Source: The Wall Street Journal
The U.S. ratcheted up the financial pressure against Tehran last week, unilaterally slapping sanctions on Iran’s powerful Islamic Revolutionary Guard Corp, three state-owned banks, and a number of key officials for their involvement in the regime’s terrorist financing and WMD-related activities. Realizing the leverage that American financial markets give Washington, senior U.S. Treasury officials have been telling global financial institutions in the last couple of years that doing business with Iran could do great harm to their reputation and complicate their access to the U.S. market. As a result, a number of global institutions — including Switzerland’s UBS and Credit Suisse and Germany’s Commerzbank and Deutsche Bank — have either terminated or dramatically reduced business with Iran.
There are limits to this unilateral strategy, though. Companies and financial institutions that do not operate in the U.S. may be willing to ignore Washington’s warnings. But being cut off from New York and the world’s other leading financial capital, London, is a risk not too many of these firms would be willing to take. Few could afford to relocate to a smaller financial hub and miss out on the opportunities only the City of London or New York could offer just to continue doing business with Iran.
It is therefore encouraging that British Prime Minister Gordon Brown immediately backed Washington, noting that “we endorse the U.S. administration’s efforts to apply further pressure on the Iranian regime.” But while public support from the U.S.’s closest ally will undoubtedly help bolster the impact of the unilateral actions, the U.K. could do far more.
If the British government were to send a similarly strong warning to banks, it could dramatically increase the financial pressure on Iran. More than 550 international banks and 170 global security houses have a presence in London. Between $50-100 billion of Middle Eastern money will enter London in the next few years, estimates Peter Weinberg, the former CEO of Goldman Sachs International. Coordinated visits by top U.S. and U.K. officials to major financial institutions could be a particularly effective way to get the message across that business with Iran is risky so long as Tehran ignores the U.N. Security Council orders about its nuclear program. A joint U.S.-U.K. effort might carry particular weight coming on the heels of the Financial Action Task Force’s Oct. 11 statement on Iran. Founded by the G7, the 34-country body instructed financial institutions to use “enhanced due diligence” when dealing with Iran to avoid inadvertently contributing to terrorist financing and money laundering. As U.S. Treasury Secretary Henry Paulson said after Washington’s latest step against Tehran: “In dealing with Iran, it is nearly impossible to know one’s customer and be assured that one is not unwittingly facilitating the regime’s reckless conduct.”
While the U.K. wields particularly powerful tools, there may also be other European countries now willing and ready to ramp up financial and economic pressure against Iran. Ideally, this would be done at the European Union level — something that French President Nicolas Sarkozy has been pushing for. But in the absence of a third U.N. Security Council resolution authorizing additional sanctions, many EU countries, primarily Germany, Austria and Spain, appear reluctant. The French have thus suggested that those European countries willing to act need not wait for unanimity. In fact, France has already announced that it is pressing large French companies to refrain from investing in Iran.
A combined initiative by the U.S. and individual European countries to press Iran may strengthen the hand of those in Tehran arguing for accommodation. It would also be a good way to show China, Russia and laggard European governments that with or without them, action will be taken against Iran. If they are dissatisfied with this approach, they should first spell out a realistic alternative that could bring Iran to suspend its enrichment program.
Mr. Clawson is the Washington Institute’s deputy director for research and author of several books on Iran. Mr. Jacobson, a senior fellow in the institute’s Stein Program on Terrorism, Intelligence, and Policy, previously served as a senior advisor in the U.S. Treasury Department’s Office of Terrorism and Financial Intelligence. [/spoiler] [spoiler title=”British Parliamentarians’ letter to EU Presidency urging blacklisting of Iranian regime’s IRGC”] In a letter to Portuguese Prime Minister José S?crates, who currently holds the EU’s rotating Presidency, the British Parliamentary Committee for Iran Freedom, a cross-party group of Parliamentarians from both Houses of Parliament, on Wednesday urged the European Union to blacklist the Iranian regime’s Islamic Revolutionary Guards Corps (IRGC). The group also called on the EU to lift restrictions from the main Iranian opposition movement, the PMOI.
The text of letter by the British Parliamentarians to EU Presidency urging blacklisting of Iranian regime’s IRGC:
31 October 2007
Dear Prime Minister S?crates,
It was a great stride in the war against terrorism when the Bush administration blacklisted the Iranian regime’s Revolutionary Guards (IRGC) and accused its elite Qods Force of “supporting terrorism”.
The Bush administration’s decision to ban the IRGC came not a moment too soon, with Tehran declaring its intention to push ahead with its nuclear weapons programme in defiance of UN Security Council resolutions 1696, 1737, and 1747 and senior Revolutionary Guards commanders directing terrorist operations against UK and Coalition Forces in Iraq and Afghanistan. The Ministry of Defence has made clear that the regime is transferring to Iraq roadside bombs including the deadly EFP technology which is responsible for the majority of Coalition deaths there.
The IRGC, which gets its orders directly from the regime’s Supreme Leader Ali Khamenei, is in charge of much of the regime’s production of weapons of mass destruction (WMD) including the A-bomb. It has also been involved in planning and executing more than 100 terrorist operations against foreign nationals and Iranian dissidents in virtually every continent of the world over the past 27 years. Of course, this figure significantly excludes the regime’s daily terrorist activities in Iraq and Afghanistan.
Interpol has international arrest warrants for senior IRGC commanders for masterminding numerous terror attacks such as the 1994 bombing of a Jewish community centre in Buenos Aires.
The IRGC has also played a major role in suppressing dissent among an increasingly disenchanted population at home. It is responsible for carrying out the executions of 120,000 members and sympathisers of the main Iranian opposition force, the People’s Mojahedin Organisation of Iran (PMOI), 30,000 of whom were executed in the 1988 massacre of political prisoners. It has also participated in the torture of well over half a million political prisoners over the past two decades.
The regime in Iran makes use of more than 174 forms of physical and psychological torture. The IRGC controls a large portion of Iran’s economy. We have determined that since 2005, Mahmoud Ahmadinejad has appointed several hundred Revolutionary Guards commanders to senior Government positions including the recent instalment of Saeed Jalili as Tehran’s new nuclear negotiator. [/spoiler] [spoiler title=”Predictable Reaction from Tehran After Bush’s Blacklisting of the Islamic Revolutionary Guards Corps”] Reaction from Tehran and its Trans-Atlantic apologists to the Bush administration’s October 25 blacklisting of the Islamic Revolutionary Guards Corps (IRGC), the Qods Force and a dozen other IRGC proliferation and terrorist affiliates was more than predictable.
Shaken by the strategic political and economic ramifications of these targeted designations — by far better understood in Tehran than in many of Washington’s policy circles — the clerical regime’s Supreme Leader Ali Khamenei appeared in public to assuage the anxiety of their shrinking ideological base on October 31. At the same time, there were the usual bombastic and belligerent statements from Khamenei’s protégé Mahmoud Ahmadinejad and IRGC commanders. In thinly-veiled threat to the demoralized insiders, Ahmadinejad said that “millions of Iranians would be ready to sacrifice themselves fighting the country’s enemies.”
Ali Fadavi, deputy head of the IRGC’s naval forces, warned that the IRGC forces were prepared to carry out suicide operations in the Persian Gulf “if necessary … this spirit is prevailing now within the Revolutionary Guards,” he said.
Meanwhile, not surprisingly, Iran’s Democratic opposition, the National Council of Resistance of Iran (NCRI) and a host of senior anti-fundamentalist and nationalist Iraqi political figures, including former Prime Minister Iyad Allawi and Iraqi National Accord front leader Dr. Adnan Al-Duleimi, welcomed the decision to blacklist the IRGC and its affiliated entities.
The prominent Iranian opposition leader, Maryam Rajavi, described the move as “indispensable to thwart the export of terrorism and fundamentalism to the Middle East region, in particular the regime’s meddling in Iraq and to prevent the regime from obtaining nuclear weapons.” Mrs. Rajavi, elected by the NCRI as president for the transitional period after the mullahs are overthrown, stressed, “This is a clear testament and a necessary prelude to democratic change in Iran.”
The Iraqi dignitaries emphasized that the sanctions would prove effective in limiting the Qods Force campaign in Iraq.
But would it? Absolutely! It is common knowledge that the IRGC has expanded its role beyond simply being the main military component of the ayatollahs’ regime into a financial and political conglomerate. But how extensive is the Guard’s financial network and how would economic demise impact the totality of the regime? And a quick survey of current reporting on the IRGC shows that indeed its role in Iran’s economy has been grossly underestimated.
Over the years, the IRGC has created a web of financial sources which do not fall under the supervision and accountability of the government, in order to cloak the IRGC’s financial transactions and other activities at home and abroad.
The IRGC’s share of business increased dramatically after Ahmadinejad’s rise to presidency. Today, the IRGC has taken control of some of the most lucrative sectors of the Iranian economy, extending over more than 57 percent of the country’s imports and 30 percent of its non-oil exports. This has enabled it to make a profit of around $5 billion annually. In July 2006, $2 billion from the government’s reserves was transferred to the IRGC’s Khatam-ol Anbia Construction Headquarters. The same year, this company earned $7 billion more when signing three large contracts to work in oil and gas fields.
The office of the Supreme Leader oversees the Guards’ economic activities. Its budget remains a secret and it does not report to any other agency in the government. One company, Hessan, is run by Khamenei’s office and controls the IRGC’s assets and accounts. In reality, a major portion of $40 billion of annual trade between the European Union and the Iranian regime ends up in the coffers of the IRGC, its affiliates and front companies. When EU is doing business with Iran, most probably it is dealing with the IRGC. The IRGC runs more than 500 small and large companies with branches spanning four continents, especially in the Persian Gulf states. In the UAE, there are 483 front companies run by the IRGC involved in activities ranging from importing household appliances, contracting projects in oil and gas fields, smuggling oil out of Iraq, providing technical requirements for nuclear and missile projects, road works, building dams, ports and buildings.
Operating illegal shipping ports for certain contraband imports and exports is among the major tasks of the IRGC. According to information from inside the regime, the IRGC has established 60 illegal ports in the southern Iranian coasts. It is believed that many of these ports have military applications.
According to the NCRI, some of the companies affiliated with the IRGC are: Razmandegan, Razmjoo, National Building, IRGC Cooperation Insurance and the IRGC Bassij Ghorb companies, Kosaran Institute, Construction bases known as Ghorbs in the IRGC’s air force, navy, ground force and the joint staff, IRGC’s Cooperation Company, Ta’min Aghlam Institute, Javan Seir Isar Travel Agency, Maskan Institute, Koosha Ghodrat, Iranians Trade and Development and Negar Nasr companies, Bahman Industrial Group, Shahriyar, Atlas and Atlas Maritime companies.
Some of the key commanders of the IRGC engaged in its business and commercial activities are:
1. IRGC Brig. Gen. Muhammad Khoda Bakhshi, Khatam-ol Anbia Construction Headquarters coordinator
2. Mullah Hojjat Piri, deputy coordinator in Khatam-ol Anbia Construction Headquarters
3. IRGC Brig. Gen. Abdurreza Abedzadeh, deputy commander of Khatam-ol Anbia Construction Headquarters
4. Sardari (engineer), head of the Khatam-ol Anbia Construction Headquarters engineering team
5. Mullah Ismaeel Sa’adat, Khamenei’s representative in Khatam-ol Anbia Construction Headquarters
It is abundantly clear that if the European Union follows the U.S. lead and, in addition to supporting the new U.S. sanctions, slaps its own targeted, punitive measures against the IRGC, a lot would be achieved toward dismantling Tehran’s nuclear effort and terror machine.
Contrary to some suggestions, these targeted sanctions, as a part of a robust diplomatic offensive to defuse the existential threats Tehran is posing, could prevent a military conflict. More importantly, these sanctions signify a clear departure from the disastrous policy of striking a grand bargain with the ayatollahs. As long as the mullahs are ruling Tehran, the more jaw has pushed Iran and the whole region toward more war. According to a Gallup poll released October 31, the American people consider Tehran as being by far the greatest threat to world stability. And, according to an internal secret survey conducted by the Iranian regime, over 90 percent of the Iranians favor regime change in Iran.
To avoid war, however, the United States and Europe should push for an Iranian solution, i.e. relying on the Iranian people and their democratic opposition movement. There is no need to appropriate money, provide arms, or have boots on the ground. It is time for the State Department to vacate the terrorist designation of Iran’s main opposition groups, the MEK and the NCRI. A bipartisan majority of members of Congress rejected the designation, which they said was meant as a goodwill gesture to the Iranian regime. Now is the time to act.
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