Major Banks Cutting Ties With Iran
More than 40 major international banks and financial institutions have either cut off or cut back business with the Iranian government or private sector as a result of a quiet campaign launched by the Treasury and State departments last September, according to Treasury and State officials. The financial squeeze has seriously crimped Tehran's ability to finance petroleum industry projects and pay for imports. It has also limited Iran's use of the international financial system to help fund allies and extremist militias in the Middle East, say U.S. officials and economists who track Iran. The U.S. campaign, developed by Treasury Secretary Henry M. Paulson Jr. and Secretary of State Condoleezza Rice, emerged in part over U.S. frustration with the small incremental steps the U.N. Security Council was willing to take to contain the Islamic republic's nuclear program and support for extremism, U.S. officials say. The council voted Saturday to impose new sanctions on Tehran, including a ban on Iranian arms sales and a freeze on assets of 28 Iranian individuals and institutions."All the banks we've talked to are reducing significantly their exposure to Iranian business," Treasury Undersecretary for Terrorism and Financial Intelligence Stuart Levey said. "It's been a universal response. They all recognize the risks, some because of what we've told them and some on their own. You don't have to be Sherlock Holmes to see the dangers." The new campaign particularly targets financial transactions involving the Iranian Revolutionary Guard Corps, which is now a major economic force beyond its long-standing role in procuring arms and military materiel. Companies tied to the elite unit and its commanders have been awarded government contracts such as airport management and construction of the Tehran subway. The campaign differs from formal international sanctions — and has proved to win wider backing — because it targets the regime's behavior rather than seeking to change the regime itself. The financial institutions cutting back business ties are mainly in Europe and Asia, U.S. officials say.