The Trump administration has blacklisted virtually all of Iran’s financial sector, dealing another blow to an economy that is already reeling under U.S. sanctions. The move will deepen tensions with European nations and others over Iran.

Thursday’s move hits 18 Iranian banks that had thus far escaped the bulk of re-imposed U.S. sanctions and, more importantly, subjects foreign, non-Iranian financial institutions to penalties for doing business with them. Thus, it effectively cuts them off from the international financial system.

“Today’s action to identify the financial sector and sanction eighteen major Iranian banks reflects our commitment to stop illicit access to U.S. dollars,” said Treasury Secretary Steven Mnuchin. “Our sanctions programs will continue until Iran stops its support of terrorist activities and ends its nuclear programs. Today’s actions will continue to allow for humanitarian transactions to support the Iranian people.”

The action targets 16 Iranian banks for their role in the country’s financial sector, one bank for being owned or controlled by a another sanctioned Iranian bank and one military-affiliated bank, Treasury said in a statement. Some of them had been covered by previous designations but Thursday’s move places them all under the same authority covering Iran’s entire financial sector.

The targeted banks are the Amin Investment Bank, Bank Keshavarzi Iran, Bank Maskan, Bank Refah Kargaran, Bank-e Shahr, Eghtesad Novin Bank, Gharzolhasaneh Resalat Bank, Hekmat Iranian Bank, Iran Zamin Bank, Karafarin Bank, Khavarmianeh Bank, Mehr Iran Credit Union Bank, Pasargad Bank, Saman Bank, Sarmayeh Bank, Tosee Taavon Bank, Tourism Bank and Islamic Regional Cooperation Bank.

Foreign companies that do business with those banks were given 45 days to wind down their operations before facing so-called “secondary sanctions.”

European nations have opposed the blanket financial services blacklisting because it will open up their biggest banks and and other companies to U.S. penalties for conducting business with Iran that had previously been allowed.

The move comes as the U.S. has stepped up efforts to kill the 2015 Iran nuclear deal that President Donald Trump withdrew from in 2018. Since then, Trump has steadily increased pressure on Iran by imposing sanctions on its oil sales, blacklisting top government officials and killing a top general in an airstrike.

Last month, the administration unilaterally announced that it had restored all international sanctions against Iran that had been eased or lifted under the nuclear deal. And, having been ridiculed by most members of the U.N. Security Council for claiming to have retained the right to restore international sanctions despite no longer being a member of the deal, the administration has continued to seek to boost its leverage with Iran.

While almost the entire rest of the world, which has an interest in preserving the deal, has vowed to ignore those sanctions, violating them will come with significant risk of losing access to the U.S. financial system. Some believe that Thursday’s action could destroy any chance of salvaging the accord by making it impossible for Iranian banks to have any relationships with their foreign counterparts.

Critics say the sanctions will further cut off Iran’s ability to import humanitarian goods that are especially needed during the coronavirus pandemic, although U.S. officials insist there are carve-outs for legitimate items such as food and medicine. Relief organizations and others, however, say the exemptions still starve the Iranian people of essentials.

Thursday’s decision, which was first reported by The Washington Post, follows months of internal administration debate about the best way to proceed with Iran, particularly as Trump faces a difficult reelection challenge against former Vice President Joe Biden, who has said he wants to return to the nuclear deal.

Until Wednesday, the Treasury Department had opposed the step, arguing that it would adversely affect U.S. relationships with Europe. However, Iran hawks in Congress and outside the government have long sought the cut-off.

(AP)