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U.S. imposes economic sanctions on Iranian banks

WASHINGTON — The Bush administration sought to ratchet up the pressure on Iran on Thursday by slapping economic sanctions on the regime's banks and Revolutionary Guard.

"Iran exploits its global financial ties to pursue nuclear capabilities, to develop ballistic missiles and fund terrorism," said Treasury Secretary Henry Paulson, who announced the action together with Secretary of State Condoleezza Rice.

Rice said Iran is proceeding with efforts to develop a nuclear weapons capability and refused to negotiate with the international community. She also said it is supporting Shiite militants in Iraq and terrorists in Afghanistan, Lebanon and the Palestinian territories.

The sanctions target the Islamic Revolutionary Guard Corps and one of its arms, the Quds Force. They also target three of Iran's state-owned banks.

"What this means is that no U.S. citizen or private organization will be allowed to engage in financial transactions with these persons and entities," she said.

The administration stopped short of declaring the Revolutionary Guard a terrorist organization, a step that officials had discussed over the summer.

Peter Crail, a non-proliferation analyst with the Arms Control Association, said sanctions would do little to alter Iranian behavior. He added that in the past the Revolutionary Guard has created new front companies to play a "cat and mouse game" with sanctioning governments.

"It's increasing the pressure," Crail said. "But it's another minor, targeted step."

Paulson said Iran uses "deceptive financial practices" to evade international restrictions, and he called on the world's banks to be vigilant.

Rice and Paulson made their announcement as President Bush flew to California to view the wildfires.

Last week, Bush said other nations should be interested in blocking Iran from securing the means to make nuclear weapons if they want to prevent the prospect of "World War III." He also said he would prefer an international solution.

The potential prospect of military options against Iran is shadowing the 2008 presidential campaign.

Democratic candidates Barack Obama and John Edwards criticized front-runner Hillary Rodham Clinton for supporting a Senate resolution recommending that the State Department declare the Revolutionary Guard a terrorist organization.

Obama and Edwards said the resolution gives the Bush administration cover for a possible military strike against Iran. Clinton said it is part of an aggressive diplomacy that included both carrots and sticks.

Republican candidates have aggressively pledged to keep Iran from obtaining a nuclear weapon.

National Security Council spokesman Gordon Johndroe says there's no significance to the fact that Bush himself did not make the announcement. "It's State and Treasury action," he said

Matthew Levitt, an analyst with the Washington Institute for Near East Policy, said the new sanctions "are much needed" and will be effective because the United States is at the center of the international financial system.

Levitt, who directs the institute's Stein Program on Terrorism, Intelligence, and Policy, said sanctions are intended to create leverage on both Iran and U.S. allies.

"Multilateral action is always the primary desire, if for no other reason that it sends not only financial but political reverberations back to Iran," Levitt said.