Republicans alarmed at talk U.S. may ease Iran trade | Ryan Warns Obama Not to Give Iran Dollar Access

Republicans alarmed at talk U.S. may ease Iran trade | Ryan Warns Obama Not to Give Iran Dollar Access

U.S. Republicans alarmed at talk U.S. may ease Iran trade
Patricia Zengerle, Arshad Mohammed, Yeganeh Torbati

April 1, 2016

U.S. Republican lawmakers voiced deep concern on Thursday about reports that the Obama administration might allow Iran to use the dollar in some business transactions, although no such plans have been announced.

United States Congress Seal - Old Guard Audio

United States Congress Seal – Old Guard Audio

U.S. government officials said the issue is being discussed in the Treasury Department, but any policy change would not involve widespread access for Iran to the U.S. financial system, disputing media reports suggesting otherwise.

The Obama administration is considering easing some sanctions to permit non-U.S. companies to have some access to the U.S. financial system for U.S. dollar transactions involving Iran, said a U.S. official who spoke on condition of anonymity.

The official said the matter was being studied, no decisions had been taken and that, to the official’s knowledge, none were imminent.

The underlying reason for weighing the step is that non-U.S. companies now able to do business with Iran because of last year’s nuclear deal find it is difficult to do so without at some point touching the U.S. financial system.

The official said such companies are getting conflicting messages from their own governments, which encourage trade with Iran, and from Washington, which emphasizes that it will enforce sanctions rigorously.

Republicans remain dead set against any effort to ease restrictions against Tehran, especially in light of Iran’s recent missile tests.

“As Iran continues to undermine the spirit of its nuclear agreement with illicit ballistic missile tests, the Obama administration is going out of its way to help Tehran reopen for business. The president should abandon this idea,” said Paul Ryan, the Republican Speaker of the House of Representatives.

Officials: US Considers Easing Ban on Dollars to Help Iran

Associated Press
Bradley Klapper, Matt Lee

April 1, 2016

The Obama administration is considering easing financial restrictions that prohibit U.S. dollars from being used in transactions with Iran, U.S. officials said. Angry lawmakers countered that Tehran would be getting more than it deserves from last year’s nuclear accord.

While no final decision has been made, officials told The Associated Press the Treasury Department has prepared a general license permitting offshore financial institutions to access dollars for foreign currency trades in support of legitimate business with Iran, a practice that is currently illegal.

Several restrictions would apply, but the change could prove significant for Iran’s sanctions-battered economy. It also would be highly contentious in the United States, where Republican and some Democratic lawmakers say the administration promised to maintain a strict ban on dollars along with other non-nuclear penalties on Iran after last July’s seven-nation nuclear agreement.

“These reports are deeply concerning, to say the least,” House Speaker Paul Ryan said Thursday in a statement. “As Iran continues to undermine the spirit of its nuclear agreement with illicit ballistic missile tests, the Obama administration is going out of its way to help Tehran reopen for business. The president should abandon this idea.”

The nuclear pact provided Iran with billions of dollars in sanctions relief for curtailing programs that could lead to nuclear weapons. But the Iranians say they haven’t benefited to the extent envisioned under the deal because of other U.S. measures linked to human rights, terrorism and missile development concerns.

Because of its status as the world’s dominant currency, the dollar often is used in money conversions. For example: If the Iranians want to sell oil to India and be paid in euros instead of rupees, so they could more easily purchase European goods, the process commonly starts with the rupees being converted into dollars.

American sanctions block Iran from exchanging the money on its own. And Asian and European banks are wary because U.S. regulators have levied billions of dollars in fines in recent years and threatened transgressors with a cutoff from the far more lucrative American market. Using dollars to make even a rupees-to-euros conversion, following that example, would still involve the money entering the U.S. financial system, if only momentarily.

The new guidance would allow dollars to be used in currency exchanges as long as no Iranian banks are involved, according to the officials, who weren’t authorized to speak publicly on the matter and demanded anonymity. No Iranian rials can enter into the transaction, and the payment wouldn’t be able to start or end with American dollars. The ban would still apply if the final payment is intended for an Iranian individual or business on a U.S. sanctions blacklist.

Top administration officials have only hinted at providing Iran additional help.

“We do believe that they are complying” with the nuclear accord, Ben Rhodes, President Barack Obama’s deputy national security adviser, told reporters Thursday. “Ballistic missiles, support for terrorism, destabilizing activities in the region, that’s not the nuclear deal,” Rhodes said. “It’s a separate set of issues in which we have the ability to respond.”

In a speech Wednesday, Treasury Secretary Jack Lew said, “Since Iran has kept its end of the deal, it is our responsibility to uphold ours, in both letter and spirit.”

Lew warned that “sanctions overreach” risked driving business away from the United States, hurting the U.S. and global economy and empowering economic rivals.

“If foreign jurisdictions and companies feel that we will deploy sanctions without sufficient justification or for inappropriate reasons – secondary sanctions, in particular – we should not be surprised if they look for ways to avoid doing business in the United States or in U.S. dollars,” Lew told the Carnegie Endowment for International Peace.

The 2012 National Defense Authorization Act instructs the president to “block and prohibit” all Iranian assets if they “come within the United States, or are or come within the possession or control of a United States person.”

In a letter to the president Thursday, Rep. Brad Sherman, a Democrat, said allowing dollar transactions for business with Iran “is clearly not required” by the nuclear deal and would only lead the Iranians to make further demands.

Rep. Steny Hoyer, the No. 2-ranked House Democrat, added: “I do not support granting Iran any new relief without a corresponding concession. We lose leverage otherwise, and Iran receives something for free.”

In a separate letter, Republican Sens. Marco Rubio and Mark Kirk cited testimony last year by Treasury Department’s sanctions chief, Adam Szubin, who told lawmakers Iran wouldn’t be allowed “even to execute a dollarized transaction where a split second’s worth of business is done in a New York clearing bank.”

U.S. officials said the change wouldn’t break that pledge because Iran still wouldn’t have access to the American financial system. If an Indian bank exchanges the money with a Hong Kong clearinghouse and the money is eventually converted to non-U.S. currency, no Iranian institution ends up touching any dollars. And no Iranian rials would be entering the United States.

Both concerns are rooted in the Obama administration’s designation of Iran in 2011 as a jurisdiction of “primary money laundering concern.” Critics of Obama’s outreach to Iran say softening the rules would provide Iran a toehold toward re-entering the global financial system, helping it raise more cash for U.N.-banned ballistic missile work or supporting U.S.-designated terrorist groups.

U.S. Moves to Give Iran Limited Access to Dollars

Wall Street Journal
Jay Solomon

April 1, 2016 

The Obama administration is preparing to give Iran limited access to U.S. dollars as part of looser sanctions on Tehran, according to congressional staff members and a former American official briefed on the plans.

The proposed move comes amid rising Iranian criticism that the landmark nuclear agreement reached last year between global powers and Tehran hasn’t provided the country with sufficient economic benefits.

Executives at European and Asian banks have said in recent interviews that they remain reluctant to conduct any financial transactions with Iran due to fears they might run afoul of the U.S. Treasury and its regulations that ban dollar dealings with Iranian firms. Most major international trade, particularly in oil and gas, is conducted in U.S. dollars.

The Treasury is considering how to issue licenses to offshore dollar clearing houses for specific Iranian financial institutions, an approach that wouldn’t require the involvement of American banks, according to the congressional officials. The clearing houses, likely involving select foreign banks, would conduct the dollar transactions instead, shielding the U.S. financial system from any direct contact with Iran, these officials said.

“They are looking at a couple mechanisms to allow for this dollar trade, stopping short of normalizing banking transactions,” said a congressional banking official briefed by the administration on its plans, which haven’t been finalized.

Treasury action on Iran’s access to the dollar wouldn’t require congressional approval.

American law still prohibits U.S. and foreign banks from dealing in dollars with Iran, despite the July nuclear agreement. The Treasury Department designates Iran’s entire financial system as a “primary money laundering concern” due to Tehran’s nuclear and missile programs and support for international terrorist groups, such as Hezbollah in Lebanon and Hamas in the Palestinian territories.

The U.S. Treasury and State departments declined to comment Thursday on preparations to allow Iran limited access to dollars.

But Treasury Secretary Jacob Lew has stressed in recent weeks the need for the U.S. to comply with the “letter and spirit” of the nuclear agreement and help Iran gain economic relief. Congressional officials following the deliberations said they expected a Treasury action could come within weeks, though they acknowledged details of the proposal were evolving.

Since 2006, the U.S. government has imposed an escalating campaign to freeze Iran out of the global banking system in a bid to persuade Tehran to roll back its nuclear program. The sanctions crippled Iran’s economy and cut by more than half its oil exports. Under the nuclear agreement Iran consented to limit its nuclear aspirations in exchange for the lifting of most international sanctions.

Treasury and State Department officials have traveled to the Middle East, Europe and Asia in recent weeks to meet with foreign governments and private businesses to discuss ways to help Iranian commerce, according to U.S. officials, who didn’t address the proposed dollar arrangement.

On Wednesday, Mr. Lew gave an address on sanctions policy at the Carnegie Endowment for International Peace, a Washington think tank, and argued the U.S. risked losing international credibility if it didn’t follow through and provide Iran with significant relief.

“The risk that sanctions overreach will ultimately drive business activity away from the U.S. financial system could become more acute if alternatives to the United States as a center for financial activity…assume a larger role,” Mr. Lew said.

The Treasury chief refused during a March congressional hearing to answer a lawmaker’s questions about whether Iran would be granted access to the dollar. The administration will “make sure Iran gets relief,” he responded.

Members of Congress from both parties have rapped reports that the White House is preparing to provide Iran with access to the U.S. dollar.

Lawmakers argued in letters to the administration this week that such a step risked undermining U.S. sanctions campaigns around the world, which are predicated on using the heft of the U.S. financial system to punish America’s adversaries. Iran, they stressed, continues to support terrorism and is developing ballistic-missile capabilities, despite moving to scale back its nuclear program.

Republican Sens. Marco Rubio of Florida and Mark Kirk of Illinois wrote Mr. Lew on Wednesday seeking assurances that Iran wouldn’t be granted dollar access. Their offices said they haven’t received responses.

In a letter to President Barack Obama on Thursday, Rep. Brad Sherman (D., Calif.), said, “I believe this will set bad precedent, and it will not be the last time the Iranians and/or their business partners receive additional relief not contemplated” under the nuclear deal.

Senior members of Congress on Thursday also released statements voicing concern about the proposed arrangement.

House Speaker Paul Ryan said that the administration should abandon the dollar-access idea.

And House Democratic Whip Steny Hoyer, who gave qualified support to ending the sanctions regime during congressional debates, said he was opposed to granting Tehran any new relief “without a corresponding concession. We lose leverage otherwise, and Iran receives something for free.”

Iran has conducted a string of ballistic-missile tests in recent months that the Obama administration said were “inconsistent” with a United Nations Security Council resolution, though it stopped short of charging Tehran with a violation. U.S. officials also believe Iran is a major supplier of arms and funding for the Bashar al-Assad regime in Syria and the Houthi militia in Yemen.

Since the agreement went into force in January, Iran has scaled back its nuclear activities. The U.S., however, has maintained penalties on Iranian defense and missile firms and individuals allegedly involved in human-rights abuses.

Iranian officials have increasingly complained that the ongoing U.S. penalties are prohibiting Iran from conducting normal business with a flood of European, Asian and Middle East companies that have sought to enter the Iranian markets.

Iran’s Supreme Leader Ayatollah Ali Khamenei sharply criticized the Obama administration during a Persian New Year’s speech for allegedly misleading Tehran’s nuclear negotiators during the talks.

“Our banking trade, our efforts to return wealth from their banks, various kinds of businesses that require financial services, all of these are still facing problems,” Mr. Khamenei said. “When we investigate the issue, it becomes obvious that [the banks] are afraid of the United States.”

Mr. Lew and other U.S. officials said in the months after the nuclear agreement that Iran would continue to be denied any access to the U.S. financial system. This included blocking Iranians from establishing accounts at American banks or conducting dollar trade through European or Asian banks.

“Iranian banks will not be able to clear U.S. dollars through New York, hold correspondent account relationships with U.S. financial institutions, or enter into financial arrangements with U.S. banks,” Mr. Lew said last summer.


Ryan Warns Obama Not to Give Iran Dollar Access

Washington Examiner
Nicole Duran

April 1, 2016 

House Speaker Paul Ryan warned President Obama on Thursday to abandon any plan to let Iran use U.S. currency in its international business transactions, after a new report surfaced that the Treasury Department was considering the move.

“These reports are deeply concerning,” Ryan stated. “As Iran continues to undermine the spirit of its nuclear agreement with illicit ballistic missile tests, the Obama administration is going out of its way to help Tehran reopen for business. The president should abandon this idea.” 

The Associated Press reported on Thursday that Treasury may allow foreign governments to briefly convert their currencies into dollars to complete transactions with Tehran. The change would still deny Iran access to the U.S. financial system, however.

Such sanctions relief was not part of the nuclear deal Iran struck with six world powers last summer. The Obama administration has said for months that the nuclear agreement was focused only on items related to Iran’s nuclear program, and the sudden move to consider lifting the dollar sanction could further anger Republicans.


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