Steven Mnuchin Presses Allies to Tighten Iran Sanctions

By Ian Talley Features Dow Jones Newswires

The Trump administration wants to work with Washington's allies to ramp up sanctions on Iran, U.S. Treasury Secretary Steven Mnuchin said in an interview Monday, but he stopped short of calling for special action against firms conducting business with Iran's military corps, which the administration has targeted for added scrutiny.

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In high-level meetings this past week in Saudi Arabia, Israel, the United Arab Emirates and Qatar, Mr. Mnuchin tried to ratchet up the pressure on Iran and crack down on terror financing in the region.

The Trump administration's threats to pull out of a landmark 2015 nuclear deal with Iran and an escalating U.S. sanctions regime against Tehran have rattled allies. Many fear Washington's new Iran policy could encourage the Persian nation to pull out of the nuclear accord, entangling Western and Middle Eastern companies doing business with the country in a new round of punitive actions.

Earlier this month, President Donald Trump vowed to end U.S. participation in the nuclear deal unless Congress and U.S. allies are able to deliver on new measures targeting Tehran's expanding missile program, its support for regional militant groups and any future nuclear activities.

One question hanging over many companies and their governments is how aggressive the Treasury plans to be in penalizing firms that have ties to sanctioned Iranian entities, especially the Islamic Revolutionary Guard Corps. Over the past decade, the IRGC has taken over swaths of the country's economy, including oil, finance, telecoms and construction.

"Right now we are really focused on our allies working with us on sanctioning the activities that are outside" the nuclear deal, Mr. Mnuchin said in an interview after a weeklong trip through the Middle East. Asked if the U.S. was prepared to go after companies in Europe, the Middle East and elsewhere that have business ties to Iran, the secretary said, "It would premature for me to comment on that aspect."

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Still, the secretary signaled Washington's stance could change.

"At least for now, we're working with our European partners on the agreement and as it relates to items outside the deal, we have been and will be aggressively sanctioning those activities," he said.

In Israel, where the secretary met with Prime Minister Benjamin Netanyahu and several of his top finance and intelligence officials, Mr. Mnuchin said the U.S. would be taking aggressive actions against Hezbollah, a Lebanese Shiite militant group heavily funded by Iran.

"Hezbollah poses a threat across the Middle East and beyond and we must jointly use our authorities to disrupt its financiers and financial networks," he said in a speech hours before flying into Ben Gurion Airport outside Jerusalem.

Hezbollah is only one of several groups that Iran is supporting in opposition of U.S. strategic interests in the region. Analysts say the IRGC also supports and arms Hamas in the Gaza Strip, Houthi rebels in Yemen, and militants in Iraq and Syria.

"Everywhere we go, we send the message that Iran is a top priority for us and we want them to join us in squeezing them," said Sigal Mandelker, the Treasury's sanctions chief, who accompanied the secretary. For banks, firms and individuals, keeping ties to the sanctioned arms of the regime could expose them sanctions, she said.

In Doha, Mr. Mnuchin secured a commitment from Qatari officials to step up efforts to sanction entities financing terror in the country. The government agreed to substantially increase intelligence-sharing terrorist financiers in the region, he said, placing greater emphasis on charitable and money service sectors. While Qatar's minister of finance, Ali Shareef Al Emadi, said the country promised to bolster its efforts against Islamic State and al Qaeda and other terrorist groups, analysts say the real test will be the extent to which Qatar cracks down on the Sunni extremists operating within its borders.

Qatar is in the middle of a regional crisis, after Saudi Arabia, the U.A.E., and other Arab countries abruptly cut diplomatic ties with Qatar in June and imposed an economic blockade, citing Doha's ties to Islamist groups like the Muslim Brotherhood and alleged links to terror groups, which the country denies. That, say many analysts, is spurring Qatar to nurture ties with Iran, one of the few neighboring countries that has maintained commercial ties.

Some U.S. officials and analysts hope that the new Terror Finance Targeting Center, launched last week by Mr. Mnuchin in Riyadh, could provide a diplomatic bridge for Qatar to address some of its neighbors' concerns.

It is unclear, however, whether Doha will staff the new center and cooperate on joint designations of Sunni extremists with Saudi Arabia, the U.S. and the six other Middle East nations that agreed to launch the facility.

Write to Ian Talley at ian.talley@wsj.com

(END) Dow Jones Newswires

October 30, 2017 22:46 ET (02:46 GMT)