The sanctions action, part of a ‘maximum pressure’ campaign meant to avoid war, targets institutions critical to the last vestiges of Iran’s international trade
WASHINGTON—The U.S. said it would send military forces and hardware to Gulf allies and moved to sever some of Iran’s last ties to world markets on Friday, while preparing to outline a case for international action next week when world leaders gather at the United Nations.
The sanctions on Iran’s central bank and two other major state financial institutions were punishment for attacks on critical oil supplies in Saudi Arabia. They came as the administration sought to steer clear of a military response, instead bolstering administration efforts to persuade the U.N. and European allies to join its sanctions campaign.
“It’s going to hell,” President Trump said, referring to Iran’s economy. “All they have to do is stop with the terror.”
Mr. Trump plans to air accusations of Iranian violence in meetings with world leaders throughout the week, a senior administration official said, adding Iran will be a top theme of the annual U.N. General Assembly gathering.
Mr. Trump is hoping to build an international coalition to pressure Iran, using last weekend’s cruise missile and drone strikes against a Saudi oil field and refinery as fresh evidence of Tehran’s wrongdoing. He will be accompanied at the U.N. by Secretary of State Mike Pompeo, who has spent the week calling U.S. allies and traveling to the Middle East.
“The regime in Tehran must be held accountable through diplomatic isolation and economic pressure,” Mr. Pompeo said.
The U.S. military will develop plans to deploy a “moderate” number of troops and air and missile defenses to Saudi Arabia in response to the strikes, Secretary of Defense Mark Esper and Marine Gen. Joe Dunford, the chairman of the Joint Chiefs of Staff, said in a Friday night briefing at the Pentagon.
The deployment, which Mr. Esper described as “defensive in nature,” is intended to protect international commerce and buttress Saudi defenses, the Pentagon leaders said.
Gen. Dunford said the number of troops wouldn’t be in the thousands but stopped short of saying how many would deploy. The Wall Street Journal reported Thursday that the Pentagon was considering sending additional warplanes, air defense batteries and troops.
Saudi Arabia brought reporters to see the facilities damaged in the attacks as it sought to help rally international backing. Charred wreckage at the Khurais oil field, about 125 miles east of the Saudi capital Riyadh, was evidence of a carefully targeted strike. Missiles hit the field’s crucial stabilization towers, which extract crude from the ground and process it.
In Abqaiq, a desert town where Saudi national oil company Aramco processed 7 million barrels of oil a day, hundreds of workers scrambled to get the plant back on line. Officials said it took about seven hours to douse the fires there after the attack.
Iran’s leadership has rejected accusations Tehran is behind the attacks.
An attack on Saudi Aramco oil facilities has led to an escalation of tensions between the U.S. and Iran. While Houthi rebels in Yemen have claimed responsibility, the U.S. and Saudi Arabia are pointing to evidence Iran was involved. Here’s what we know so far.
Iran’s central bank had already been sanctioned by the administration, but Friday’s designation marks the first time a monetary authority has ever been blacklisted by the U.S. for ties to terror and is expected to further isolate the country both financially and politically.
The action is expected to squeeze Iran’s collapsing economy, which the administration says is meant to force Iran into abandoning its nuclear weapons and ballistic missile programs and curb its interventions in regional conflicts.
Iranian President Hassan Rouhani said Iran would defy the sanctions, Iran’s state TV reported, and threatened further breaches of the 2015 nuclear accord. The U.S. exited the deal last year before reimposing an economy-wide pressure campaign. Iran has in recent weeks enriched uranium beyond agreed levels, an act interpreted by Western officials as an implicit threat to rev up its nuclear weapons program.
“If their commitments is incomplete, so is ours,” Mr. Rouhani was quoted as saying in a cabinet meeting. “If it becomes necessary in the future, we will take other steps.”
The sanctions also hit the National Development Fund of Iran and Etemad Tejarate Pars Co., an Iranian firm controlled by the government.
The National Development Fund is estimated to be valued at $80 billion to $100 billion, with significant sums held in overseas accounts around the world, analysts say.
The sanctions will force foreign institutions to freeze those accounts and deny Iran access to their funds or risk facing U.S. sanctions themselves.
That money—as well as any central bank accounts outside Iran—is critical for Iran’s financing of the last vestiges of international trade keeping its economy on life support.
Iran’s central bank and the National Development Fund have been used by the regime to finance its proxies fighting in Lebanon, Syria, Iraq and Yemen rather than safeguarding the welfare of the Iranian people, Treasury Secretary Steven Mnuchin said.
“Treasury’s action targets a crucial funding mechanism that the Iranian regime uses to support its terrorist network, including the Quds Force, Hezbollah, and other militants that spread terror and destabilize the region,” said Mr. Mnuchin, whose department is responsible for executing the administration’s economy-wide “maximum pressure” campaign.
Iran’s Quds Force, an elite military unit within its Islamic Revolutionary Guard Corps, is responsible for financing, arming and directing Tehran’s proxies in regional conflicts, including Hezbollah.
Although the U.S. has provided special exceptions for humanitarian supplies, some fear the latest action could hit those imports. The sanctions “will likely eviscerate humanitarian trade with Iran,” said Ryan Costello, policy director of the National Iranian American Council.
The threat of losing access to U.S. markets has forced companies around the world to pull out of Iran and cut off financial ties, including by slashing exports of Iran’s crucial oil revenues and cutting Iran’s access to global banking infrastructure.
Some countries opposed to Washington’s decision to pull out of the nuclear accord and reimpose sanctions, including U.S. allies, have maintained financial ties with the Iranian government.
A terror-blacklisting, however, often makes targets international pariahs and support of such entities politically more unpalatable.
Technically, the sanctions freeze any assets the targets have in U.S. territory and prohibit any transactions by U.S.-based people, banks or companies. But more importantly, anyone found doing business with them also risks facing sanctions that could cut off their access to the U.S., the world’s most important financial market and biggest engine of the global economy.
Treasury said Iran’s central bank was involved in transferring hundreds of millions of dollars from the development fund to Iran’s Atomic Energy Organization and the Ministry of Defense Armed Forces Logistics, which is responsible for manufacturing ballistic missiles. The government planned to use Etemad Tejarate Pars Co. for military purchases, including from Russia, it said.
Iran has been tapping the National Development Fund, in collaboration with the central bank, to finance Quds Force operations over the last several years, Treasury officials said. As oil revenues plummeted in the wake of the sanctions, reliance on that sovereign-wealth fund has grown, with Tehran pulling out $4.8 billion in January to fund the Revolutionary Guard and the Islamic Republic of Iran Broadcasting, its media arm that Iran experts say is a key tool for spreading the regime’s propaganda.
By hitting the three institutions under terror powers, the associated stigma will deter future financing even if a new administration decides to reverse the Trump Iran policy and re-engage with Tehran, said Mark Dubowitz, chief executive of the Foundation for Defense of Democracies, a think tank that advocates for tougher sanctions against Iran.
As Tehran tries to access its newly sanctioned international accounts, it will expose any other hidden overseas accounts the intelligence community didn’t already know about, Mr. Dubowitz said.
Iran experts say the Trump administration’s sanctions campaign could fuel a political uprising that overturns the current regime and repositions Tehran into a government more amenable to Washington’s demands.
But others say the regime’s grip—secured by killing and torturing dissidents, and undermining previous sources of political power that have historically been able to challenge the government—is too secure.
—Rory Jones in Khurais, Saudi Arabia and Vivian Salama and Nancy A. Youssef in Washington contributed to this article.