* Republican works on broader ban for Iran central bank deals
* Kirk also seeks to blacklist entire energy sector of Iran (Adds comments from analyst) By Roberta Rampton
WASHINGTON, Oct 8 (Reuters) - Republican Senator Mark Kirk, who last year co-authored a package of U.S. sanctions on Iran's banking and oil sectors, is working on new legislation that would further tighten the economic noose on Tehran, an aide to the lawmaker said Monday.
Kirk and other U.S. lawmakers are pushing to expand sanctions aimed at cutting off revenues they believe Iran is using to advance its nuclear program.
Western nations believe Iran is trying to build nuclear weapons, while Tehran has insisted its program is for civilian purposes.
Undermined by sanctions, Iran's currency lost about a third of its value in 10 days, sparking civil unrest last week.
Kirk is working on legislation that could be offered as an amendment to an annual defense policy bill that the Senate and House of Representatives must finalize after the Nov. 6 presidential election.
The bill would seek to ban all international banks, whether private or government-owned, from conducting transactions with any Iranian bank that is in any way connected to the Central Bank of Iran, an aide to Kirk told Reuters on condition of anonymity.
Currently, only oil-related transactions with the central bank are covered.
The bill would seek to blacklist Iran's entire energy sector, and ban insurance or reinsurance services to Iran, making more transactions and services subject to sanctions, the aide said.
The only exceptions would be for food and humanitarian aide, and oil exports that are allowed under current sanctions law.
"As the Iranian regime continues to defy the U.N. Security Council and refuses to halt its uranium enrichment activities, Senator Kirk is committed to building a bipartisan coalition to impose farther-reaching sanctions on the Islamic Republic," the aide said.
Kirk has been working from home in Illinois since January as he recovers from a stroke.
FREEZE ON FOREIGN RESERVES
The United States has long barred American firms from doing business with Iran. In December, the government adopted measures authored by Kirk and Democratic U.S. Senator Robert Menendez that force international buyers of Iranian oil to cut their purchases.
Last week, Menendez said in an interview that he was working on a bill to impose new penalties on foreign banks that handle any significant transactions with Iran's central bank.
Menendez said he is also looking at ways to freeze an estimated 30 percent of Iran's foreign currency reserves held in banks outside the country.
Projections by one sanctions advocacy group, the Foundation for Defense of Democracies, suggest that Iran has at least two years' worth of foreign exchange reserves to help support its economy, said the group's executive director Mark Dubowitz
New measures proposed by Congress could limit access to those reserves, further limit Iran's ability to access foreign goods and services, and encourage capital flight, Dubowitz said.
"I think Congress is trying to come up with a series of measures that can have a dramatic and profound impact on Iran's balance of payments without imposing a formal trade embargo on Iran," he said.
"The risk is that it ends up being too little, too late," he said.
U.S. Defense Secretary Leon Panetta said on Saturday that the international community will impose more economic sanctions on Iran if the country does not resolve concerns over its nuclear program.
(Editing by Warren Strobel and Doina Chiacu)
@robertarampton)(+202 898 8390))
Keywords: IRAN USA/SANCTIONS