U.S. Easing up on Iran and Yuan

The U.S. has started to retreat from the severe sanctions it was trying to impose on Iran. Instead they are aiming diplomatically to soften the sanctions to gain Russia and China’s support. Among provisions removed from the original draft resolution the U.S. sent to key allies last month were sanctions aimed at choking off Tehran's access to international banking services and capital markets, and closing international airspace and waters to Iran's national air cargo and shipping lines, according to the people.

Secretary of State Hillary Clinton has been on a world tour trying to force Iran into shutting down its nuclear program. Iran maintains that the program is for energy purposes and not for developing atomic weapons. The U.K. and Germany convinced Mrs. Clinton and the Obama Administration that softening several elements of the proposal was the only way to find resolution with China and Russia on the U.N. Security Council.

The U.S. is looking for sanctions with bite. If the current resolution is passed, it would still target major power centers in Tehran, particularly the Islamic Revolutionary Guard Corps, the nation’s prime military force, and there would still be legal search and seizure of suspicious cargo bound for Iran. But the original U.S. draft would have demanded an overall ban on Iran airplanes and ships in U.N. territorial waters. Hurting Iran’s imports and exports, and primarily making it difficult to get supplies needed for weapons.

Russia has been contradictory in its statements about Iran. Prime Minister Putin announced opening a nuclear reactor with Iran just last week, but the country has also made statements about continuing the discussion and needing to limit Iran’s economic pull, as long as it does not effect Russia’s existing deal for nuclear energy. China will definitely be the most important nation. Beijing receives a large percentage of its oil from Iran and sanctions against Iran would be an inhibitor to China’s growing nation. However, the U.S. has countered that claim by saying that Saudi Arabia and United Arab Emirates will replace Iran’s oil sales.

In other news, Chinese and U.S. officials, facing rising tensions over Beijing's currency policy, struck a more conciliatory tone Wednesday, though they didn't offer immediate solutions for resolving their differences. The U.S. has commented recently that China has valued the yuan unnaturally low against the dollar and giving China an advantage in global business. Policy makers in the U.S. have called for China to revlaue its currency. Chinese officials have rejected this idea.

Treasury Secretary Timothy Geithner said that the U.S. "can't force them to make that change…I think we can work through the tough things we have together," Mr. Geithner said. The US Treasury must label and detect manipulative currency practices. Lawmakers have pointed fingers at China’s practices, claiming that the low value of the yuan keeps the U.S. from creating jobs and lowering the national deficit. Chinese officials have stated that U.S. unemployment issues have nothing to do with China, and they would evaluate the yuan based on China’s condition only.