Wall Street Journal: On the heels of new United Nations sanctions against Iran, more than half the Democrats in the Senate are planning to ask the Bush administration to unilaterally impose sanctions on the country’s central bank. The Wall Street Journal
By GLENN R. SIMPSON
March 5, 2008; Page A4
On the heels of new United Nations sanctions against Iran, more than half the Democrats in the Senate are planning to ask the Bush administration to unilaterally impose sanctions on the country’s central bank.
A letter urging President Bush to take action is expected to be sent to the White House today by Sen. Charles Schumer of New York, who said yesterday that 26 Democrats have signed the letter, including Majority Leader Harry Reid of Nevada and Majority Whip Richard Durbin of Illinois.
The letter is an attempt to influence internal deliberations within the Treasury and State departments about whether to levy the new sanctions, Mr. Schumer said in an interview. “We are trying to weigh in on what we think is the right side,” Mr. Schumer said.
“The one really effective thing we have done against Iran is the sanctions on the banks,” he added. “And now what the banks have done is that the central bank is handling their business for them, so unless you sanction the central bank, you are not going to get anywhere.”
The letter contends that the bank “is heavily involved in the funding of terrorism and the financing of Iran’s proliferation activities,” according to a draft, which cites statements on the matter made in recent years by both the Treasury and State departments.
The central bank, known as Bank Markazi, “is now deviating from its normal duties to facilitate transactions for Iranian banks currently under sanctions,” Mr. Schumer also asserted in a recent note to his fellow Democrats seeking support.
The U.N. Security Council on Monday voted to impose penalties on Iran for the third time for refusing to suspend its nuclear program, including freezing the assets of about dozen Iranian companies and individuals associated with the program. But the U.N. stopped short of blacklisting two major state-owned Iranian banks, as the U.S. requested. In addition to lobbying the U.N., Washington has conducted its own campaign to damage Iran’s financial system, blacklisting banks and companies and lobbying Iran’s trading partners to curtail their business with Tehran.
Iran has made no secret of its efforts to get around the U.S. quarantine. Gholam Hossein Elham, a spokesman for the government of Iran at the United Nations, said this week that Iran is insulated from international sanctions because its central bank has taken “serious preventive measures to protect national interests using international capacities,” Agence France-Presse reported.
The Treasury Department is investigating the central bank’s role in allegedly funding terrorism and helping finance acquisitions of nuclear and conventional weapons technology, and in helping other Iranian banks circumvent U.S. financial sanctions.
The letter is a strong signal to the White House that a further escalation of unilateral efforts by the U.S. to financially quarantine Iran will be warmly received on Capitol Hill. A move against Bank Markazi would have limited practical effect within the U.S. but could discourage banks in other countries from any dealings with it — a potentially serious trade impediment for Iran.
The Bush administration hasn’t made any public statements on a recent report in The Wall Street Journal regarding U.S. scrutiny of Bank Markazi. Administration officials declined to comment on the matter yesterday.
Counterterrorism officials from the U.S. and allied countries say Bank Markazi has stepped up its efforts to help Iranian banks, relying on its own ties to Western financial institutions.
“Iranian state-owned banks, in particular, are finding themselves increasingly isolated, threatening the viability of their foreign-based branches and subsidiaries,” Mr. Schumer noted in his memo to colleagues. “As a result, these banks are resorting to tactics that shelter them from American sanctions.”
Bank Markazi’s international role was highlighted in late December when American lawyers won a temporary court order in France freezing four of the bank’s accounts at Natexis Banque Populaire. The accounts contained more than $200 million in European currencies.
Critics of Bank Markazi say it operates as an arm of the regime. “At variance with the procedures of nearly every other central bank in the world, the President of Iran personally presides over the meetings” of the bank’s general assembly, said Ali M.S. Fatemi, a professor at the American University of Paris, in a recent court declaration for the French case.
