U.S. targets Iran’s drone production in retaliation for Israel attack

“Our actions make it more difficult and costly for Iran to continue its destabilizing behavior,” Yellen said in a statement. “We will continue to deploy our sanctions authorities to take further actions in the coming days and weeks. to confront Iran.”

The new sanctions, which the administration said earlier this week, appear to be aimed at easing rather than escalating tensions in the region, as President Joe Biden has sought to prevent hostilities in the Middle East from expanding. Some critics have urged the government to further sanction China for its large purchases of Iranian oil to reduce revenue for the Iranian government. The U.S. Treasury Department has taken some steps to sanction Chinese companies for such purchases, but a tougher crackdown could lead to higher global oil prices and, therefore, higher U.S. natural gas prices in an election year.

For now at least, the government appears to have largely avoided such an escalation. Instead, the administration’s sanctions on Thursday appeared to focus on targets inside Iran.

The sanctions cut off the targeting of banks and other financial institutions that use U.S. dollars. But it’s unclear how many Western companies are aiding Iran’s drone production, especially given that Iran’s economy is already minimally connected to Western economies such as the United States and its allies.

Rachel Zimba, an adjunct senior fellow at the Center for a New American Security, a foreign policy think tank, said Western countries have imposed sanctions on Iranian drones because of their use by Russian forces in Ukraine. “I think it’s more of the same,” she said. “This is not an escalation measure to try to curb energy revenue, and I doubt the names involved rely on a dollar nexus, which could limit its effectiveness.”

Even before the October 7 attack on Israel escalated regional tensions, Iran’s economy was already one of the most severely sanctioned in the world. The United States has imposed sanctions on Iran since 1979. After the Trump administration withdrew from the Iran nuclear agreement reached by the Obama administration in 2018, economic pressure escalated significantly.

The latest sanctions target 16 people and two companies that support Iran’s drone production. Five companies that supply materials to Iranian steelmaker Khouzestan Steel Co. were also sanctioned. The U.S. Treasury Department also imposed sanctions on three subsidiaries of an Iranian automaker accused of supporting the regime.

Over the weekend, Iran sent more than 300 drones and missiles to Israel in response to Israel’s deadly attack on the Iranian consulate in Syria. The Iranian attack did not cause significant damage or casualties, as Israeli, U.S. and other forces intercepted most of the artillery fire.