DON'T LOSE ACCESS:
Your IP access to ForeignPolicy.com will expire on June 15.
To ensure uninterrupted reading, please contact Rachel Mines, sales director, at email@example.com.
Congress prepares to go after all Iranian banks
Coming soon from the Congress that brought you the sanctions against the Central Bank of Iran: new legislation to sanction every single Iranian bank. Members of both the House and Senate from both parties are moving forward soon with legislation that would expand financial sanctions against Iran to include all Iranian financial institutions — whether ...
Coming soon from the Congress that brought you the sanctions against the Central Bank of Iran: new legislation to sanction every single Iranian bank.
Members of both the House and Senate from both parties are moving forward soon with legislation that would expand financial sanctions against Iran to include all Iranian financial institutions — whether government-affiliated, private, inside Iran, or controlled abroad. According to multiple congressional aides who previewed the legislation for The Cable, this would effectively cut off every Iranian financial institution from the international community — subjecting any bank that conducts transactions with an Iranian bank or holds money for an Iranian bank to risk losing its own access to the U.S. market.
Currently, only the 18 Iranian banks designated by the U.S. Treasury Department and the Central Bank of Iran are subject to such sanctions — leaving more than 25 banks free to conduct business with the international community, which the legislations’ sponsors see as a major hole in U.S. policy. According to congressional aides involved with the legislation’s development, the ban on all Iranian banks would contain a humanitarian exemption, the oil exemptions built into the Menendez-Kirk amendment passed into law last December, and would provide the president with the authority to issue a national security waiver.
The legislation, being developed by the office of Senator Mark Kirk (R-IL) in coordination with other offices, including Rep. Brad Sherman (D-CA) and House Foreign Affairs Chairwoman Ileana Ros-Lehtinen (R-FL), may be offered as early as next week as an amendment to the new Senate Iran sanctions bill that was approved by the Senate Banking Committee last month.
"This would really be a one-two punch combination if Congress extended sanctions to all Iranian financial institutions," one aide involved in the legislation told The Cable. "When you land a clear blow to a boxer’s chin, you don’t back off and wait to see if he’ll fall — you throw another punch and make sure he does."
Mark Dubowitz, executive director of the Foundation for the Defense of Democracies, a conservative policy organization in Washington, told The Cable that the new measures were necessary to prevent the Iranian regime from simply changing its banking tactics to focus on banks not yet sanctioned.
"Money is like water; it searches for cracks in a foundation exploiting even hairline cracks that provide an entry point," he said. "Existing cracks in sanctions laws are leaving entry points to the global financial system for scores of unsanctioned Iranian financial institutions. This allows the Iranian regime to shift its transactions to those still allowed access and to freely move money through the global financial system."
The full text of the new language is here.
Iran sanctions are extremely popular on Capitol Hill these days. After the Obama administration initially opposed the Kirk-Menendez amendment to sanction the Central Bank of Iran, the Senate added that legislation to the fiscal 2012 defense authorization bill by a vote of 100-0.
Meanwhile, the European Union’s high representative for foreign affairs, Catherine Ashton, replied positively via letter today to Iran’s Feb. 14 letter on resuming nuclear talks with the P5+1 countries, which included the five permanent members of the U.N. Security Council plus Germany.
According to Ashton’s letter, the international community is willing to resume talks with Iran. Those discussions would have to focus on Iran’s nuclear program, but initial steps could focus on confidence-building measures between the two sides.
"Looking forward to a sustained aimed at producing concrete results and in order not to repeat the experience of Istanbul, I would propose that we resume our talks at a mutually convenient date and venue as soon as possible," she wrote.