The suggestion that the Obama administration might allow Iran access to the U.S. banking system — something not required under the Joint Comprehensive Plan of Action (JCPOA) and something the administration has previously vowed not to do — has provoked a hostile reception among sanctions experts and members of Congress. If the administration imagined that its move would fly under the radar, it was badly mistaken. This is no mere technical adjustment.
To the contrary, the consequences of such a move cannot be overstated. Mark Dubowitz and Annie Fixler of the Foundation for Defense of Democracies explain that if Obama moves forward, “the next president’s ability to target Iran’s malign activities with non-nuclear sanctions will be much more difficult if billions of dollarized transactions are green lighted. The next administration won’t easily be able to reverse this once it is in motion, made even more difficult by inevitable European and Asian pushback.” They continue:
Iran’s record of illicit finance has been the basis of several years of Financial Action Task Force (FATF) warnings. FATF, the global anti-money laundering and anti-terror finance standards body, regularly warns members that they should “apply effective counter-measures to protect their financial sectors” from illicit finance risks emanating from Iran. As recently as February 2016, FATF warned that Iran’s “failure to address the risk of terrorist financing” poses a “serious threat … to the integrity of the international financial system.” If the U.S. green lights the greenback, it will undermine FATF’s global standards.
Iran will use an American green lighting in order to water down FATF’s illicit finance warnings. Step-by-step, Iran will legitimize itself in the global financial and business community without fundamentally changing its financial practices. Just as it went from nuclear pariah to nuclear partner under the JCPOA without admitting to its nuclear weaponization work, Tehran will use this same strategy of coupling a denial of wrongdoing with demands for more and more concessions.
Bipartisan outrage has now bubbled up in Congress.
House Speaker Paul Ryan issued a terse statement: “These reports are deeply concerning, to say the least. As Iran continues to undermine the spirit of its nuclear agreement with illicit ballistic missile tests, the Obama administration is going out of its way to help Tehran reopen for business. The president should abandon this idea.”
More surprising was the reaction of the No. 2 Democrat in the House, Minority Whip Rep. Steny Hoyer (D-Md.):
I am concerned about reports that the Treasury Department is considering mechanisms that would allow the use of the U.S. dollar for business transactions involving Iran. The power and central role of the U.S. banking system remains a critical tool toward combatting global terror finance and illicit trade, and it should remain that way.
Given these reports, I want to make clear my concerns that the Administration had indicated that there would be no further concessions beyond those specifically negotiated and briefed to Congress. I do not support granting Iran any new relief without a corresponding concession. We lose leverage otherwise, and Iran receives something for free. Only when Iranian banks fully absolve themselves of involvement in terror financing and missile procurement, when Iranian Revolutionary Guard Corps ceases its saber-rattling against America’s allies, and Iran’s leadership ends its despicable threats against Israel and the Jewish people — only then, perhaps, should the international community consider additional steps with regard to Iran’s reintegration into the global economy beyond concessions pursuant to the Joint Comprehensive Plan of Action. Until such a time, I think we ought to go no further than fulfilling only our obligations as laid out in the JCPOA, and I look forward to being briefed on what the Administration has planned.
One senses that in the wake of Iran’s multiple ballistic missile tests in defiance of the United Nations, revelations about the shortcomings of the inspection system, Iran’s continued aggression in the region and its increased repression of its people, Democrats who were cajoled into supporting the JCPOA have lost patience with the administration. They have every right; the administration sold them a bill of goods promising that the deal would not impede actions to respond to Iranian misconduct. That, it seems, was blatantly false. It opened the door for unprecedented concessions and refusal to enforce existing U.N. strictures on non-nuclear topics.
Congress should foreclose this latest proposed move and pass meaningful sanctions for Iran’s recent conduct. At stake here is what little remaining credibility we have to deter Iran’s actions and the integrity of the dollar, which, if Obama has his way, will enable Iran to, as sanctions expert Omri Ceren puts it, “launder its way into the global financial system.”