WASHINGTON—The Obama administration is preparing to give Iran limited access to U.S. dollars as part of looser sanctions on Tehran, according to congressional staff members and a former American official briefed on the plans.
The proposed move comes amid rising Iranian criticism that the landmark nuclear agreement reached last year between global powers and Tehran hasn’t provided the country with sufficient economic benefits.
Executives at European and Asian banks have said in recent interviews that they remain reluctant to conduct any financial transactions with Iran due to fears they might run afoul of the U.S. Treasury and its regulations that ban dollar dealings with Iranian firms. Most major international trade, particularly in oil and gas, is conducted in U.S. dollars.
The Treasury is considering how to issue licenses to offshore dollar clearing houses for specific Iranian financial institutions, an approach that wouldn’t require the involvement of American banks, according to the congressional officials. The clearing houses, likely involving select foreign banks, would conduct the dollar transactions instead, shielding the U.S. financial system from any direct contact with Iran, these officials said.
“They are looking at a couple mechanisms to allow for this dollar trade, stopping short of normalizing banking transactions,” said a congressional banking official briefed by the administration on its plans, which haven’t been finalized.
Treasury action on Iran’s access to the dollar wouldn’t require congressional approval.
American law still prohibits U.S. and foreign banks from dealing in dollars with Iran, despite the July nuclear agreement. The Treasury Department designates Iran’s entire financial system as a “primary money laundering concern” due to Tehran’s nuclear and missile programs and support for international terrorist groups, such as Hezbollah in Lebanon and Hamas in the Palestinian territories. CONTINUE AT SITE
