The United States cannot guarantee that Iran won’t have access to dollars by continuing to freeze the country from the American financial system, the Treasury Department’s sanctions chief told lawmakers on Wednesday.
It’s the latest clarification in a two-month-long spat between administration officials and mostly GOP lawmakers over whether Treasury plans to loosen restrictions preventing dollar-based transactions with Iran.
“Every foreign bank in the world has U.S. dollars in their possession,” Adam Szubin, the acting Treasury undersecretary for terrorism and financial intelligence, told the House Foreign Affairs Committee. “Our sanctions don’t extend to those dollar bills. And foreign actors aren’t under our jurisdiction if they choose to give them to any actor, including an Iranian actor.”
Szubin, whose official confirmation is still pending before the Senate, was responding to a line of questioning from the committee’s chairman, Ed Royce (R-Calif.), who has grilled everyone from Treasury Secretary Jack Lew to President Obama for assurances that Iran would not get its hands on dollars under the nuclear deal. He has not been satisfied with their answers.
The controversy stems from the part of the Iran nuclear deal that allowed for the lifting of certain sanctions and for Tehran to resume ties with various foreign banks, including the European financial system. But the process has been slow-going, with Iranian officials complaining that the United States is warning foreign banks not to engage with Tehran for fear of breaking U.S. sanctions rules.
GOP lawmakers especially have taken certain ambiguities in the testimony of officials to mean that the Treasury Department may be trying to relax U.S. rules blocking Iran from fuller financial integration on the sly, in order to coax Tehran into maintaining compliance with the nuclear deal.
Administration officials have denied the charges, blaming Iran’s frustrations with the pace of integration on a business climate that does nothing to inspire investor confidence.
But that hasn’t placated members’ concerns.
“The concern is that while Iran wouldn’t be allowed direct access to the dollar you could structure a scheme offshore that would have similar impact,” Royce told Szubin, while asking him if there were any plans “to offer Iran the ability to access offshore dollar-clearing facilities” or allow for “dollar-clearing in any form.”
Noting that the topic had inspired “a lot of confusion and concern,” Szubin tried to give the committee a quick primer on the extent of sanctions’ reach in the wake of the nuclear deal.
“We have not promised nor do we have any intent to give Iran access to the U.S. financial system,” Szubin said.
But because dollars, being the “international currency of choice for international trade,” are everywhere, there is a chance that U.S. dollars stored in the vaults of foreign banks could end up in Iran.
“Our primary sanctions in the U.S. control what U.S. actors can do and what they cannot do and governs the conduct of U.S. actors anywhere they reside in the world,” Szubin said. “Our sanctions do not control the actions of non-U.S. persons, whether or not the currency they’re using is the dollar, the euro, the pound or the yen.”