U.S. Wields Financial Sanctions Against Iran

By Peter Crail

On Oct. 22, the Department of the Treasury levied financial sanctions against the Export Development Bank of Iran and three of its affiliates for their role in providing financial services to Iranian defense organizations suspected of involvement in Tehran’s nuclear and missile programs, effectively cutting them off from the U.S. financial system. Washington has increasingly relied on such financial restrictions to respond to and deter the financing of proliferation and, more broadly, to place pressure on countries of proliferation concern such as Iran. (See ACT, October 2008.)

Although the use of sanctions against entities suspected of involvement in proliferation is not new, the strategy of implementing targeted restrictions to cut off individuals and organizations from the international financial system has only been developed in recent years. Stuart Levey, undersecretary of the treasury for terrorism and financial intelligence, told the Senate Finance Committee April 1 that the “key difference” between the use of financial sanctions and more traditional sanctions “is the reaction of the private sector.” He explained that financial institutions have voluntarily cut off business with sanctioned entities and individuals out of “good corporate citizenship” and in order to protect their reputation, adding that “the end result is that the private sector actions voluntarily amplify the effectiveness of government-imposed measures.”

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