Wall Street Journal: The Bush administration said it has blocked a major Iranian bank’s access to the U.S. financial system, the latest step in Washington’s growing attempt to isolate Iran.
The Wall Street Journal
By DEBORAH SOLOMON
September 9, 2006; Page A4
WASHINGTON — The Bush administration said it has blocked a major Iranian bank’s access to the U.S. financial system, the latest step in Washington’s growing attempt to isolate Iran.
Stuart Levey, the Treasury Department’s undersecretary for terrorism and financial intelligence, said Bank Saderat, one of Iran’s largest state-owned banks, no longer will be able to use the U.S. financial system. In a speech before the American Enterprise Institute, Mr. Levey said Bank Saderat had helped transfer hundreds of millions of dollars to terrorist organizations, including Hezbollah and Hamas.
The quest to cut off Iran’s support to Hezbollah gained urgency this summer when the Shiite Muslim militia and Israel engaged in intense fighting in Lebanon and Hezbollah unleashed hundreds of rockets into Israel. The size of Hezbollah’s arsenal raised alarm at the level of Iranian support for the group.
At the same time, the U.S. is eager to show that Iran can be cut off economically in the run-up to United Nations Security Council debates this fall that will focus on ways to impose economic sanctions for Tehran’s refusal to give up its nuclear program’s uranium-enrichment work.
The move is part of a broader Bush administration effort to hamper Iran’s efforts to aid terrorism and acquire sophisticated weapons, by convincing other governments and financial institutions world-wide to stop doing business with Iranian-controlled companies.
“This is an appropriate leveraging of U.S. economic sanctions by authorities to make it more difficult for Iran to use the common international financial infrastructure to engage in buying materials for its nuclear program, to support terrorist activities and to do other bad stuff that jeopardizes security,” says Jonathan Winer, a former State Department official in the Clinton administration and now a partner at law firm Alston & Bird LLP.
While Iranian financial institutions can’t directly access the U.S. financial system, they can touch it indirectly by working through foreign banks. These so-called “U-turn transactions” allow U.S. banks to process payments involving Iran if the money transfer begins and ends with a non-Iranian foreign bank. Friday’s move will prohibit Bank Saderat from participating in transfers involving U.S. banks.That, in turn, will pressure foreign banks to stop dealing with Bank Saderat.
