Posted on 10/23/2007 5:41:08 AM PDT by Schnucki
Just under two years ago President George W. Bush appeared to confess himself at a loss when it came to how to exert US pressure on Tehran. "We don't have much leverage with the Iranians right now," he said in December 2005. "We are relying on others because we have sanctioned ourselves out of influence with Iran."
Today, by contrast, the US is fizzing with ideas about how to push Iran in the dispute over its nuclear programme - whether the sanctions involved are unilateral or multilateral, informal or formal.
Various arms of the Bush administration, Congress, and even individual states are all seeking to increase the pressure on President Mahmoud Ahmadi-Nejad to change course.
Condoleezza Rice, secretary of state, has signalled that the US may put the Quds Force of Iran's Revolutionary Guard on the US's terrorist list. "There have been some Quds Force individuals and entities already designated and we'll look at the prospect of doing it [to] the organisation as a whole," she said last month.
The state department has also championed two UN sanctions resolutions against Iran and wants to push through a third, while the US Treasury has banned two Iranian banks from accessing dollar financing, and discouraged international banks from doing business with Tehran.
"The goal is that they will change their mind on the policy that is most responsible for this isolation," says Stuart Levey, the US Treasury under-secretary and one of the leading figures in the campaign to turn the financial screws on Tehran.
The combination of executive orders that prohibit third parties from doing business in the US on behalf of the Iranian banks Saderat and Sepah, together with a UN resolution proscribing Sepah, has helped deter many international financial institutions from transactions with Iran.
US officials argue that banks need to know their customers to ensure that they are not breaking US or UN law by dealing with proscribed groups, and that in a country as opaque as Iran such certainty is hard to come by.
The US has been considering issuing an order against a third Iranian bank, Bank Melli, and has also looked at extending measures against the country's central bank.
Mr Levey praises moves at Swift, the international financial messaging group, to make it obligatory to identify any underlying benefactor in bank-to-bank payments.
Some observers believe that the Treasury is playing a good cop, bad cop routine with the justice department in efforts to disrupt Iran's banking relationships.
While the Treasury denies threatening foreign banks if they do not cut ties with Tehran, the justice department is understood to be increasing scrutiny of several large European banks for previous violations of US sanctions against Iran, Libya, Cuba and Sudan.
The probes follow a landmark money laundering settlement by ABN Amro in 2005, which was fined $80m by the Treasury's Office of Foreign Assets Control after it emerged that its US offices had processed wire transfers that originated from Bank Melli.
"There is a divide between the policy arm, which is the Treasury, and the enforcement arm, which is the justice department," said one banking industry lawyer familiar with the issue.
Meanwhile, the House of Representatives has passed a bill that could force President Bush to impose sanctions on foreign energy groups that invest in Iran, although the measure faces significant obstacles to become law. At least three US states have also passed legislation that requires or calls for divestment from companies that have invested in Iran's energy sector.
Despite the pressure, however, Iran is pushing ahead with its nuclear programme, with Israeli claims that the country could have enough fissile material for a bomb by the end of 2009. Other western countries believe Iran is unlikely to reach that stage until closer to 2015. Tehran says its purposes are purely peaceful.
A further indication that the financial pressure has yet to lead Iran to rethink was the resignation at the weekend of Ali Larijani - considered a pragmatist - as Iran's nuclear negotiator.
European diplomats complain that the US's unilateral measures are not as effective as UN sanctions resolutions, even though the UN process is stalled at present.
"When the US took action against Saderat, it hit the bank's reputation and operations," says one. "When the UN acted against Sepah it all but put it out of business."
Two years on from Mr Bush's outburst, the US has discovered more levers to put pressure on Iran than it thought it had available. The question is whether those levers will have the desired effect.
It’s been said before, but it bears repeating...if only we had taken care of them in 1979.
FYI
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