OREANDA-NEWS. US Senate Republicans are considering legislation to prevent Iran from indirectly accessing the US financial system, in a bid to codify a policy the US Treasury has enforced since November 2008.

The legislative action, announced today by Senate Foreign Relations Committee chairman Bob Corker (R-Tennessee), would prevent President Barack Obama's administration from relaxing an existing ban on the use of dollar-denominated transactions by Iranian entities.

Obama on 1 April ruled out a major change on allowing Iran's use of US banks but said his administration will assure European and other banks that they can do business with Iran so that country can take full advantage of the lifting of nuclear-related sanctions. The US Treasury is working with its counterparts in Europe, Russia and China to make sure that companies interested in doing business with Iran understand which sanctions the US has lifted. But the State Department said today that the outreach efforts have focused on making sure Iran can fully access the more than $100bn of US dollar-denominated reserves frozen in foreign banks as a result of the nuclear-related sanctions.

The different messages on the possible sanctions relief coming from different US government agencies justify the need for legislation to maintain banking sanctions on Iran, Corker said today at a hearing. Committee ranking member Ben Cardin (D-Maryland) said he would oppose any bill aiming to derail the nuclear deal with Iran.

The US as part of the deal agreed not to disrupt the normal functioning of the Iranian banking system. Obama has justified his willingness to meet Iranian concerns about access to the international financial system by the need to help the people of Iran and to strengthen the hand of Iranian president Hassan Rohani, who has invested political capital to implement the nuclear deal.

"There are hardliners inside of Iran who don't want to see Iran open itself up to the broader world community and are doing things to potentially undermine the deal," Obama said. He referenced Iran's ballistic missile tests and destabilizing activities in the region, saying they would prevent foreign businesses from coming to Iran.

The US Treasury is not likely to allow the so-called "u-turn transactions," or US dollar transactions by foreign banks on behalf of Iranian institutions. But the administration is keen to at least hold out the prospect of an indirect access to the US financial system to Iran, as an incentive to change its foreign policy behavior.

US State Department undersecretary Thomas Shannon at a US Foreign Relations Committee hearing today asked the senators not to act quickly to extend the long-standing Iran Sanctions Act that will expire on 31 December. "We should begin to understand how Iran implements its [nuclear deal] commitments and it will determine what the Iran Sanctions Act should look like," Shannon said.

Iran since mid-January has raised its crude and condensate exports to more than 2mn b/d but will require 6-12 months to boost exports to the pre-sanctions level of 2.5mn b/d, deputy foreign minister Abbas Araqchi said on 4 April.