US Sanctions Iran’s Central Bank Over Drone Strike on Saudi Oil Facilities

September 20, 2019 Updated: September 20, 2019

The United States sanctioned Iran’s central bank and sovereign fund on Sept. 20 in response to the drone strikes on oil facilities in Saudi Arabia, which Washington and Riyadh blame on Tehran.

According to the U.S. Department of the Treasury, the Central Bank of Iran and the National Development Fund of Iran have funneled billions of dollars in funding to the Islamic Revolutionary Guard Corps and Hezbollah, both of which are designated by the United States as foreign terrorist groups.

A third Iranian entity, Etemad Tejarate Pars Co., was sanctioned for concealing payments routed to  Iran’s Ministry of Defense and Armed Forces Logistics.

“Iran’s brazen attack against Saudi Arabia is unacceptable. Treasury’s action targets a crucial funding mechanism that the Iranian regime uses to support its terrorist network, including the Qods Force, Hizballah, and other militants that spread terror and destabilize the region,” said Treasury Secretary Steven Mnuchin.

President Donald Trump on Sept. 20 said he expected sanctions to work on Iran and that he preferred that strategy to military action.

“I think the sanctions work,” Trump said during a joint press conference with Australian Prime Minster Scott Morrison. “The military would work. That’s a very severe form of winning.”

Iran’s Foreign Minister Mohammad Javad Zarif has said in an interview published on Sept. 19 that the Islamic regime will go for “all-out war” if the United States or Saudi Arabia attack its territory.

The drone strikes temporarily knocked out up to half of Saudi Arabia’s oil production capacity. Initial assessments were that the damage was significant and that bringing full production back online could take weeks or even months, said Saudi officials and industry sources who visited the sites or were briefed on the attacks. The initial assessment was later revised with a return to full capacity expected by the end of the month.

Iran has denied it was behind the attacks. Yemen’s Houthi movement, an ally of Iran battling a Western-backed, Saudi-led coalition, has claimed responsibility. But Gulf diplomats and regional officials say they are skeptical of the claim given the sophistication of the attacks.

The sanctions on the three entities freeze the assets that are either on U.S. soil or in possession of U.S. citizens. They are the latest in the Trump administration’s escalating pressure campaign kicked off when the president withdrew from the 2015 Iran nuclear deal.

“The United States will continue its maximum pressure campaign against Iran’s repressive regime, which attempts to achieve its revolutionary agenda through regional aggression while squandering the country’s oil proceeds,” Mnuchin said. “Iran’s Central Bank and the National Development Fund were ostensibly intended to safeguard the welfare of the Iranian people, but have been used instead by this corrupt regime to move Iran’s foreign currency reserves for terrorist proxies.”

Tehran demands that the United States lift all sanctions reimposed after Trump quit the nuclear deal before it meets with Washington.

Speaking to reporters on Sept. 19 in the United Arab Emirates, Secretary of State Mike Pompeo said that the United States is seeking a peaceful solution.

“We’d like a peaceful resolution, indeed. I think we’ve demonstrated that. They’ve taken down American UAVs, now conducted the largest attack on the globe’s energy in an awfully long time, and we are still striving to build out a coalition,” Pompeo said.

“I was here in an act of diplomacy. While the foreign minister of Iran is threatening all-out war and to fight to the last American, we’re here to build out a coalition aimed at achieving peace and a peaceful resolution to this.”

Reuters contributed to this report.

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