US Treasury Secretary Janet Yellen said the Biden administration hasn’t ruled out new sanctions against Iran in relation to renewed conflict in the Middle East, but no decisions have been made.
“I wouldn’t take anything off the table in terms of future possible actions, but I certainly don’t want to get ahead of where we are now,” Yellen said during a press conference in Marrakech, Morocco.
Following the surprise Oct. 7 attack on Israel by Hamas militants, for which Iran has voiced its approval, speculation has grown over whether the US would tighten its restrictions on Iranian oil exports.
Speaking to reporters at the annual meetings for the International Monetary Fund and World Bank, Yellen rejected a widely held notion that the US had gradually relaxed some enforcement of sanctions on Iranian oil sales as part of a wider efforts at a diplomatic rapprochement.Play Video
“We have not in any way relaxed our sanctions on Iranian oil,” she said, adding the US constantly reviews new information that could justify a tightening of sanctions. “We will continue to do that.”
More than 2,000 people have reportedly been killed since the start of the worst attack on Israel in decades. Israeli forces have since been battling to retake captured territory and signs are mounting it’s preparing for a ground invasion of Gaza.
Economic Threat
The conflict and the reaction from financial markets adds another threat to a fragile global economy, which is still recovering from the Covid-19 pandemic and fallout from Russia’s invasion of Ukraine.
Uncertainty in the oil market has put traders on edge for signs that Iran, a supporter of Hamas, was directly involved in the attack. Iran has denied involvement and the White House has no confirmation the nation directed the assault.
Yellen’s remarks on Iran came in response to a question about $6 billion in Iranian oil sale proceeds that had been frozen but recently made available to Tehran.
“Those are funds that are sitting in Qatar were made available purely for humanitarian purposes,” she said. “Those funds have not been touched.”
Yellen downplayed concerns over the conflict’s potential to upend the global economy.
“We’re monitoring potential economic impacts from the crisis, but I’m not really thinking of that as a major likely driver of the global economic outlook,” she said.
Soft Landing
The Treasury chief continued to sound an upbeat note on the US economy.
“I still see as the base case for the United States a so-called soft landing,” she said, referring to the scenario in which inflation abates without a significant rise in unemployment.
While low unemployment continues, she said wage pressures that risked prolonging high inflation had eased and inflation, itself, was diminishing.
“Are there risks to this outcome? Of course there are and global shocks are among them,” she said. “Of course, the situation in Israel poses additional concerns.”
Yellen deflected a question about whether partisan squabbles in Washington were undermining her ability to make credible financial promises on behalf of the Biden administration.
‘Top Priorities’
“Funding for Ukraine, both military and direct budget support, along with resources for Israel, are absolute top priorities of the Biden administration,” she said.
“We’ve made that completely clear to Congress and we believe there is substantial bipartisan support,” she added. “We’re going to leave it to members of Congress to figure out how to move forward on the promises once a speaker is in place.”
Doubt has been cast upon US pledges of continued support for Ukraine after Representative Kevin McCarthy was ousted by members of his own party as House speaker, giving Republican hardliners an opening to stall the next round of aid to Kyiv.
She also said she’s receiving “some positive responses” to her appeal to other governments to follow the US lead in promising more funds for the World Bank to increase its lending capacity.
(Updates with additional Yellen comments from fifth paragraph.)
–With assistance from Rob Verdonck.