The Obama administration flirted with the idea of sanctioning the Iranian Central Bank, with Treasury Undersecretary David Cohen saying that they were “looking very actively” at imposing such measures. But officials have since warned against the broad sanctions.
Director of the Treasury’s Office of Foreign Assets Control Adam Szubin said this week at a House of Representatives hearing that the Central Bank sanctions could actually benefit Iran and hurt the U.S. and global economies by causing oil prices to spike:
There are very real scenarios in which an oil spike might hit. [...]
If there is a hike in the price of oil, Iran gains. If there is a spike in the price of oil…there could be profound harm to the global economic recovery and a windfall to Iran.
The amendment also constricts the administration’s ability to conduct its foreign policy. In most matters, the president is afforded a foreign policy waiver to free his hand to make policy and maintain relations with other countries. But the Kirk amendment “require(s) the President to impose sanctions on foreign financial institutions that conduct transactions with the Central Bank of Iran.” The waiver, in this case, lasts only 60 days and must be renewed and certified to Congress, and only in the case that allowing the financial transactions is “necessary to the national security interest of the United States.”
The sanctions, however, could be difficult to implement. “[F]oreign financial institutions that conduct transactions with the Central Bank of Iran” might include entities such as European central banks that are conducting what, according to their own and international laws, are completely legal business in and with Iran that is routed through the central bank.
This summer, more than 90 senators signed onto a letter to Obama, led by Kirk and Sen. Chuck Schumer (D-NY) supporting the notion of sanctioning Iran’s central bank.