(Bloomberg) -- The U.S. Treasury Department imposed sanctions on Iran’s central bank governor and another senior official in the bank for allegedly providing support for terrorist activities, drawing condemnation from Tehran.
The latest escalation in tensions came as European officials gathered with Iran’s foreign minister in Brussels to find ways to salvage the 2015 Iranian nuclear deal following President Donald Trump’s decision to exit the accord and reimpose sweeping sanctions.
The U.S. Treasury Department on Tuesday named Valiollah Seif, Iran’s central bank governor, and Ali Tarzali, the assistant director of the international department at the central bank of Iran, as “specially designated global terrorists” for allegedly assisting Iran’s Islamic Revolutionary Guards Corps-Quds Force in funneling millions of dollars to support Hezbollah, the Tehran-backed Lebanese group.
“It is appalling, but not surprising, that Iran’s senior-most banking official would conspire with the IRGC-QF to facilitate funding of terror groups like Hizballah, and it undermines any credibility he could claim in protecting the integrity of the institution as a central bank governor,” Treasury Secretary Steven Mnuchin said in a statement. “The United States will not permit Iran’s increasingly brazen abuse of the international financial system.”
The new sanctions cut off Iran’s access to a “critical banking network,” the Treasury said in a statement, adding that it seeks to “stifle Iran’s ability to abuse the U.S. and regional financial system.” The action against Seif does not sanction the Central Bank of Iran, though the bank is targeted under sanctions Trump reinstated when he withdrew from the nuclear deal.
Iran’s reaction was delivered by Foreign Ministry spokesman Bahram Qassemi, who described the measures against Seif as a continuation of “irrational and hostile” U.S. policies toward the Islamic Republic.
The bank governor has also recently been attacked at home, with some lawmakers and hardline opponents of President Hassan Rouhani accusing him of mismanaging the banking industry and currency markets amid a weakening of the national currency, the rial.
Trump’s decision to withdraw from the nuclear deal dealt a major blow to the more moderate Rouhani, who twice won election promising his diplomatic achievement would deliver major economic benefits to Iranians.
Speaking in Brussels on Tuesday after meeting with foreign ministers of the three European nations and Iran, European Union foreign-policy chief Federica Mogherini said that technical experts had been commissioned to find ways to maintain oil shipments and to protect European companies doing business with Iran from being caught in U.S. sanctions.
The EU will identify “practical solutions” to avert disruptions in transport from and to Iran and keep channels open for “effective banking transactions,” she said.
Iran’s Foreign Minister Mohammad Javad Zarif said it would become clear in the next few weeks “whether agreements reached today will be implemented and how much progress we can make in practice.”
Rouhani called for a sustained response to Trump’s unilateral exit. “So that others aren’t misled, today the United States must, as the violator of international law, come under pressure,” he said, according to a report on Wednesday from the semi-official Iranian Student’s News Agency.
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