WASHINGTON (AP) – The Bush administration says harsh new penalties it is imposing against Iran – the first such U.S. action targeting the armed forces of another country – are part of a diplomatic strategy and not a prelude to war.

The U.S. sanctions on elements of Iran’s vast armed forces and its largest bank are the most sweeping since 1979, when the takeover of the U.S. Embassy in Tehran ruptured diplomatic, business and military ties.

The sanctions are part of the Bush administration’s two-track approach to its chief adversary in the Mideast that offsets diplomatic overtures with sanctions, bellicose rhetoric and the implicit threat of military action.

Senate Appropriations Committee Chairman Robert Byrd, D-W.Va., said the new sanctions smack of the “chest-pounding” that preceded the 2003 U.S.-led invasion of Iraq and raise “the specter of an intensified effort to make the case for an invasion of Iran.”

“In no way, shape or form does it anticipate the use of force,” insisted Nicholas Burns, the State Department’s No. 3 diplomat.

Instead, officials said they hope the measures will increase pressure on Iran to take a deal offered last year that would give the oil-rich country economic and other incentives in exchange for ending nuclear activities that could produce a bomb.

In Iran, the Guards’ chief shrugged off the U.S. pressure.

“They have applied all their efforts to reduce the efficiency of this revolutionary body,” said General Mohammad Ali Jafari, according to the state news agency IRNA. “Now as always, the corps is ready to defend the ideals of the revolution more than ever before.”

The United States has long labeled Iran a state supporter of terrorism and has been working for years to gain support for tougher global sanctions aimed at keeping the country from developing nuclear weapons.

The Bush administration has won two rounds of watered-down U.N. Security Council sanctions but has been frustrated by months of delay in seeking a third, tougher set of penalties.

Iran has ignored the U.N. sanctions and an offer from European nations that do extensive business with Iran, which is continuing work on its nuclear program, which it says is peaceful.

Thursday’s punitive moves directly target Iranian organizations and people the U.S. accuses of supporting terrorism or spreading weapons of mass destruction, but the main effect is likely to fall elsewhere – on European and other overseas banks and firms that do business with Iran.

“As awareness of Iran’s deceptive behavior has grown, many banks around the world have decided as a matter of prudence and integrity that Iran’s business is simply not worth the risk,” said Treasury Secretary Henry Paulson.

There has been grumbling, mainly in Europe, about earlier U.S. financial sanctions on Iran that overseas bankers found heavy-handed, but some of Iran’s former financial partners have already distanced themselves from Tehran under hardline President Mahmoud Ahmadinejad.

Paulson and Secretary of State Condoleezza Rice announced the penalties together, a recognition that a year-old effort to levy unilateral Treasury sanctions has had greater effect than the diplomatic channels Rice has pursued with Iran.

“Unfortunately the Iranian government continues to spurn our offer of open negotiations, instead threatening peace and security” through its nuclear program and export of ballistic missiles, Rice said. She also contends Iran is backing militants in Iraq, Afghanistan, Lebanon and the Palestinian territories.

The latest sanctions will cut off from the American financial system more than 20 Iranian entities, including individuals and companies owned or controlled by the powerful Revolutionary Guard Corps.

State-owned Bank Melli, Bank Mellat and Bank Saderat were named supporters of global terrorist groups for their activities in Afghanistan and the Middle East.

Any assets found in the United States belonging to the designated groups must be frozen. Americans also are prohibited from doing business with those designated organizations.

Bank Melli is Iran’s largest. The U.S. says it provides services to Iran’s nuclear and ballistic missile programs. Bank Mellat serves the state Atomic Energy Organization and Bank Saderat routes money to terrorist or militant groups, the administration said.

The administration did not lay out any new evidence for the allegations.

The designations put companies outside the United States on notice that doing business with the designated groups could put them at risk of U.S. financial penalty.

The United States has the world’s largest economy and the most influential banking system, and much of the world’s business is done in dollars.

Paulson said it is nearly impossible for overseas businesses or banks to “know one’s customer” in Iran and avoid unwittingly funding terrorism or other illicit activities.

The Iranian Revolutionary Guard Corps and Iran’s Ministry of Defense and Armed Forces Logistics were designated proliferators of weapons of mass destruction and ballistic missile technology.

The Revolutionary Guards is the largest component of Iran’s military and has influence in business and other spheres. The defense ministry is the parent organization for Iran’s aerospace and ballistic missile operations.

The Quds Force, which was named a supporter of designated terrorist organizations, is a part of the Guard Corps that Washington accuses of providing weapons, including powerful explosives blamed for the deaths of U.S. soldiers in Iraq.

The penalties, some of which have been long expected, were announced an hour before Rice faced scathing questions from congressional Democrats on Iraq, and in the midst of embarrassing revelations about lapses in the State Department’s management of private security guards in Iraq.

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Associated Press writers Matthew Lee and Jeannine Aversa contributed to this report.

AP-ES-10-25-07 2033EDT

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