US mulls new regulations on dollars to help Tehran

Move seen significant

WASHINGTON, March 31, (AP): The Obama administration may soon tell foreign governments and banks they can start using the dollar in some instances to facilitate business with Iran, officials told The Associated Press, describing an arcane tweak to US financial rules that could prove significant for Tehran’s sanctions-battered economy.

While no decision is final, US officials familiar with internal discussions said the Treasury Department is considering issuing a general license that would permit offshore financial institutions to access dollars for foreign currency trades in support of legitimate business with Iran, a practice that is currently illegal.

Several restrictions would apply, but such a license would reverse a ban that has been in place for several years and one the administration had vowed to maintain while defending last year’s nuclear deal to skeptical US lawmakers and the public.

The United States and other world powers reached agreement with Iran last summer to give the Islamic Republic billions of dollars in sanctions relief in exchange for its promise to curtail programs that would allow it to develop nuclear weapons.

Because of its status as the world’s dominant currency, the dollar often is used in money conversions. For example: If the Iranians want to sell oil to India and be paid in euros instead of rupees, so they could more easily purchase European goods, the process commonly starts with the rupees being converted into dollars.

American sanctions block Iran from exchanging the money on its own. And Asian and European banks have steered clear of such transactions, fearful of US regulators who have levied billions of dollars in fines in recent years and threatened trans- gressors with a cutoff from the far more lucrative American market. Using dollars to make even a rupees-toeuros conversion, following that example, would still involve the money entering the US financial system, if only momentarily.

Dropping the prohibition would go a long way to meet Iran’s complaints that the West hasn’t sufficiently rewarded it for taking thousands of uranium-spinning centrifuges offline, exporting its stockpile of the bombmaking material and disabling a facility that would have been able to produce weapons-grade plutonium. But it surely would prompt intense opposition from critics of last July’s nuclear accord.

If approved, the new guidance would allow dollars to be used in currency exchanges as long as no Iranian banks are involved, according to the officials, who weren’t authorized to speak publicly on the matter and demanded anonymity. No Iranian rials can enter into the transaction, and the payment wouldn’t be able to start or end with American dollars. The ban would still apply if the final payment is intended for an Iranian individual or business on a US sanctions blacklist.

The administration has hinted the US could introduce new sanctions concessions, but has confirmed nothing.

In a speech Wednesday, Treasury Secretary Jack Lew lauded Iran for accepting the nuclear deal to achieve its goal of ending Western sanctions. “Since Iran has kept its end of the deal, it is our responsibility to uphold ours, in both letter and spirit,” he told the Carnegie Endowment for International Peace.

Lew warned that “sanctions overreach” risked driving business away from the United States, hurting the US and global economy and empowering economic rivals.