WASHINGTON (AP) — Treasury Secretary Janet Yellen warned Tuesday of possible global economic damage from rising tensions in the Middle East, while the Biden administration said it was preparing new sanctions in response to Iran’s malign activity in the region.
Yellen spoke out against Iran’s “malign and destabilizing activity” in remarks ahead of the spring meetings of the International Monetary Fund and World Bank this week, saying Iran’s missile and drone attack on Israel “underlines the importance of the Treasury Department’s work to use our economic tools to counter Iran’s malign activities.”
She added: “From this weekend’s attack to the Houthi attacks in the Red Sea, Iran’s actions threaten the stability of the region and could cause economic spillovers.”
The Iranian attack on Israel early Sunday was in response to what was reportedly an Israeli attack on the Iranian consulate in Syria earlier this month. Israel’s military chief said Monday his country will respond to the attack as world leaders warn of retaliation in a bid to prevent a spiral of violence.
As the IMF and its fellow lending agency, the World Bank, hold their spring meetings this week, high on the agenda are rapidly rising tensions between Iran and Israel and what escalation it could mean for the global economy.
Meanwhile, White House National Security Advisor Jake Sullivan also said Tuesday that upcoming U.S. sanctions would target Iran’s missile and drone program and entities supporting the Islamic Revolutionary Guards Corps and Iran’s Defense Ministry.
“We expect our allies and partners will soon follow suit with their own sanctions,” Sullivan said in a statement. “Additionally, we continue to work through the Department of Defense and U.S. Central Command to further strengthen and expand the successful integration of air and missile defense and early warning systems across the Middle East to enhance the effectiveness of Iran’s missile and UAV further erode capabilities.”
Israel and Iran have been on a collision course during Israel’s six-month war against Hamas militants in Gaza. The war broke out after two Iranian-backed militant groups led an attack on October 7, killing 1,200 people in Israel and kidnapping 250 others. An Israeli offensive in Gaza has caused widespread destruction and killed more than 33,000 people, according to local health officials.
“Since the inception of the administration, we have targeted more than 500 individuals and entities linked to terrorism and terrorist financing by the Iranian regime and its allies,” Yellen said, citing sanctions on Iran’s drone and missile programs, militant groups Hamas, the Houthis, Hezbollah and other Iraqi militias.
Yellen said she expected the additional sanctions to be announced in the coming days.
The annual meeting will come as other ongoing conflicts, including Russia’s invasion of Ukraine, threaten global financial stability.
Yellen in February voiced her strongest public support yet for the idea of liquidating some $300 billion in frozen Russian Central Bank assets and using them for Ukraine’s long-term reconstruction.
She said Tuesday that the US “continues to work with our international partners to unlock the economic value of immobilized Russian state assets and ensure that Russia pays for the damage it has caused.” Yellen added that she will meet with the Group of Seven’s financial leaders on Wednesday to continue discussions on the issue and will look at “a range of options ranging from actually seizing the assets to use it as collateral.”
Another key topic for this year’s meetings on the U.S. side will be ongoing discussions about Chinese industrial policies that threaten U.S. jobs and the global economy, according to Yellen. She traveled to Guangzhou and Beijing earlier this month to have “difficult conversations” with colleagues about what she describes as China’s overcapacity in its wave of low-priced Chinese green technology exports that could overwhelm U.S. factories and make it impossible to to compete.
Yellen said she plans to meet with her Chinese counterparts later this week for a fourth meeting of the US-China Economic and Financial Working Groups, “to share information, identify potential areas of cooperation and, if we disagree, openly express our to express concerns.”
The U.S. Treasury Department and China’s Treasury Department have established economic working groups in an effort to reduce tensions and deepen ties between the nations.
