Under a recently-enacted law, Obama is to reduce Iranian oil revenue by punishing banks or other parties that make payments to Iran's central bank. Thus, the interbank payment system becomes a tool of American foreign policy.

Although implementation is unlikely until the second half of this year, the threat of it has already contributed to a spike in oil prices, and efforts by importing nations either to obtain Iranian oil by barter, at discounted prices, or find alternative suppliers. Iranian threats to close the Straits of Hormuz, drastically reducing world petroleum supplies, are arguably another consequence.

Apart from its timing, which seems likely to provoke an international crisis immediately before our presidential election, this use of the payments system to punish or coerce another country raises fundamental issues.

Those who frequently bemoan the supposedly increasing role of a relatively unregulated "shadow banking" system — primarily Democrats — might well ponder the consequences of restricting transfers by banks and hence forcing these transfers into alternative, non-bank channels.

Predictable consequences: anti money laundering, the "war on terror" and other ongoing programs dependent on the difficulty and cost of transferring money away from bank systems could be permanently weakened. Confidence needed to support international investment and "free trade" policies will be eroded. Valuable international payment data, such as is compiled by the Bank for International Settlements, will become less complete and reliable.

In 1941 Roosevelt undertook to embargo oil shipments to Japan, supposedly in order to discourage Japanese aggression in distant Asian lands such as Manchuria, remote from core American interests. The direct result, many historians assert, was Pearl Harbor — one of the most destructive attacks we've ever suffered. Plus a two-front war with many millions of casualties that might well have been mitigated or avoided.

To some international legalists, a financial embargo might seem different and more appealing because it is arguably not an act of war. But Japan didn't attack us because we committed an act of war. It attacked us because without oil shipments, it would have lost credibility and economic viability, and would have been much less able to pursue foreign policy objectives. Same for Iran?

Think back. George W. Bush was not afraid to start wars. But when he wanted to restrain Iran, his efforts were limited to talk shows at the U.N. that predictably failed every time to obtain effective sanctions, because China and/or Russia dissented. Nothing much was accomplished.

Has there been a new technical development in international finance that enables Obama to achieve what was impossible for Bush — namely, effective restriction of Iranian oil revenues independent of Russian and Chinese concurrence? Absolutely not.

Remember, before Obama there was a notable incident in 2005 that highlighted our ability to isolate enemies financially. A small bank in Macau was accused of receiving money on behalf of North Korea from exports of which we disapproved. That bank was cut out of the international payments system for a period of weeks, until some kind of settlement was reached which satisfied the U.S. I suspect we, rather than North Korea, got the money, or some of it.

For me, this was like the first test of the A-bomb in the New Mexico desert. Once this weapon had been demonstrated why, until now, wasn't it ever used again?

The reason, I think, is that once any country knows we can greatly reduce its export revenues, it will want to attack now rather than wait until it is economically eviscerated. Attack how? The retired general who commanded war games testing U.S. carriers vs. a simulated attack by swarms of Iranian speedboats says the carriers were sunk in five or ten minutes. That's just an example. Pearl Harbor in the Persian Gulf.

After that, what? Bomb them back to the Stone Age? Unlikely. Retaliate in ways that won't provoke a wider war? Chancy, problematical.

Years of mixed-up, unreliable forecasts about Iranian capability to produce and deliver nuclear weapons continue. Nothing new. Years of speculation about our willingness and ability to "restrain" Israel continue. Nothing new. Remember Saddam Hussein's "weapons of mass destruction"?

The only thing that's new in this picture is a presidential election — with a president who seems to stand less than an even chance of reelection.

When there's a fresh war or crisis, the incumbent gets a big boost. France, with its highly unpopular president facing a May election, is the loudest advocate of strangling Iran. U.S. and France: an oddly logical couple.

Let's back off.

 Anrew Kahr is a principal in Credit Builders LLC, a financial product development company, and was the founding chief executive of First Deposit, later known as Providian. He can be reached at akahr@creditbuilders.us.com.