By Ian Talley and Rebecca Ballhaus
WASHINGTON -- The U.S. said it would send military forces and
hardware to Gulf allies and moved to sever some of Iran's last ties
to world markets on Friday, while preparing to outline a case for
international action next week when world leaders gather at the
United Nations.
The sanctions on Iran's central bank and two other major state
financial institutions were punishment for attacks on critical oil
supplies in Saudi Arabia. They came as the administration sought to
steer clear of a military response, instead bolstering
administration efforts to persuade the U.N. and European allies to
join its sanctions campaign.
"It's going to hell," President Trump said, referring to Iran's
economy. "All they have to do is stop with the terror."
Mr. Trump plans to air accusations of Iranian violence in
meetings with world leaders throughout the week, a senior
administration official said, adding Iran will be a top theme of
the annual U.N. General Assembly gathering.
Mr. Trump is hoping to build an international coalition to
pressure Iran, using last weekend's cruise missile and drone
strikes against a Saudi oil field and refinery as fresh evidence of
Tehran's wrongdoing. He will be accompanied at the U.N. by
Secretary of State Mike Pompeo, who has spent the week calling U.S.
allies and traveling to the Middle East.
"The regime in Tehran must be held accountable through
diplomatic isolation and economic pressure," Mr. Pompeo said.
The U.S. military will develop plans to deploy a "moderate"
number of troops and air and missile defenses to Saudi Arabia in
response to the strikes, Secretary of Defense Mark Esper and Marine
Gen. Joe Dunford, the chairman of the Joint Chiefs of Staff, said
in a Friday night briefing at the Pentagon.
The deployment, which Mr. Esper described as "defensive in
nature," is intended to protect international commerce and buttress
Saudi defenses, the Pentagon leaders said.
Gen. Dunford said the number of troops wouldn't be in the
thousands but stopped short of saying how many would deploy. The
Wall Street Journal reported Thursday that the Pentagon was
considering sending additional warplanes, air defense batteries and
troops.
Saudi Arabia brought reporters to see the facilities damaged in
the attacks as it sought to help rally international backing.
Charred wreckage at the Khurais oil field, about 125 miles east of
the Saudi capital Riyadh, was evidence of a carefully targeted
strike. Missiles hit the field's crucial stabilization towers,
which extract crude from the ground and process it.
In Abqaiq, a desert town where Saudi national oil company Aramco
processed 7 million barrels of oil a day, hundreds of workers
scrambled to get the plant back on line. Officials said it took
about seven hours to douse the fires there after the attack.
Iran's leadership has rejected accusations Tehran is behind the
attacks.
Iran's central bank had already been sanctioned by the
administration, but Friday's designation marks the first time a
monetary authority has ever been blacklisted by the U.S. for ties
to terror and is expected to further isolate the country both
financially and politically.
The action is expected to squeeze Iran's collapsing economy,
which the administration says is meant to force Iran into
abandoning its nuclear weapons and ballistic missile programs and
curb its interventions in regional conflicts.
Iranian President Hassan Rouhani said Iran would defy the
sanctions, Iran's state TV reported, and threatened further
breaches of the 2015 nuclear accord. The U.S. exited the deal last
year before reimposing an economy-wide pressure campaign. Iran has
in recent weeks enriched uranium beyond agreed levels, an act
interpreted by Western officials as an implicit threat to rev up
its nuclear weapons program.
"If their commitments is incomplete, so is ours," Mr. Rouhani
was quoted as saying in a cabinet meeting. "If it becomes necessary
in the future, we will take other steps."
The sanctions also hit the National Development Fund of Iran and
Etemad Tejarate Pars Co., an Iranian firm controlled by the
government.
The National Development Fund is estimated to be valued at $80
billion to $100 billion, with significant sums held in overseas
accounts around the world, analysts say.
The sanctions will force foreign institutions to freeze those
accounts and deny Iran access to their funds or risk facing U.S.
sanctions themselves.
That money -- as well as any central bank accounts outside Iran
-- is critical for Iran's financing of the last vestiges of
international trade keeping its economy on life support.
Iran's central bank and the National Development Fund have been
used by the regime to finance its proxies fighting in Lebanon,
Syria, Iraq and Yemen rather than safeguarding the welfare of the
Iranian people, Treasury Secretary Steven Mnuchin said.
"Treasury's action targets a crucial funding mechanism that the
Iranian regime uses to support its terrorist network, including the
Quds Force, Hezbollah, and other militants that spread terror and
destabilize the region," said Mr. Mnuchin, whose department is
responsible for executing the administration's economy-wide
"maximum pressure" campaign.
Iran's Quds Force, an elite military unit within its Islamic
Revolutionary Guard Corps, is responsible for financing, arming and
directing Tehran's proxies in regional conflicts, including
Hezbollah.
Although the U.S. has provided special exceptions for
humanitarian supplies, some fear the latest action could hit those
imports. The sanctions "will likely eviscerate humanitarian trade
with Iran," said Ryan Costello, policy director of the National
Iranian American Council.
The threat of losing access to U.S. markets has forced companies
around the world to pull out of Iran and cut off financial ties,
including by slashing exports of Iran's crucial oil revenues and
cutting Iran's access to global banking infrastructure.
Some countries opposed to Washington's decision to pull out of
the nuclear accord and reimpose sanctions, including U.S. allies,
have maintained financial ties with the Iranian government.
A terror-blacklisting, however, often makes targets
international pariahs and support of such entities politically more
unpalatable.
Technically, the sanctions freeze any assets the targets have in
U.S. territory and prohibit any transactions by U.S.-based people,
banks or companies. But more importantly, anyone found doing
business with them also risks facing sanctions that could cut off
their access to the U.S., the world's most important financial
market and biggest engine of the global economy.
Treasury said Iran's central bank was involved in transferring
hundreds of millions of dollars from the development fund to Iran's
Atomic Energy Organization and the Ministry of Defense Armed Forces
Logistics, which is responsible for manufacturing ballistic
missiles. The government planned to use Etemad Tejarate Pars Co.
for military purchases, including from Russia, it said.
Iran has been tapping the National Development Fund, in
collaboration with the central bank, to finance Quds Force
operations over the last several years, Treasury officials said. As
oil revenues plummeted in the wake of the sanctions, reliance on
that sovereign-wealth fund has grown, with Tehran pulling out $4.8
billion in January to fund the Revolutionary Guard and the Islamic
Republic of Iran Broadcasting, its media arm that Iran experts say
is a key tool for spreading the regime's propaganda.
By hitting the three institutions under terror powers, the
associated stigma will deter future financing even if a new
administration decides to reverse the Trump Iran policy and
re-engage with Tehran, said Mark Dubowitz, chief executive of the
Foundation for Defense of Democracies, a think tank that advocates
for tougher sanctions against Iran.
As Tehran tries to access its newly sanctioned international
accounts, it will expose any other hidden overseas accounts the
intelligence community didn't already know about, Mr. Dubowitz
said.
Iran experts say the Trump administration's sanctions campaign
could fuel a political uprising that overturns the current regime
and repositions Tehran into a government more amenable to
Washington's demands.
But others say the regime's grip -- secured by killing and
torturing dissidents, and undermining previous sources of political
power that have historically been able to challenge the government
-- is too secure.
--Rory Jones in Khurais, Saudi Arabia and Vivian Salama and
Nancy A. Youssef in Washington contributed to this article.
Write to Ian Talley at ian.talley@wsj.com and Rebecca Ballhaus
at Rebecca.Ballhaus@wsj.com
(END) Dow Jones Newswires
September 20, 2019 19:59 ET (23:59 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.