The U.S. lawmakers are considering expanding the economic sanctions on Iran in the wake of the near-collapse of the Iranian currency, which senior Iranian clerics called a consequence of an American-led conspiracy to wage an economic war on Tehran.
Democratic Senator Robert Menendez, a member of the Senate Banking and Foreign Relations Committees, said he was planning to propose new penalties on foreign banks that handle any significant transactions with the central bank of Iran, Reuters has reported. Only oil-related transactions are covered under the already existing sanctions.
Menendez said he was also focusing on ways to freeze an estimated 30 percent of Iran's foreign currency reserves in banks outside the country.
"It seems to me we have to completely exhausted all the tools in our sanctions arsenal, and do so quickly, before Iran finds a way to navigate out of its current crisis," Menendez told Reuters in an interview.
Iran's national currency, the rial, fell as much as 18 percent Monday to a record low against the U.S. dollar, news agencies reported.
It dropped to as much as 35,000 to the dollar, according to agencies citing currency exchange sites in the country.
The currency has reportedly lost 80 percent of its value since the end of 2011, BBC reported.
The plunging currency indicates that the international sanctions imposed over Iran’s alleged nuclear weapons program have taken a toll on its economy.
Since the U.S. Congress will meet only after the Nov. 6 presidential election, any fresh proposals on sanctions will have to wait.
Speaking to reporters in Washington Wednesday, U.S. Department of State spokesperson Victoria Nuland said, “The economic sanctions that the international community has put on the (Iran) government as a result of its lack of forthcomingness on its nuclear program are having a profound impact on the ground and are being felt in what’s happening to the rial.”
Western nations had initially said that the sanctions were intended to hurt the government and not the people of Iran, but now admits to it having a wider impact.
Britain, France and Germany have called for more EU sanctions on Iran, though further U.N. sanctions may meet with stiff resistance from Russia and China.
Iranian President Mahmoud Ahmadinejad, in a televised speech Tuesday, urged people to stop selling the rial for dollars, which only heightened the public's anxiety. The police cracked down on currency traders and suspected speculators in Tehran Wednesday at the first outbreak of public anger over the plunging rial, news media reported. Hundreds of citizens took part in a march demanding relief while several merchants in Tehran’s main bazaar closed their shops in protest.
Meanwhile, U.N. chief Ban Ki-moon, in a report to the U.N. General Assembly released Friday, said international sanctions on Iran were having "significant" effects on the Iranian people and also appeared to be harming humanitarian operations in the country, Reuters reported.
"The sanctions imposed on the Islamic Republic of Iran have had significant effects on the general population, including an escalation in inflation, a rise in commodities and energy costs, an increase in the rate of unemployment and a shortage of necessary items, including medicine," Ban said in the report.
Gayathri writes about geopolitics and business for International Business Times. She began her career at the Times of India as news coordinator, before moving on to IBTimes...