Sanctions have failed to curb Iran's nuclear ambitions, says Treasury official

Obama administration officials acknowledged Tuesday that sanctions against Iran have so far failed to change the country's leaders' approach to nuclear development. 

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But the administration is nonetheless ramping up its targeting of the Iranian economy and government officials, hopeful that continued efforts are forcing a paradigm shift among its Supreme leader. 

"We have not yet achieved the objective, which is to change the Iranian government's calculus," David Cohen, the Treasury Department's under secretary for terrorism and financial intelligence, said Tuesday in testimony before the Senate Banking Committee.

Cohen's comments come as Iranians prepare to vote on June 14 in elections to replace President Mahmoud Ahmadinejad. 

The election is dominated by hardline candidates loyal to Iran's supreme leader, Ayatollah Ali Khamenei, who ultimately controls the country's nuclear program. 

As such, it "seems unlikely" that the election will lead to a change in Iran's nuclear policy, said Sen. Tim Johnson (D-S.D.), chairman of the Banking Committee. 

International sanctions to force Iran's leadership to halt its nuclear program, cease human rights violations and stop supporting the regime of Bashar Assad and the terrorist organization Hezbollah have had a significant impact on the country's economy. 

The measures have reduced the value of its currency by two-thirds, cut its crude oil exports in half and shrunk its GDP by up to 8 percent last year. 

While Iranian leaders have not budged on the country's nuclear program, Cohen said complaints by Iran's presidential candidates about the economy and other recent statements have convinced administration officials that global efforts have had "some impact" on the leaders' thinking. 

Hundreds of Iranian candidates, including those who may have been less supportive of Khamenei, have been prevented from running in recent weeks.

 The Obama administration has criticized those exclusions.

"While Iran's Supreme Leader called for an 'epic election' to demonstrate Iran's strengths, instead we've witnessed a process that appears to be unfair, unjust and unrepresentative of the Iranian people who deserve better from their leaders and from their government," said Wendy Sherman, under secretary for political affairs at the State Department.

Sen. Mike Crapo (Idaho), the top Republican on the committee, agreed that the new president "is destined to continue the longstanding policies of the Ayatollah and the powers in Tehran."

In recent weeks, the Obama administration has beefed up its pressure on Iran, both through heightened sanctions and efforts to help Iranian citizens evade government censorship.  

On Tuesday, the Treasury Department unveiled new sanctions targeting 37 businesses controlled by Iran's leadership. 

According to the department, the companies are fronts that have pulled in 10s of billions of dollars for the government. 

"It is our hope that in exposing this network of front companies that generate enormous profits for the Iranian regime and operates under the direction of the supreme leader's office, that we will advance our efforts to gain the attention of those who hold the nuclear file," said Cohen.

President Obama signed an executive order on Monday to target the country's currency, the rial, in international markets, and last week issued a general license to allow expors of cellphones, laptops and other communications devices to Iran. 

Under Monday's action, foreign banks and money exchangers have until July 1 to holding and dealing with large quantities of Iran's currency,or else risk being shut out of the U.S. financial market. 

That effort is intended both to make the rial worthless outside of Iran as well as to further devalue it when institutions dump the currency before the July 1 deadline, Cohen said Tuesday.

On Wednesday, the State Department is scheduled to issue exemptions for countries that still purchase Iranian oil but have significantly reduced those imports. Countries that import Iranian crude oil but are not granted an exception could have their financial institutions cut out of the American financial market. 

There are six main importers of Iranian oil, led by China, the global leader.

President Obama will bring up Chinese engagement with Iran when he meets with President Xi Jinping in California on Friday, officials declared.

Despite the targeting of Iran's oil sector, the administration is hesitant to eliminate all global imports of Iranian oil. 

"We all would like all of Iran's oil to go, but it is not in our interest to have any of those six economies tank in the process, because we're all mutually dependent on each other," said Sherman.