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.