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U.S. firms from major drug makers like Merck & Co. to mom-and-pop outfits like Harrington's American Pulp & Paper Corp. are finding it hard to get paid even for medicines and other humanitarian exports explicitly allowed by the U.S. Treasury, according to officials, sanctions lawyers and the companies.

"Everything from aspirin to multivitamins - you name it - it's all jammed up," said Cari Stinebower, an international trade lawyer with Crowell & Moring, a Washington, D.C.-based law firm, and a former counsel for the Treasury Department's Office of Foreign Assets Control (OFAC).

The payments gridlock is a testament to the effectiveness of the latest round of financial sanctions, which aim to force Iran to curb its nuclear program and which have made the Iranian banking sector even more radioactive for major global banks.

But they also undercut the long-standing U.S. argument that its sanctions are not meant to squeeze the Iranian people but rather the Islamic republic's leaders and their suspected pursuit of nuclear weapons.