Iran Nuclear NewsIran sanctions yield little

Iran sanctions yield little


ImageWall Street Journal: Asset freezes net only small sums as U.N. weighs new ones to fight Iran's nuclear program. The Wall Street Journal

Asset Freezes Net Only Small Sums as U.N. Weighs New Ones to Fight Nuclear Program


ImageIn its latest proposed set of tougher United Nations sanctions on Iran, the U.S. is again relying on asset freezes as one tool to pressure the country not to build nuclear weapons.

But a close look at how much Iranian money has been frozen to date in the U.S. under existing sanctions shows that the total amount is surprisingly small, less than $43 million, or roughly a quarter of what Iran earns in oil revenue in a single day.

Other countries also haven't frozen very much, despite freezes implemented by the European Union and the U.N., interviews show. Switzerland, for example, has frozen only about $1.4 million in Iranian assets—a tiny fraction of the $712 million Swiss companies exported to Iran last year.

"It's peanuts," says Jeremy P. Carver, a British attorney who has advised governments on implementing sanctions. "It's not going to really change a thing."

U.S. officials do not dispute that current amounts of frozen Iranian assets seem small. In some cases, Iran has shifted the money outside the U.S. or EU to avoid sanctions. The officials emphasize that their strategy is not to seize many assets, but to pressure Iran to change its ways by making it extremely difficult for it to do business.

"The strategy is not to freeze as many assets as we can," says Stuart Levey, the Treasury Department official who has headed the U.S. sanctions initiative during both the Obama and Bush administrations. "That alone, without the full range of measures we can bring to bear, would be a failing strategy."

The proposed new asset freezes come as an Iranian firm recently acquired hardware used to enrich uranium, circumventing current sanctions designed to prevent such purchases, The Wall Street Journal reported over the weekend. The International Atomic Energy Agency is investigating how the Iranian firm procured valves and vacuum gauges used in uranium enrichment that were made by a French company owned by Tyco International Ltd. until December. The French and U.S. companies have said they knew nothing about it.

Iran insists it is trying to develop civilian atomic power—not weapons. A spokesman for Iran's U.N. mission in New York did not respond to requests for comment for this story.

Asset freezes remain part of the U.S. and its allies' arsenal in trying to pressure Iran not to develop atomic weapons. In February, the U.S. Treasury Department added four companies and a top general connected to Iran's elite military force, the Revolutionary Guard, to a long list of Iranian entities and individuals already subject to asset freezes in the U.S.

The latest draft proposal of new U.N. sanctions also places an international freeze on funds linked to the Revolutionary Guard, according to a person familiar with the document. The Obama administration hopes for a Security Council vote on the proposed sanctions this month.

Treasury officials acknowledge that the rules regarding Iran-related asset freezes are complex and often misunderstood. For example, the department's published "overview" of Iran-related regulations contains a list of dozens of entities owned or controlled by the government of Iran that are subject to financial sanctions. But while the assets of some of those entities, including several Iranian banks, are subject to freezing, many of them—such as government-owned Bank Tejarat—aren't, because they haven't been linked to Iran's nuclear program.

In those cases, U.S. financial institutions only are required to reject any transactions involving those firms, not freeze their funds. The Iranian entities are then free to find non-U.S. financial institutions willing to complete the deals.

U.S. officials say that still achieves their objective of putting pressure on Iran by making it difficult for it to conduct business. "Every step of the process is going to present obstacles," says Adam J. Szubin, director of the Office of Foreign Assets Control, the Treasury Department unit that enforces the U.S. sanctions regime. "Some surmountable, some not."

Adds Mr. Levey, the Treasury official: "The amount of assets frozen does not accurately reflect the tremendous disruptive impact of the range of measures we have imposed."

Those measures include encouraging private companies—including international banks—to shun Iran. A growing number of companies, including Caterpillar Inc. and Ingersoll-Rand PLC, recently have announced they were cutting ties with Iran.

Iranian asset freezes in the U.S. and other countries are shrouded in secrecy. The Treasury Department declined to release a list of U.S. banks holding frozen Iranian funds, citing confidentiality. Under federal regulations, financial institutions are required to file reports within 10 business days after freezing assets, and describe the owner and property. But those reports "are regarded as privileged and confidential," according to federal regulations.

Even the precise total of Iranian frozen funds isn't clear. A Treasury spokeswoman would only describe the total as "a significant majority" of the $43.3 million in Iran-related blocked funds Treasury reported to Congress for 2009. Some of that money doesn't relate to Iran's nuclear program and was frozen decades ago.

Germany doesn't even track frozen Iranian assets, says Jeanette Schwamberger, a spokeswoman for the federal finance ministry, adding, "We estimate that it's not a high number." Officials in the Netherlands and Luxembourg declined to provide specific figures, but said the amounts were relatively small.

Britain reported last year that it froze about $1.5 billion in Iranian assets under EU and U.N. sanctions. But much of that money may have since been released to clients of several Iranian banks whose accounts were frozen, according to a person familiar with the matter. Bank customers can receive their money if they can show they have no connection to Iran's nuclear or military activities.

Switzerland has only frozen about $1.4 million in Iranian assets because it follows U.N. sanctions, which are less comprehensive than EU or U.S. sanctions, says Erwin Bollinger, of the Federal Department of Economic Affairs. "It's not much, really," he says.

Another source of confusion in the U.S.: Adding new Iranian entities to the U.S. list of firms or individuals subject to freezing doesn't necessarily mean any money actually gets seized, even though news accounts often report that funds were frozen. Most Iranian businesses or individuals haven't kept money in the U.S. for years because of past sanctions and the strained relations between the two countries. "It would be very surprising to see very large amounts of blocked assets in a recent designation of an Iranian entity," says Mr. Szubin.

U.S. financial sanctions on Iran date back to the 1979 Iranian revolution when 52 Americans were taken hostage. To retaliate, the U.S. froze about $12 billion in Iranian government bank deposits, gold and other property. After the hostages were released in 1981, most of the assets either were released to Iran or were transferred to accounts to pay outstanding legal claims under an agreement known as the Algiers Accords.

The U.N. has implemented three sets of sanctions against Iran since 2006 that include asset freezes. As the Iranian government has not ceased its nuclear activities, and defiantly has been enriching uranium, the U.S. has been pressing Security Council members for a new set of sanctions that, among other things, include additional asset freezes. The U.S. has been struggling to get China and Russia to support the new measures.

In addition, the U.S. has its own set of economic sanctions against Iran, as does the EU. These sanctions also include asset freezes.

—David Crawford in Berlin contributed to this article.

Latest news

Iran’s New Generation Seeks Nothing but Regime Change

In a silly and desperate statement, the Iranian regime’s foreign minister Hossein Amir-Abdollahian claimed that nothing special is going...

Iran’s Youths Broke the Spell of Fear

One of the main characteristics of the recent protests in Iran is the courage and fearlessness of the people,...

Iran Is on the Brink of a Revolution

The wall of fear has been broken. In many cities across Iran, women are taking to the streets, leading...

Iran’s Regime Claims To Fill Global Energy Gap Despite Crippled Petroleum Sector

In recent weeks, the Iranian regime’s officials have been constantly exaggerating their huge capacity in oil and gas reserves...

What Is Happening in Iran?

Following the brutal killing of Masha Amini, the Iranian people have once again united to fight and defeat the...

Iran Regime’s Ministry of Culture’s Decision To Eliminate Children’s Intellectual Centers

With the so-called ‘Cultural Revolution’ which took place between 1980 and 1983, the Iranian regime tried to purge the...

Must read

Iran advocates security agreements with Pakistan

Iran Focus: Tehran, May 16 – Iran’s Deputy Interior...

‘This is Not a Film’ really a sly commentary on Iran

Boston Globe: The title of “This Is Not a...

You might also likeRELATED
Recommended to you