Diplomacy

Experts: Cutting Off Iran from International Banking is Essential for Maximum Pressure

For the expected sanctions on Iran’s banking sector to have maximum effect, Iranian banks must be cut off from Society for Worldwide Interbank Financial Telecommunication (SWIFT), two experts told security columnist Josh Rogin in a report published Thursday in The Washington Post.

As part of the nuclear deal, Iranian banks were allowed in 2016 to rejoin SWIFT, which facilitates the transfer of funds across international borders. However, top administration officials want to ban Iran from SWIFT as part of its effort to maximize financial pressure on the Islamic Republic, in the wake of President Donald Trump’s decision to withdraw from the nuclear deal in May.

Trump has asked Treasury Secretary Steven Mnuchin in July to produce a memo detailing how to impose sanctions on SWIFT, if it refuses to expel Iran. Mnuchin has not yet responded,  “which prevents Trump from making a decision” regarding SWIFT, Rogin reported.

Forcing Iran to leave SWIFT in 2012 under pressure from Congress and some European nations is seen as one of the main drivers of Iran’s decision to negotiate the 2015 nuclear deal, according to Rogin.   Trump has said that he wants to renegotiate the nuclear deal.

Two experts told Rogin that the failure to expel Iran from SWIFT would undermine Trump’s efforts to isolate and pressure Iran.

“The only hope for the president’s strategy to succeed is getting SWIFT to disconnect all the Iranian banks,” said Richard Goldberg, a senior advisor to the Foundation for Defense of Democracies (FDD), who helped write the original SWIFT legislation as an aide to then-Sen. Mark Kirk (R – Ill.) . “And if the Treasury Department waffles one iota on that mission, they are setting the president up for failure.”

“Mnuchin’s job as treasury secretary is to protect the integrity of the global financial system, and he’s not protecting that integrity if he is allowing sanctioned Iranian banks to stay on,” Mark Dubowitz, the CEO of FDD, told Rogin.

Rogin pointed out that expelling Iran from SWIFT would also make it more difficult for Iran to prop up the Assad regime in Syria and supporting its regional terror proxies, including Hamas and Hezbollah. And while SWIFT’s bylaws prohibit it from illegal activities, including funding terror, Rogin observed that Iran has “wantonly abuse[d] international financial systems for illicit purposes.”

While explaining that Mnuchin may have legitimate concerns about the negative effects of government exerting pressure on SWIFT, Rogin concluded, “Mnuchin should make his arguments to the president, give him the information he already requested and let the president decide.”
[Photo: The White House / WikiCommons ]