Bush bans Iranian bank from doing business in U.S.

WASHINGTON – The Bush administration on Tuesday put more pressure on Iran, barring one of its largest state-owned banks from doing business with U.S. citizens, residents, banks or businesses because of its involvement in Iran’s nuclear program.

The Treasury Department’s designation of Bank Sepah as a “facilitator” in Iran’s nuclear program – the second such U.S. action in less than six months – will encourage banks across the globe to curtail lending to Iran. A lending squeeze would hit Iran’s vital oil sector particularly hard.

Bank Sepah, Iran’s fifth-largest state bank, provided financial services to two Iranian companies that are involved in developing missiles capable of delivering weapons of mass destruction, said Stuart Levey, the Treasury Department’s undersecretary for terrorism and financial intelligence.

The Iranian bank, Levey alleged, also facilitated business between Iran’s main aerospace company and North Korea’s chief missile-export agency.

“The financial relationship between Iran and North Korea, as represented by the business handled by Bank Sepah, is of great concern to the United States,” Levey said.

North Korea already has developed nuclear weapons, but Iran says it seeks nuclear know-how only for peaceful purposes.

The Treasury Department’s announcement came a day before President Bush is to announce his new plan for Iraq, and appeared to be further evidence that Bush will continue to pressure Iran rather than engaging it diplomatically, as the bipartisan Iraq Study Group recommended last year.

Secretary of State Condoleezza Rice spent more than six months trying to persuade the U.N. Security Council to adopt tough sanctions against Iran. But the council passed a weak resolution in December that had been watered down by Russia, which has extensive business interests in Iran.

A State Department official, who wasn’t authorized to speak publicly and did so on the condition of anonymity, said the Bush administration planned to pursue unilateral actions that don’t require further U.N. action.

The sanction of Bank Sepah affects not only its nearly 300 branchs in Iran but also the operations of a wholly owned subsidiary in Great Britain and Bank Sepah operations in Rome, Paris and Frankfurt, Germany. Treasury officials said Bank Sepah had assets of nearly $14 billion in 2005.

The Treasury Department designated Iran’s Bank Saderat as a financier of terrorism last September, and Tuesday’s action further isolates Iranian banks from the global financial community, cutting off finance sources for Iran’s oil sector.