| Ander Nieuws week 52 / nieuwe oorlog 2007 |
International Herald Tribune
December 18, 2007
By Farah Stockman
The Bush administration's new policy of penalizing Iranian banks is facing a critical challenge as financial institutions in Russia, China and much of the Middle East decline to cut ties, analysts and diplomats say.
Even Afghanistan and Iraq have so far declined to take action against Bank Melli, Iran's largest public financial institution, which was among the first foreign banks to open branches in Kabul and Baghdad.
"Nothing is happening," Sinan Shabibi, governor of the Central Bank of Iraq, said recently by telephone.
The world reaction to the U.S. sanctions on Bank Melli, which operates as Iran's central bank overseas, will determine whether President George W. Bush's new tool against Iran is a failure or a success, analysts say.
U.S. officials say they have seen progress since they blacklisted Bank Melli, Bank Mellat, and Bank Saderat in October. Banks in Japan, India and Europe have quietly followed suit.
"We've seen significant movement," said Adam Szubin, director of the Office of Foreign Assets Control at the Treasury Department. "We are certainly not disappointed."
U.S. officials want the UN Security Council to add Bank Melli to a list of Iranian entities facing sanctions, requiring other countries to stop doing business with it and starving Iran of access to foreign capital.
Russia and China, two of the Security Council members that can veto the move, have called the U.S. bank sanctions arbitrary and unhelpful. President Vladimir Putin of Russia portrayed the blacklisting of Bank Melli as senseless and dangerous, like "running around like a madman with a blade in one's hand."
Wang Baodong, press counselor for the Chinese Embassy in Washington, said China did not support the "arbitrary imposition of sanctions."
The bank sanctions have become more controversial since a new U.S. National Intelligence Estimate concluded that Iran halted its nuclear weapons program in 2003. Even before the report became public, the bank sanctions stoked resentment among countries who believed that Bush was overstepping.
The sanctions against Bank Melli stem from an executive order that Bush issued in 2005 giving him unprecedented power to blacklist foreign banks. While previous presidents have blacklisted foreign companies over weapons proliferation, Bush's order allows the Treasury Department to punish the banks in which suspected proliferators hold accounts and make transactions.
The U.S. government can then shut that bank out of the U.S. financial system without ever having to make its evidence public or even sharing the allegations with the banks.
"A judge never gets to look at this," said Paul Downs, a New York-based lawyer for a law firm that represented Banco Delta Asia, a Macao bank hit by U.S. sanctions because North Korea had an account there. Many financial institutions around the world broke their ties with it, fearing that the United States would blacklist them as well.
"They are effectively forced to go along," said Suzanne Maloney, a former State Department specialist on Iran now at the Brookings Institution, a Washington-based research organization.
At first, Treasury officials used the power Bush gave them sparingly, fearing that moving against mainstream foreign banks would anger their allies.
Their first target was Tanchon Commercial Bank, a tiny North Korean institution with few ties to the outside world. The bank was believed to have aided the purchase of most of North Korea's ballistic missiles.
Over time, U.S. officials grew bolder. In January, they announced sanctions against Bank Sepah, Iran's fifth largest bank, accusing it of "direct and extensive financial services to Iranian entities responsible for developing missiles capable of carrying weapons of mass destruction." The allegations against Bank Sepah included facilitating a business venture between a North Korean missile provider and an Iranian company.
In October, Treasury officials made their most aggressive move yet: They blacklisted three more Iranian banks, including Bank Melli, an institution that conducts an estimated 30 percent of all financial transactions in Iran.
U.S. officials said Bank Melli was being blacklisted because it had "provided a range of financial services on behalf of Iran's nuclear and missile industries, including opening letters of credit and maintaining accounts." Bank Melli was also accused of handling transactions for Bank Sepah. Bank Melli, an 80-year-old state-run institution with 3,500 branches and affiliates worldwide, says it engages only in widely accepted financial services for lawful clients.
Treasury officials said last week that they would continue their efforts to isolate Bank Melli despite the National Intelligence Estimate's conclusion that Iran's nuclear program had been halted. They noted that Bush's order also covers Iran's long-range missile program, which is still active.
But even foreign diplomats who support the banking sanctions acknowledge that they are intended to pressure Iran to halt its uranium enrichment research, not to block secret weapons purchases.
"It's not that you think hitting Bank Melli will reduce the financing of proliferation," said a Washington-based European diplomat who supports the sanctions. "It's part of the shaming game."
Copyright (c) 2007 The International Herald Tribune
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