Last month, the U.S. government banned U.S. businesses from doing business with Iranian Bank Sepah after concluding that the bank transfered money to North Korea in return for missle technology. With some success, the U.S. tried to persuade Eurpopean governments to do the same. As noted by The New York Times, it was the first move by the U.S. against an Iranian bank following the adoption of typically tepid UN sanctions against Iran in December. However, prior to those sanctions being imposed, the U.S. had taken similar action against another Iranian bank, Bank Saderat, Iran's largest commercial bank. Both banks are government owned and controlled.
Though the two banks have few direct links to American banks,
Treasury officials say the American directive can bar Americans working
at European banks from involvement in any transaction with Bank Sepah.
In
addition, the action by the Treasury Department means that no American
bank can help facilitate – by transferring dollars, for example – any
transaction between a European bank and Bank Sepah. These steps thus
extend the reach of American laws to other countries, though only to a
limited degree.
It appears that only a few months after first applying the regulatory squeeze, the sanctions are beginning to work.
Iran's weekend offer to resume nuclear negotiations, coupled with new
flexibility over how and where future uranium enrichment trials may be
conducted, represents the first clear evidence that domestic and
international pressure on Tehran's hardliners is beginning to bear
fruit.
But the US military build-up in the Gulf, UN sanctions, or
even Washington's latest Iraq "dossier", are not primarily responsible
for this apparent shift: American meddling with the mullahs' money has
been much more effective.
Since imposing penalties last autumn on Iran's largest commercial bank,
Bank Saderat, for allegedly transferring funds to Hizbullah and other
"terrorist organisations", the US treasury and associated agencies have
been spinning an expanding, entangling web of unilateral sanctions and
other punitive measures around Iran's financial institutions and
commercial enterprises.
[...]
Despite legal worries and concerns about "extra-territoriality" -
attempts to apply US laws beyond US shores - European governments are
being urged to curtail all types of business with Iran, including
commodities and manufacturing. This goes far beyond the measures agreed
in December by the UN security council and approved by EU foreign
ministers yesterday [February 12, 2006].
[...]
Latest figures suggest the strategy is working. Exports from
Germany, which with Italy is Iran's leading European trade partner,
dropped by an estimated 20% last year. "Business dealings are going
backwards, de facto," a Berlin official said. "A lot of German
companies do business with the US. We don't have to say anything.
They've got the message."
Private western banks are also under
pressure to comply with what is rapidly becoming a "Cuba-plus" US-led
international embargo, by withholding letters of credit, loans, loan
insurance and transfer facilities. Barclays plc and HSBC holdings are
among those that have curbed their Iranian dealings.
Iran's oil
industry, providing 70% of state revenues and crucial funding for an
extensive welfare state, is a particular US target. The industry has
suffered years of underinvestment and has never entirely recovered from
the Iran-Iraq war. US pressure on western oil companies and
energy-hungry governments such as Japan not to put money and technology
into a country with the world's third largest oil reserves is intense.
As
a result, some estimates suggest Iran's oil exports are falling by 10%
annually. All this hardly helps plans by President Mahmoud Ahmadinejad
for a 20% increase in budget spending to quell growing public anger
over rising prices and unemployment while maintaining domestic energy
subsidies amounting to a massive 15% of GDP.
Some experts claim that all this financial pressure is unnecessary. Apparently, theocracy really IS a bad form of government, at least as far as rendering unto Caesar what is Caesar's is concerned.
"The mullahs are doing a good job of destroying Iran's economy. They
should be left alone to complete their work," [Johns Hopkins Professor Roger Stern] wrote recently.
"Attacking Iran would allow the regime to escape responsibility for the
economic disaster it created. Worse, an attack could unite Iran behind
the clerical terror sponsors whose grasp on power may be slipping. For
these reasons, the best policy towards Iran may be to do nothing at
all."
I guess Iran's economy is functioning as well as ours would with Pat Robertson in charge. Then again, at least Pat can leg press 2000 pounds after drinking one of his personally concocted "age-defying protein shakes," so I'd best not sell him short or he'll kick me straight to hell and back. Or, perhaps not back.
But back to the Islamist wing-nuts: I doubt that a military attack against Iran is in the offing, at least not by the U.S. We seem to have our hands full at the moment, notwithstanding much saber rattling. However, with a bush-jacketed jackal like "Boy" Ahmadinejad at the controls of a renegade government that is trying to develop nuclear weapons in order to wipe certain infidel countries off the mapdefend itself from hostile neighbors, you can't be too careful. As long as the financial pressure appears to be working as well as it has, not only against Iran but against the loons from North Korea, it's hard to argue that the U.S. should back off using that strategy. Waiting for the mullahs to implode from their own incompetence could be a long and ultimately risky process. Then again, the sudden fall of an enemy in that region of the world hasn't exactly had rosy results for the West recently, so it's hard to have confidence in any strategy.