Yellen says Iran attack could result in global “economic spillovers”

WASHINGTON » T reasury Secretary Janet Yellen warned Tuesday of potential global economic damage from rising tensions in t he M iddle East a nd pledged that the U. S. and its allies won’t hesitate to use their sanctions powers to address Iran’s “malign and destabilizing activity” in the region.

She made her remarks ahead of this week’s spring meetings o f the International Monetary Fund and World Bank, saying Iran’s weekend missile attack on Israel “underscores the importance of Treasury’s work to use our economic tools to counter Iran’s malign activity.”

She added: “From t his weekend’s attack t o the Houthi a ttacks i n the Red Sea, I ran’s actions threaten the region’s stability and could cause economic spillovers.”

Iran’s missile attack on Israel early Sunday came in response to what it says was an I sraeli s trike on Iran’s c onsulate i n Syria earlier this month. I srael’s m ilitary chief said Monday that his country will respond to the attack, while world l eaders c aution a gainst r etaliation, trying to avoid a spiral of violence.

As the IMF and its fellow lending agency, the World Bank, hold their spring meetings this week, high on the agenda are the fast- rising tensions between Iran and Israel and what escalation could spell for the global economy.

Israel a nd I ran have been on a collision course throughout I srael’s sixmonth war against Hamas in Gaza. The war erupted after groups b acked by Iran led an attack on Oct. 7 that killed 1,200 people in Israel and kidnapped 250 others. An Israeli offensive in Gaza has caused widespread devastation a nd killed more than 3 3,000 people, according to local health officials.

“We’ve t argeted over 500 individuals and entities connected to terrorism and terrorist financing by the Iranian regime and its proxies since the start of the Administration,” Yellen said, citing sanctions against Iran’s d rone and missile programs, groups Hamas, the Houthis, Hezbollah, and other Iraqi militia groups.

“Treasury will not hesitate to work with our allies to use our sanctions authority to continue disrupting the Iranian regime’s malign and destabilizing activity,” she said. “I fully expect we will take additional s anctions a ctions against Iran i n the coming days.”

The annual g athering will t ake place as o ther ongoing conflicts, including Russia’s i nvasion of Ukraine, t hreaten global financial stability.

Yellen i n February o ffered her strongest public support yet for the idea of liquidating roughly $ 300 billion in f rozen Russian Central Bank a ssets and using them for Ukraine’s long- term reconstruction.

She said Tuesday t hat the U. S. is “continuing to work w ith our international partners to unlock the economic value of immobilized Russian sovereign assets and ensure that Russia pays for the damage it has caused.” Yellen added that she will meet with G roup o f Seven finance leaders Wednesday to c ontinue discussions on the topic and will look at “a series of possibilities, ranging from actually seizing the assets to using them as collateral.”

Another major issue for this year’s meetings on the U. S. side, Yellen said, will be ongoing conversations about Chinese industrial policy that poses a threat to U. S. jobs and the global economy.

She traveled to Guangzhou a nd B eijing e arlier this month, to hold “difficult conversations” with counterparts o ver what she describes as C hina’s overcapacity in its wave of low- priced Chinese green tech e xports t hat could overwhelm factories in the U. S. and make it impossible to compete.

Yellen said she plans to meet later this week with her Chinese counterparts for a fourth meeting of the U. S.- China Economic and Financial Working Groups, “to share information, identify potential areas of cooperation, and, when we disagree, frankly communicate concerns.”

U. S. Treasury and China’s Ministry of F inance launched the e conomic working groups i n an effort t o ease tensions and deepen t ies between the nations.