Treasury Secretary Janet L. Yellen said on Wednesday that the Israel-Gaza war represents a new concern for the global economy and signaled that additional U.S. sanctions could be coming in response to the attack on Israel by Hamas.
Ms. Yellen offered a forceful defense of Israel while pushing back on the notion that U.S. sanctions against Iran — a key backer of Hamas — have become too lenient. As the Biden administration faces pressure to respond to the crisis, Ms. Yellen said that the Treasury Department continues to review its sanctions on Iran, Hamas and Hezbollah, the Lebanese militant group that is also a longtime adversary of Israel.
“We have not in any way relaxed our sanctions on Iranian oil,” Ms. Yellen said at a news conference on the sidelines of the annual meetings of the International Monetary Fund and the World Bank in Marrakesh, Morocco. “We have sanctions on Hamas, on Hezbollah, and this is something that we have been constantly looking at and using information as it becomes available to tighten sanctions.”
She added: “We will continue to do that.”
The Treasury secretary also did not rule out the possibility of reversing a decision made last month to unfreeze $6 billion of Iranian funds in exchange for the release of American hostages if it is determined that Iran was involved in the attack by Hamas.
At the time of the exchange, the United States informed Iran that it had transferred about $6 billion in Iranian oil revenue from South Korea to a Qatari bank account. The money is only supposed to be allowed to be used for food, medicine and other humanitarian goods.
“These are funds that are sitting in Qatar that were made available purely for humanitarian purposes and the funds have not been touched,” Ms. Yellen said, adding: “I wouldn’t take anything off the table in terms of future possible actions.”
The crisis in Israel poses a new challenge for the world economy and for the Biden administration, which has spent the last year working to combat inflation in the United States and to corral energy prices that have become volatile because of Russia’s war in Ukraine. Another war in the Middle East complicates those efforts by threatening to constrain oil supplies and send prices higher.
Ms. Yellen’s remarks came as international policymakers gathered in Morocco for a week of meetings and as the global economic recovery is losing momentum. The Treasury secretary said that geopolitical “shocks” continue to pose risks to the world economic outlook.
“Of course, the situation in Israel poses additional concerns,” Ms. Yellen said.
Ms. Yellen said that she continues to believe that the United States economy can achieve a so-called soft landing — where inflation eases without a recession. However she is closely monitoring the potential for economic fallout from the new conflict in the Middle East.
“While we’re monitoring potential economic impacts from the crisis, I’m not really thinking of that as a major driver of the global economic outlook,” Ms. Yellen said. “We will see what impact it has; thus far, I don’t think we’ve seen anything suggesting it will be very significant.”