the allegations against Iran are based while Mr Trump attends the UN meetings.
Some Iranian experts said the sanctions could help the Islamic republic at a time when the US is under pressure from its Gulf allies to take stronger measures against Tehran.
Iranian politicians view the sanctions as evidence that Mr Trump is wary of military confrontation with Iran. “If Trump wanted to get involved in a military action, he would have done that after Iran shot down the drone,” said one Iranian analyst.
Iran has warned that any retaliation would meet an immediate response. A senior military adviser to Iranian supreme leader Ayatollah Ali Khamenei said Iran’s response to any aggression would not be limited to the region.
“If the Americans think of a plot [military action], we will respond to them from the Mediterranean Sea to the Red Sea and the Indian Ocean,” said Rahim Safavi.
While the sanctions may not have a big practical impact, they are a further setback to French-led European efforts to use the UN General Assembly to make progress on de-escalating US-Iran tensions and move towards a negotiated solution to the crisis.
“The sanctions serve to signal to the Iranians that the hurdles to a negotiated solution — and sanctions relief — remain high,” said Esfandyar Batmanghelidj, founder of Bourse & Bazaar, a publication that focuses on Iranian politics and economics.
French president Emmanuel Macron said last month in Mr Trump’s presence that he hoped the US leader would meet his Iranian counterpart within weeks. But European diplomats said the attacks had stalled any momentum the Macron initiative had.
Additional reporting by Matthew Rocco in New York
Follow Demetri Sevastopulo on Twitter: @dimi