The Trump administration ordered new economic sanctions against Iran Friday in response to the attack last weekend in Saudi Arabia. The sanctions target Iran’s central bank and its sovereign wealth fund.
“This is very big,” said Treasury Secretary Steven Mnuchin. “We’ve now cut off all sources of funds to Iran.”
The move comes less than a week after an attack on a Saudi oil facility that temporarily cut off nearly 6% of the world’s oil supply. While Houthi rebels in Yemen claimed responsibility for that attack, the administration suspects Iran was behind it.
“It’s too bad what’s happening with Iran. It’s going to hell,” President Trump told reporters Friday in announcing the sanctions. “They’re practically broke. They are broke. And they could solve the problem very easily. All they have to do is stop with the terror.”
The sanctions are designed to sever any remaining ties between Iran and the U.S. financial system. The order from the Treasury Department bars Americans from doing business with Iran’s central bank and its National Development Fund.
“Attacking other nations and disrupting the global economy has a price,” Secretary of State Mike Pompeo said in a statement. “The regime in Tehran must be held accountable through diplomatic isolation and economic pressure.”
The practical impact of the new sanctions could be limited, though, since Iran was already subject to numerous economic restrictions.
“This is more symbolic than practical in consequence,” said Richard Nephew, who was a sanctions expert in the State Department during the Obama administration and advised the team that negotiated with Iran. “It is hard to see what new economic impact will result.”
The sanctions could add complications for those trying to deliver humanitarian supplies to Iran, although Treasury said it will continue to consider waivers for deliveries of food and medicine, as appropriate.
“There is no bigger loser of this policy than the Iranian people,” warned Ryan Costello, policy director of the nonprofit National Iranian American Council. He noted that despite earlier sanctions Iran’s central bank continued to play an important role in the trade of humanitarian goods.
Without a carve-out for that activity, higher prices for food and shortages of Western drugs could result, Costello warned.
At a White House news conference, Trump said he has shown restraint toward Iran. He did not rule out a military response to the attack in Saudi Arabia but stressed he is in no hurry.
“Going into Iran would be a very easy decision,” Trump said. “I think the sanctions work. And the military would work. But that’s a very severe form of winning.”