Yesterday the UK's sanctions against Iran were broadened to take in draconian financial sanctions - cutting off all ties with Iranian banks.
So why have we taken this step and what does it mean?
Story so far...
Sanctions against Iran have been in place in one form or another since the 1970s, when the American Embassy was seized in Tehran and the US froze up to $10 billion in Iranian assets. Since then there has been a gradual increase in sanctions by various nations and in 2006 the UN passed a resolution imposing sanctions against the supply of nuclear-related materials, or doing business with individuals and companies related to the programme.
Various nations have taken specific steps since then. The UN sanctions are based around cutting off the nuclear programme, while those in the US are much broader, encouraging businesses to halt all trade with the state entirely. In the EU, meanwhile, there are restrictions in foreign trade, financial services, energy sectors and technologies.
Broadening sanctionsThe UK yesterday announced it would be stepping up sanctions dramatically as the result of the International Atomic Energy Agency's (IAEA) latest report on Iran. The Foreign Secretary, William Hague, said: "The IAEA's report last week provided further credible and detailed evidence about the possible military dimensions of the Iranian nuclear programme. Today we have responded resolutely by introducing a set of new sanctions that prohibit all business with Iranian banks.
George Osborne added:"We believe that the Iranian regime's actions pose a significant threat to the UK's national security and the international community. Today's announcement is a further step to preventing the Iranian regime from acquiring nuclear weapons."
This announcement came alongside separate ones from the US and Canada strengthening sanctions in those territories. However, they are unlikely to be augmented by further UN resolutions, as it is expected China and Russia would block any efforts to do so.
What it meansThis is the first time that the UK has used these powers to cut an entire country's banking sector off from our financial sector. This underlines the severity of the Government's concerns about Iran's activities.
It means no UK bank can carry on any business relationship or any transaction with any Iranian bank, including the Central Bank of Iran. It is likely to have a massive and immediate effect, as two of the world's biggest global service banks will cut off services, leaving only two major world players - both of whom are also tied to the UK. It means it will be tremendously difficult for Iranian individuals and businesses to gain access to global banking services.
But will it affect the UK? It will certainly have a big impact on businesses who carry out work within the territory. The increasing severity of sanctions has made this more and more difficult, Those who are owed money on transactions may even find they are unable to collect their debts for fear of breaking the sanctions.
However, for the rest of us, this is unlikely to have a significant impact on either the banks involved or their customers.
Wider worldTo put this in context, while this is the most dramatic of all the banking sanctions, Iran is far from the only regime to be cut off in one form or another. We are currently imposing sanctions on:
Democratic Republic of the Congo
There are also sanctions on individuals in Egypt, the former Yugoslavia, Belarus, Liberia, Syria and the Republic of Guinea.
International companies are therefore used to adapting to deal with sanctions. The question is what effect it will have in the long term in Iran.