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Banking sanctions tighten financial pressure on Iran

Move could deal blow to nation’s vital oil industry

BRUSSELS - Iran was largely cut off from global commerce Thursday after the company that handles worldwide financial transactions said it was severing ties with many Iranian banks to back EU sanctions against Tehran.

The action by the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, aims to enforce European Union sanctions discouraging Tehran from developing nuclear weapons.

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It will go a long way toward isolating Iran financially. The company is a banking hub crucial to oil, financial transactions and other trades and global financial transactions are impossible to conduct without using it.

Because of the company’s reach, its decision to cut off some 30 Iranian banks and subsidiaries could hinder not only Iran’s banking but also its lucrative crude oil industry. It could also possibly hurt Iranian households that depend on remittances from relatives living abroad.

“Disconnecting banks is an extraordinary and unprecedented step for SWIFT,’’ said Lazaro Campos, chief executive of the company. “It is a direct result of international and multilateral action to intensify financial sanctions against Iran.’’

In a statement, the company said the EU decision to impose sanctions “prohibits companies such as SWIFT to continue to provide specialized financial messaging services to EU-sanctioned banks’’ and “forces SWIFT to take action.’’

There was no immediate reaction from the Iranian government or the banks involved. Not all Iranian banks are subject to EU sanctions.

Although the move added no new sanctions, it aimed to maximize the impact of the EU sanctions already approved.

“It’s tightening the noose,’’ said Ali Ansari, an expert on the Middle East at the London-based Chatham House think tank. “It will just reinforce what’s already been happening.’’

And that, he said, is increasing Iran’s isolation and difficulty in conducting trade and commerce.

In a statement, the European Council - which is made up of the government leaders of the 27 European Union countries - said it had “developed the application’’ of its restrictive measures against Iran.

In addition to sanctioning Iranian officials and freezing the assets of certain companies, the European Union plans to institute an embargo on the import of Iranian oil in July - an attempt to choke off funding for Iran’s nuclear program.

The EU sanctions are aimed at forcing Iran to demonstrate to the international community that it is not trying to develop nuclear weapons. Iran says that its nuclear program is for peaceful purposes only, but officials in many other countries - including the United States and Israel - believe otherwise.

Washington and allies Britain, France, and Germany have sought a tough approach toward Iran over the nuclear issue but have run into resistance from Russia and China.

Russia, China, and the four Western nations have agreed to meet with Iran in another effort to seek a negotiated solution, but East-West disagreements within the group are greater than ever.

A previous series of talks between the six and Iran ended in failure, the last one more than a year ago in Istanbul, Turkey.

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