After backtracking on its move to permit Iran to conduct transactions in dollars through American financial institutions—in violation of promises to Congress—the Obama administration is now poised to allow the Islamic Republic to achieve similar results by using foreign banks. In a recorded conference call, Mark Dubowitz and Eric Lorber explain why Iran was originally denied access to the U.S. financial system, and the troubling consequences of providing a workaround:
These sanctions were [originally] put in place because the Iranian financial sector represented a threat to the integrity of the global financial system. . . . And that threat is on the basis of its proliferation financing, nuclear financing, and missile financing, [as well as] terror financing, money laundering, and sanctions evasion. . . . [T]here was a 2011 finding under the Patriot Act that found Iran’s entire financial sector—in fact, the entire jurisdiction of Iran—to be a jurisdiction of primary money-laundering concern. . . .
[With the greenlighting of transactions] in an offshore dollar-clearing facility, [the Iranians are] setting the stage for the next steps, where they can begin to erode coercive leverage [provided by existing sanctions] . . . legitimize themselves as a “responsible” financial actor without doing anything to demonstrate that they’ve turned the corner on the money laundering [or] the . . . financing of terror. . . .
[T]here’s no provision [for this U.S. move ] . . . in the JCPOA. If Iran did not negotiate that [in the original deal], then Iran needs to negotiate it, and the administration should not be providing a unilateral concession without any reciprocity from the Iranians. Particularly [because], since the JCPOA has been reached, rather than being a more responsible global actor, Iran has become an even less responsible global actor.
Read more on Foreign Policy Initiative: http://www.foreignpolicyi.org/content/transcript-fpi-conference-call-implications-granting-iran-access-us-financial-market