Reuters: Support among international banks for U.S. financial pressure on Iran is still uncertain, but unilateral U.S. Treasury actions can help disrupt Iran’s ability to fund militant Islamic groups, a Bush administration official said on Tuesday. By David Lawder
WASHINGTON, Sept 12 (Reuters) – Support among international banks for U.S. financial pressure on Iran is still uncertain, but unilateral U.S. Treasury actions can help disrupt Iran’s ability to fund militant Islamic groups, a Bush administration official said on Tuesday.
U.S. actions like Friday’s move to completely bar an Iranian state-owned bank from the U.S. financial system will “shine the light on these bad actors,” said Daniel Glaser, deputy assistant Treasury secretary for terrorist financing and financial crimes, at a Senate hearing.
The Treasury is embarking on a campaign to persuade international banks to shun business with Iran over its nuclear program and its financial support for Hizbollah and other militant groups in the Middle East.
“We’re just really beginning this effort to put direct pressure on illicit Iranian activities in the international financial system,” Glaser told the Senate Banking Committee. “I think the jury’s very much still out on achieving complete international consensus on it, but I think the initial signs are very positive.”
Washington already is trying to win approval at the United Nations to impose sanctions on Iran after it ignored an Aug. 31 U.N. deadline to halt nuclear enrichment activities.
Glaser’s boss, Treasury Undersecretary Stuart Levey, is meeting with European bank executives this week to discuss ways to further limit Iran’s access to the international financial system. Treasury Secretary Henry Paulson plans to take up the issue at the Group of Seven finance ministers meeting in Singapore on Saturday.
On Friday, the Treasury barred Iran’s Bank Saderat from indirect U.S. financial transfers, charging that the 3,400-branch bank was used by the Iranian government to transfer money to Hizbollah, Hamas and the Palestinian Islamic Jihad.
Glaser said such actions will create a “market reaction” to help persuade the international financial community to follow the example of Swiss bank UBS (UBSN.VX: Quote, Profile, Research) to cut ties to Iran altogether. Credit Suisse (CSGN.VX: Quote, Profile, Research) and HSBC (HSBA.L: Quote, Profile, Research) have reduced their exposure to Iranian business.
Any actions to “disrupt (Iran’s) financial networks” would be more effective with a multilateral effort by U.S. allies, Glaser said. “We believe actions we take can have an impact, even when they are initially applied unilaterally,” he added.
By barring Iranian institutions from the U.S. banking system, the Treasury could effectively cut those banks off from U.S. dollar foreign exchange transactions, which require a U.S. counterparty bank, he said.