January 24, 2011 / 10:24 PM / 9 years ago

UPDATE 1-Key Obama aide on Iran sanctions steps down

* Levey was holdover from Bush administration

* U.S. viewed efforts to put squeeze on Iran as success

* Levey’s deputy Cohen likely nominee to replace him (Adds reaction from Treasury’s Geithner; background)

By Caren Bohan and Glenn Somerville

WASHINGTON, Jan 24 (Reuters) - President Barack Obama’s point person on cracking down on financial flows to Iran resigned on Monday, marking the loss of a key player in the U.S. effort to pressure Tehran over its nuclear program.

The departure of Stuart Levey from his role as the Treasury Department’s under secretary for terrorism and financial intelligence comes as the United States and its allies appear likely to make a push for stiffer sanctions on Iran.

That could potentially mean an even bigger role for Levey’s successor.

A meeting in Istanbul over Iran’s nuclear program involving the major world powers and Iranian officials failed to yield any progress or an agreement to meet again. U.S. Secretary of State Hillary Clinton has raised the possibility of further increasing pressure on Iran.

Obama nominated Levey’s deputy, David Cohen, to replace him. Cohen will need to be confirmed by the Senate.

U.S. officials emphasized they did not think the staff change would stem the momentum for the drive to put the financial squeeze on Iran or to choke off access by militant groups to international sources of money.

“It will have no effect on policy, or on our ability to execute the president’s policy,” U.S. Treasury Secretary Timothy Geithner said. “David came to Treasury with well-established outside expertise and has worked at Stuart’s side for the last two years.”

Levey, a holdover from President George W. Bush’s administration, had built up personal relationships with officials in foreign capitals, and the Obama administration had viewed his efforts as highly successful.

LEVEY WAS ‘SINGLE-MINDED’ IN MISSION

In an interview with Reuters this month, Levey said he felt there was growing awareness among U.S. allies on the need to pinch Iran’s oil revenues to slow its bid to acquire nuclear weapons. He also said that cooperation in instituting sanctions was growing.

“He’s been single-minded in the task that he’s set out: stop all foreign entities from getting around the sanctions. He was tireless in that effort and he was largely successful,” Virginia Tech economics professor Djavad Salehi-Isfahani said of Levey.

But Salehi-Isfahani and some other experts were skeptical of whether U.S.-led sanctions would force a political shift that could lead Tehran to freeze its nuclear enrichment program.

Levy urged foreign banks and companies to comply with U.S. sanctions, raising the threat that they could jeopardize their ability to do business in the United States if they violated them. Many banks have cut all ties to Iran as a result.

That has accelerated since the United Nations Security Council toughened financial sanctions on Iran last year, requiring foreign countries to withhold financial services that could support nuclear, missile and terrorist financing efforts in Iran.

Iran insists its nuclear enrichment program is designed to generate electric power. The United States and its Western allies accuse it of seeking to acquire nuclear weapons.

Additional reporting by David Lawder; Writing by Caren Bohan and Glenn Somerville, editing by Stacey Joyce

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