US pursuing increased pressure on Iran

Washington, July 7: Senior US officials will consult allies in Europe next week on ways to intensify pressure on Iran amid suspicions Tehran is trying to evade sanctions by concealing the origin of financial transactions.

US Secretary of State Condoleezza Rice said yesterday that with Iran becoming ''increasingly dangerous,'' the United States and its allies are discussing new sanctions to further curb Tehran's access to the international financial system.

While Washington is committed to a diplomatic solution, Iran must know ''there are coercive elements to our policy as well,'' Rice said in an interview with Maria Bartiromo on CNBC's ''Closing Bell'' program.

''We are working on financial measures that really will say to the Iranians, 'You cannot use the benefits of the international financial system and continue to pursue a nuclear weapon','' Rice added, according to an official State Department transcript.

Undersecretary of Treasury for Terrorism and Financial Intelligence Stuart Levey said he would visit London, Paris, Berlin and Frankfurt next week to ''compare notes'' about how Iran is using the international financial system to continue to pursue its nuclear program and support extremists.

Assistant Secretary of State John Rood, who handles non-proliferation issues, will accompany him.

''Some of the things we've been paying special attention to is how Iran has adapted financial practices that allow it to attempt to evade both controls of Islamic financial institutions as well as potentially to evade (UN and US) financial measures that have been put in place,'' Levey told reporters.

In some cases, Iranian state-owned institutions - including the central bank and Bank Sepah, which is under UN and US sanctions - have asked other institutions they do business with to handle transactions without using their names, he said.

This risks involving international financial institutions that do have integrity in tainted transactions and ''also is a means by which Iran can do something to evade sanctions that are in place,'' Levey said.

The UN Security Council has adopted two resolutions imposing sanctions on Iran and demanding that it halt uranium enrichment, which major powers say is aimed at producing nuclear weapons. Tehran insists it only wants to develop nuclear power to meet the country's burgeoning energy needs.

Washington also accuses Tehran of supporting Hizbollah militants in Lebanon, Hamas militants in Gaza and insurgents battling US forces in Iraq.

The United States and its allies began negotiating a third UN sanctions resolution in a conference call last Friday.

Undersecretary of State Nicholas Burns, the chief US negotiator, earlier in the week told a dinner sponsored by the New America Foundation thinktank that Iran is ''our greatest challenge outside of Iraq'' but there is still ''room for diplomacy here and time for diplomacy.'' Levey said that because of UN and US sanctions new investment in Iran ''has been dramatically constrained'' and companies increasingly question whether they should risk doing business there.

Iran sometimes announces new deals with other countries and companies but most seem to be ''a lot of form over substance,'' he said.

The US Congress, aiming for even tougher action, is considering legislation that would force President George W Bush to impose sanctions on European and other companies that invest more than 20 million dollar in Iran's oil and gas industry.

Reuters

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