Tehran loses its bankers

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For many months, officials from the U.S. Treasury Department have been quietly traversing the globe in an attempt to convince managers of foreign banks to sever ties with Iran. More than 40 major financial institutions have agreed, dealing a serious blow to Iran’s ability to finance trade deals and oil projects.

Now, the two largest European banks that were still doing business with Iran, Germany’s Deutsche Bank and Commerzbank, say they will end their relationships with Tehran. Iran has long relied on the Europeans for its banking needs, and Germany was the country’s second largest source of imports last year. But the banks appear to have caved in following increasing scrutiny of their transactions, Glenn R. Simpson and David Crawford report for the Wall Street Journal:

The two banks have also facilitated transfers of money to the Middle East on behalf of an Iran-backed European charity that the U.S. accuses of financing terrorism, according to people with access to records of the financial transfers. Counterterrorism officials say Commerzbank aided transfers of €223,000 ($305,000) to the Gaza Strip in February on behalf of the charity for an orphan-support program. In September, Deutsche Bank also transferred large sums to the Mideast for Paris-based Comité de Bienfaisance et de Secours aux Palestiniens, or Committee for Charity and Support for Palestinians, counterterrorism officials say.

Declaring victory, however, seems premature. Former U.S. Treasury Department advisor Michael Jacobson writes in a recent op-ed in the Jerusalem Post that, “smaller banks are beginning to step in as the larger ones withdraw, and a number of financial institutions have only stopped engaging in dollar transactions with Iran.”

Where might these banks and companies be found? Beijing, for one: Iran has already turned to the state-controlled Bank of China to handle some of its transactions. And Caracas for another: Venezuela and Iran are collaborating on the new multinational Bank of the South. Then there are the Russian banks, which are flush with U.S. currency thanks to record-high oil prices.

And you thought whack-a-mole was just for U.S. commanders in Iraq.