The world's international clearinghouse for financial transactions agreed on Friday to expel Iran from its money transfer network, an unprecedented escalation of global economic sanctions against the Islamic Republic.

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) said in a release that it was "ready to discontinue its services to sanctioned Iranian financial institutions as soon as it has clarity on EU legislation currently being drafted."

More than 40 Iranian banks and financial institutions use SWIFT to process financial transactions. Headquartered in Belgium, SWIFT plays a key role in the international flow of money, with more than 18 million payment messages exchanged per day between 10,000 banks and financial institutions in 210 countries.

'Extraordinary circumstances'

In the past, SWIFT has sought to act as a neutral party and opposed targeting individual nations and corporations. But the United States and the European Union pushed SWIFT to make Iran the first member state ever to be expelled from the network.

SWIFT said that its decision to kick out the Islamic Republic "reflects the extraordinary and highly exceptional circumstances of significant multilateral international support for the intensification of sanctions against Iran."

The US and EU have stepped up their sanctions against Iran in recent months, targeting the nation's oil exports and central bank. Tougher sanctions have raised concern among some oberservers that political tensions could break out in war.

"Kicking Iran out of SWIFT is both unprecedented and another dangerous step toward turning a financial war into a military conflict," said Reza Marashi, the research director at the National Iranian American Council.

Talk of negotiations

Meanwhile, US Secretary of State Hillary Clinton and EU foreign policy chief Catherine Ashton expressed cautious optimism on Friday that an Iranian overture to resume negotiations over its disputed nuclear program could bear fruit.

Iran's chief nuclear negotiator, Saeed Jalil, sent a letter to Ashton on Tuesday voicing support for a return to talks without preconditions. The letter was in response to a message Ashton had sent in October 2011.

"We voice our readiness for dialogue on a spectrum of various issues which can provide ground for constructive and forward-looking cooperation," Jalil said, adding that he welcomed Ashton's statement of respect for Iran's right to peaceful nuclear energy.

Clinton said the Iranian reply was "one we have been waiting for," but emphasized that the US will only proceed if there is a "sustained effort that will produce results." Ashton, who was meeting with the US secretary of state in Washington D.C., said she was "cautious" but "optimistic" that talks could resume.

Tensions between Iran and the West have escalated recently over the Islamic Republic's nuclear program, which the US, EU and Israel claim is designed to build a nuclear bomb. Speculation is rife that Israel could launch a pre-emptive strike to stop the program.

slk/srs (AP, AFP, Reuters)