The breadth of new US and UN sanctions on Iran has taken the regime by surprise, a senior US official told Congress Wednesday, days before talks with Tehran on its suspect nuclear program.

State Department and Treasury officials said the sanctions put in place this year have driven down Iran's nuclear weapons capability while choking its economy, notably its energy and shipping sectors, and leading to the regime's increasing isolation.

"What we are seeing thus far has been very dramatic," in terms of the effect of the tightened sanctions on Iran, US sanctions czar Stuart Levey told the foreign affairs committee of the House of Representatives.

"There are clear signs that the speed, scope and impact of sanctions have caught the Iranian regime by surprise," said Levey, the under secretary for terrorism and financial intelligence at the Treasury.

"With great regularity, major companies across a range of industries... are all announcing that they're curtailing their business dealings with Iran" and that Tehran is finding it increasingly difficult to conduct major transactions in dollars or euros, he said.

William Burns, the top US negotiator travelling to Geneva next week for the so-called P5+1 international talks with Iran on its nuclear program, said the new sanctions were "sharply" isolating Iran from the global financial system.

"Iran may be losing as much as 50 to 60 billion dollars in potential energy investments, along with the critical technology and know-how that comes with them," Burns said in his testimony.

And shipments of refined petroleum products to Iran plunged by some 85 percent from open sources since the new sanctions were implemented, he said.

The country's powerful Revolutionary Guards, believed to be at the heart of many of the country's key projects, are suffering as a growing number of international banks and companies have halted all activities with the elite unit, the officials said.

Levey cited an Iranian official who recently complained that when the Islamic republic's regime "finds a loophole" in the sanctions, US and international authorities shut it down.

Yet several lawmakers stressed that sanctions on Iran have not gone far enough.

"Since the 1990s, the US and international efforts to stop the growing Iranian threat have been half-hearted," the committee's ranking Republican Ileana Ros-Lehtinen said.

"Sanctions are not fully implemented or enforced."

In particular they pinpointed China, warning of its unfettered complicity in Tehran's pursuit of nuclear weapons, with some lawmakers calling on Washington to sanction Beijing for its involvement in the Iranian effort.

earlier related report
Iran ready for nuclear talks, but 'without concessions'
Kuwait City (AFP) Dec 1, 2010 - Iran is ready to negotiate its nuclear programme with Western powers, but will refuse to make any concessions, Foreign Minister Manouchehr Mottaki said on Wednesday.

"We support talks, negotiations and dialogue," Mottaki told a news conference in Kuwait City when asked about the resumption of talks on Tehran's sensitive nuclear programme.

"But this does not mean that we will make concessions or retreat from our principled position," he said ahead of the resumption of the talks after a one-year hiatus, and following a fresh set of UN sanctions against Iran.

The Geneva talks are aimed at allaying long-standing Western concerns that Iran's nuclear programme masks a weapons drive under the guise of a civilian programme, something Tehran denies.

"Developments in the international arena require negotiations and the Islamic republic is prepared to participate in those talks," said Mottaki.

"We hope to see a serious will for constructive talks... Undoubtedly, one of the issues to be discussed is the agenda" of talks, he added.

The United States, Europe and Israel fear that Iran wants to use nuclear technology to build a bomb but Tehran insists that its programme is a peaceful drive to produce civilian energy.

Iran is under four sets of UN sanctions over its refusal to suspend uranium enrichment, the sensitive process which can be used to make nuclear fuel or, in highly extended form, the fissile core of an atom bomb.

Mottaki said, however, the sanctions have in fact benefitted Iran.

He said that five years ago before the sanctions, Iran was importing 70 percent of spare parts for its key oil and gas sectors. Now, it is importing only 30 percent and manufacturing the rest.

Non-oil exports were worth just eight billion dollars before the sanctions, and today they are worth 30 billion dollars a year.

Mottaki added that foreign investment in Iran reached unprecedented levels last year, without providing any figures.

Sanctions notably ban investments in oil, gas and petrochemicals while also targeting banks, insurance, financial transactions and shipping -- all of which Tehran has brushed off as having no impact.