March 25, 2008
Unilateral Sanctions Against Iran
How can I buy something when I am not allowed to pay, even though I have plenty of money? How can I sell something when I am not allowed to cash in the receivable?
Those are the questions Iran's economy is asking itself now. As the Financial Times reported a few days ago:
Washington has called on international financial institutions to steer clear of doing business with Iran’s central bank, in the US’s most wide-ranging attempt yet to isolate Tehran financially.
The Treasury department has issued a warning of the risks of doing business with 51 state-owned and seven privately held Iranian banks – in effect the whole of Iran’s banking sector.
The Treasury makes sure such 'warnings' are followed through by threating foreign international banks dealing with Iran to be sanctioned themselves and to be cut off from the U.S. financial system.
These new 'sanctions' go far beyond what the UN Security Council has agreed upon. This is a unilateral step by the U.S. but will likely be effective if foreign governments allow banks under their jurisdiction to follow such U.S. 'advice'.
The EU has declared such U.S. attempts of extraterriorial jurisdiction illegal (pdf, no. 47), but it is doubtful that it will really push against these. It should do so, if only for principle reasons.
For Iran to be cut off from the international financial system is an economic catastrophy.
John McGlynn calls these new 'sanctions' The March 20, 2008 US Declaration of War on Iran. He explains the (il)legal and economic background of these in detail and concludes:
Iran [..] will become another Gaza or Iraq under the economic sanctions of the 1990s, with devastating impact on economy and society. That Iran’s complete financial and economic destruction is the goal of US policy was spelled out by the State Department the day before the FinCEN announcement.
During a daily press meeting with reporters on March 19, the State Department’s spokesperson was asked about a deal recently signed between Switzerland and Iran to supply Iranian natural gas to Europe. After condemning the deal, the spokesperson explained that the US is opposed to any “investing in Iran, not only in its petroleum or natural gas area but in any sector of its economy” and questioned rhetorically the wisdom of doing business with Iranian “financial institutions that are under UN sanctions or could become under sanctions if it’s found that they are assisting or aiding or abetting Iran’s nuclear program in any way.” A clearer expression of US desires is hardly possible.
The U.S. desire is unchanged since the Iranian revolution - regime change by whatever means.
Posted by b on March 25, 2008 at 09:25 AM | Permalink
Tehran should ask the real question right now: Who still wants to be involved with the complete clusterfuck that currently is the US financial system?
I mean, we put dogs and horses to sleep, isn't it time to do the same with Wall Street?
Posted by: CluelessJoe | Mar 25, 2008 10:11:16 AM | 1
The Shanghai Cooperation Organization needs to give Bush's America a margin call. It could provide just the dramatic and timely reality check that prevents immense carnage and wreckage.
Posted by: Pvt. Keepout | Mar 25, 2008 10:36:11 AM | 2
There is a fresh campaign build up against Iran and the economic sanctions seem to be part of these.
Fallon kicked out of his job as CENTCOM.
Last week Bush's and McCain's 'gaffes' Iran a Nuclear Threat, Bush Insists
But most striking was Bush's accusation that Iran has openly declared its nuclear weapons intentions, even though a National Intelligence Estimate concluded in December that Iran had stopped its weapons program in 2003, a major reversal in the long-standing U.S. assessment.
"They've declared they want to have a nuclear weapon to destroy people -- some in the Middle East. And that's unacceptable to the United States, and it's unacceptable to the world," Bush told U.S.-funded Radio Farda, which broadcasts into Iran in Farsi.
Experts on Iran and nuclear proliferation said the president's statement was wrong. "That's as uninformed as [Sen. John] McCain's statement that Iran is training al-Qaeda.
Yesterday Petreus: Iran behind Green Zone barrage: Petraeus
General Petraeus says Iranian special forces - the Quds Force - are adding what he calls "lethal accelerants" to a "very combustible mix".
"The rockets that were launched at the Green Zone yesterday for example, the international zone, were Iranian provided," he said.
"Elements that are paid for, they are funded, they are trained, they've been equipped and they've been directed by and large by the Iranian Quds force."
Today: Cheney: Iran seeks weapons-grade uranium enrichment
Vice President Dick Cheney on Monday said Iran was developing a uranium enrichment program for military purposes.
"Obviously, they're ... heavily involved in trying to develop nuclear weapons enrichment, the enrichment of uranium to weapons grade levels," Cheney said in an interview with ABC television transcribed by the White House.
Cheney, however, did not mention on what he based his accusation.
Looks coordinated to me ...
Posted by: b | Mar 25, 2008 10:45:44 AM | 3
If it is illegal under E.U. law, couldn't firms effected by this take legal action against their government to enforce it? Not that I hold much hope that Europe will do anything but follow the American path. Are there any banks that are too big to be sanctioned by the U.S. or that do little business there?
Also, McGlynn sites the effectiveness of this banking isolation policy against North Korea. But as I recall, N.K. detonated a nuke and the U.S. was forced back to the negotiating table.
I don't know what Iran will do, but I doubt they are helpless.
Posted by: Lysander | Mar 25, 2008 11:11:59 AM | 4
b, re Iran behind Green Zone barrage: Petraeus, this is so far fetched! how can you get closer to iran than badr
According to Iraq-na, an anonymous source said that Abdul Aziz al-Hakim head of “Supreme Council for Islamic Revolution in Iraq” gave the order to the senior leaders of Badr Brigades to form an “Awakening Council” to confront “mahdi Army”, this came after Ahmadinejad visit to Iraq, the source said that this deal is also supported by the Americans, who will provide security information and military plans to “Badr Awakening” militia, members of the militia will receive 700,000 ID = 600 Dollar salary, and will merged into the police service and army forces to ensure their safety and free movements.
American military are preparing for a major campaign against Sadrists strongholds area and cities.
its the americans and the puppet gov slamming the nationalists. hakim is thick as thieves w/iran. americans are so friggin stupid they will belive anything. mcCain might have gone overboard anticipating the AQ/iran lingo would fly. apparently they don't want us to know what the new genocidal policy re sadrists is all about. most of the news on basra is framed as a 'law 'n order' debacle. we are teeming w/iran's proxies in iraq, not fighting against them.
Posted by: annie | Mar 25, 2008 11:45:52 AM | 5
"So?" -- Dick Cheney
Posted by: Uncle $cam | Mar 25, 2008 12:18:09 PM | 6
Calmy-Rey, FM of CH, explained that the US asked Switz. to wait until new sanctions were set up before signing the nat. gas deal with Iran. Switz. waited. Then went ahead, and signed the deal.
C-M met the Iran Pres., wearing a white drapery around her head and shoulders, which created a storm of commentary (front page!) C-M made some stiff remarks about it not being the US’ business etc. When pressed, she said that in fact the deal was not contrary to US sanctions, and had been carefully vetted by “everyone” tout le monde, has a nicer ring in French, (ambiguous), and gave a long technical explanation.
Poring over the official texts is not useful - unclear and badly formulated, they can apply, or not, to this, or to that...and why should say a Hong Kong bank apply US sanctions? The whole matter is totally murky, and seems more like Mafia stiff-arming than anything else.
C-M has been a prime mover, in novspeek, in the matter of Kosova independence, on board with the US, and, astonishingly, thereby jettisoning Int’l law (or what can be made of it these days), which CH is very careful never to do, as that is one of the few things it has going for it, its ponderous neutrality, its care for both protocol (violated in this case, veils..), law, custom, probity, etc. thereby coloring it white as white (ouch) and giving it a role as a ‘negotiator’, ‘facilitator’, etc. It’s sole competitor in this area is Norway.
Anyway, bit of a ramble, but I very much doubt that C-M would have signed this deal with Iran if any problems were expected down the pipe with the US for Swiss Banks.
The standing US/Iran sanctions, include banking sanctions, latest post Nov 2007, so it is nothing new (see link) ? The UN March 08 sanctions calls for ‘vigilance’ - meaningless. What does FinCen have to do with all this? Ridiculous.
http://treas.gov/offices/enforcement/ofac/programs/> us treasury click on Iran and read Other Banking Services.
Posted by: Tangerine | Mar 25, 2008 1:23:02 PM | 7
Wishful thinking Unc$.
Was in Burlington today and thinking of you annie.
Posted by: Juannie | Mar 25, 2008 6:14:03 PM | 8
Maybe someone in the Swiss administration was smart enough to foresee that in the future, the Swiss will heat their homes with Iranian gas, not American dollars.
Besides, if EU was any smart, it'd make a lot of deals with Iran, to see if the US would try sanction against European firms. Then go before international courts and WTO and argue that the US has illegally sanctioned foreign firms, in complete violation of the trade treaties they signed a few years ago. Then seek international condemnation and a massive and punitive fine. At the end, either the US roll back, or EU can declare the international trade treaties void and dead, go on with trade wars, dump dollars, and put huge tariffs on American goods.
At the end of the day, only a fool can really think Europe would benefit of a healthy and prosperous American economy. It's time people worlwide wake up.
Posted by: CluelessJoe | Mar 25, 2008 9:58:07 PM | 9
as again, beefing with Iran provides an excellent distraction.
Posted by: jony_b_cool | Mar 25, 2008 10:54:40 PM | 10
This set of sanctions cuts both ways for the US. If you're the centre of the world financial system you can use your clout to cut others out. But if you try to cut off people that are too big you undermine your role as the centre by forcing people to work around your system. If they keep doing this there is surely going to be a backlash and an alternative banking system created, or a sub-system of the current one that will not respond to the dictates of US Treasury. And that sub-system will be too big for the US to effectively police or cut off.
Posted by: swio | Mar 25, 2008 11:17:35 PM | 11
Switzerland is famous for its banking privacy. Maybe they anticipated the US sanctions and figured that the US could not cut off the Swiss banks because too many Americans have their money in there. The net effect could be to make Switzerland the conduit for Iranian money in Europe. I'd bet the London banks are pissed. Billions and billions of Iranian gas money about to enter the world market and they can't touch a cent of it. Instead it all goes to Switzerland.
As for dealing with China and Russia, it would not be hard to set up intermediary accounts via banks that have little or no direct exposure to the US. Iran will then be able to do all its transactions via two or there steps that provide a sufficient level of deniability. I'm sure the Swiss will do the same thing. What's the US Treasury going to do about it? start up a Beijing office and begin auditing banks it has no jurisdiction over? Or worse still, cut off a bank that Walmart uses to buy the stuff it puts on Xmas shelves?
These sanctions will create a bit of a headache for Iran, but their overall effect will be to push Iran closer to Russia, China and Europe. Unless those three are genuinely on board, unlikely since the US did this unilaterally, then the only market Iran is cut off from is the US. Big deal. There's nothing the US provides they can't get in Europe.
Posted by: swio | Mar 25, 2008 11:31:17 PM | 12